Don Vialoux is founder of Tech Talk and here is a link to TechTalk. He also has sites called Timing the Market and Equity Clock. Jon Vialoux is a research analyst for Horizons Investments Management Inc. Their talk today is called "Timing the Market Using a Combination of Technical, Fundamental and Seasonal Analysis".
Don starts off with one stock he recommends, which is AutoCanada Inc. (TSX-ACQ). He is bullish on gas long term, but not so much in the short term. He is bullish on tech stocks. He thinks gold stocks will be volatile. He thinks that US corporations have lots of cash and good margins. They have fired a lot of people and have refinanced at lower rates. He thinks we should buy dividend paying stocks for income.
In the US people realize they are in problems and that the markets will go down. Spain will have to leave the Euro to recover. Agriculture will be good over the long term because of growing population, but sector will be volatile.
You should buy Dividend ETFs or Dividend paying companies. If you have trouble picking 10 to 15 good dividend paying stocks, use Dividend ETFs.
You need to be good at fundamentals, seasonal investing and technical analysis. In seasonality you find periods of seasonal strength and weakness. You use technical analysis to fine tune your entry to and exit from the market.
With seasonality you need to look for annual recurring events. Seasonality has to do with the market or a sector of the market. Look for recurrent tendencies, economic indicators, corporate earnings, consumer or business patterns, and announcement events.
For example retail sales show strong spring, flat summer, strong fall, moderate winters then a strong spring. Retail is the strongest in the fall. In the first half of the year it is driven by industry and in the second half it is driven by consumers. The average ultimate seasonality for retail is to buy on October 28 and sell on May 5th. Based on 60 years of data, these dates can vary by 1 month either way.
Lumber has gone nowhere in the last 15 years. It is volatile, but it has its seasonality. It peaks in February each year and has its lowest point in October. You can do a seasonal trade on this sector. For CanFor (TSX-CFP) you can buy the 1st of November each year and sell it the 1st of April each year and over the past 15 years you would have made a 16% per year average return.
The TSX Financial Services sector has its top in December. You should hold this sector from October 10th to December 31st and from January 21st to April 13th.
The China Shanghai market has seasonality. In fact studies have shown that 35 of 36 tops markets had a similar pattern with the market rising on Halloween (October 31st) and toping at the end of April.
The Metal and Mining Sectors (gold, copper, and zinc) bottoms in October each year. You should hold this sector from November 19th to January 5th and then from January 31st to May 5th. This has worked 82% of the time over the past 20 years. However, it did not work for the S&P Metals and Mining Sector in 2011.
As for gold, this year the consumer demand in China exceeded the consumer demand in India. Hold gold from July 12th to October 9th each year. Hold gold stocks from July 27th to September 25th each year. If you did this over the past 25 years you would have made a 14% annual return. October tends to be the weakest month for gold.
For Platinum, hold this sector from January 1st to May 31st each year. This can be used in Canada. There is a spring buying season and Platinum is up in the spring of each year. This works about 80% of the time.
The US markets are strong just before an election and this generally continues to the end of the year.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.