Don Vialoux is research analyst at Horizons ETF Management Canada. His focus is technical analysis and seasonal investing.
SPDR S&P 500 ETF (SPY-NYSE)
Technical and seasonal influences are positive until the beginning of May. Hold for now, but prepare to take profits into May.
Horizons S&P/TSX 60 Index ETF (HXT-TSX)
Nice breakout by the S&P/TSX 60 index to a seven-year high last week! Technical and seasonal influences are positive until the beginning of May. Hold for now, but prepare to take profits in May.
PowerShares QQQ Trust Ser 1 (QQQ-Nasdaq)
The Nasdaq 100 index has a history of outperforming the S&P 500 index, Dow Jones industrial average and TSX composite from mid-April to the end of May.
Past Picks: January 19, 2015
ETFS Physical Platinum Shares (PPLT-NYSE)
Then: $122.80; Now: $111.69 -9.05%; Total return: -9.05%
iShares Trust-Shares S&P Europe 350 Index Fund (IEV-NYSE)
Then: $42.30; Now: $45.72 +8.09%; Total return: +8.09%
iShares MSCI Emerging Markets Income (EEM-NYSE)
Then: $34.49; Now: $42.82 +8.43%; Total return: +8.43%
Total return average: +2.49%
A battle has evolved between favourable seasonal influences for equity prices until early May and declining earnings news. Preferred strategy is to retain seasonally attractive economically sensitive North American and international equities for now, but be prepared to take profits if technical indicators begin to deteriorate significantly. International equities currently appear more attractive than U.S. equities until early May. Beyond May, North American equity markets enter into a period of uncertainty related to the first increase by the Federal Reserve's Fed Fund rate. Since 1946, this scenario has evolved on 13 occasions. According to S&P Capital IQ, during the six month period prior to the first increase, the S&P 500 index has experienced an average decline of 10.1 per cent. Given that consensus for timing of the first increase in the Fed Fund rate is September, equity markets currently are within the six month time frame for a correction. Traders should prepare accordingly.