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Don VialouxJ.P. MOCZULSKI/The Globe and Mail

Don Vialoux is research analyst at Horizons ETF Management Canada. His focus is on technical analysis and seasonal investing.

Top Picks:

Global X Fertilizer/Potash ETF (SOIL)
Seasonal influence for the sector turned positive at the beginning of July for a potential seasonal trade until the beginning of January (see enclosed Agrium seasonality chart). Technical parameters recently turned positive (intermediate uptrend, outperformance relative to the S&P 500 Index, positive short term momentum indicators). Second quarter earnings on a year-over-year basis will turn positive this quarter.

Horizons COMEX Silver ETF (HUZ.TO)
Seasonality turned positive early in July for a seasonal trade to the beginning of October. Technical indicators show signs of base building. Horizons Silver ETF bottomed early in July at $8.93. Short term momentum indicators are oversold. Silver is outperforming gold. Units trading in Canadian Dollars and are hedged against currency fluctuations.

Global X Silver Miners (SIL)
Silver (and gold) stocks have a history of entering into a period of seasonal strength near the end of July for a trade into early October. Waiting until near the end of July to enter the trade is important this year because second quarter earnings on a year-over-year basis will be horrendous.

Past Picks: May 29, 2015

Horizons Active Floating Rate Bond ETF (HFR.TO)
Past commentary: Now is the time to avoid the inevitable correction in equity prices that happens between the beginning of June and the end of October. Investing in an Exchange Traded Fund that holds short term corporate and government bonds will provide an opportunity to realize a small return, but with limited volatility. If a summer rally starts after a stock market correction this summer, the ETF easily can be liquidated and funds can be re-employed into seasonally attractive equity sectors.

Then: $10.13; Now: $10.09; -0.40%; Total return: -0.23%

Two month Canadian Treasury Bill
Past commentary: Selected seasonal sector opportunities frequently become available during the June to October period including gold, energy and fertilizer. Owning two month treasury bills offers an opportunity to move quickly into these sectors when technical requirements confirm their favourable seasonality.

Total return: 0%

Five month Canadian Treasury Bill
Past commentary: Several non-recurring events could trigger greater than average volatility in North American equity markets this summer including first increase in the Fed Fund rate in the U.S. and Greece's foreclosure. Typically the period of volatility in summer by North American equity markets is over by the end of October. A five month Treasury bill will allow the investor to protect capital and to prepare for a return to equity markets near the end of October.

Total return: 0%

Market outlook:
This year the S&P 500 Index is following its traditional trading pattern during years when winter was colder than average. The winter of 2015 was the coldest in more than a decade. The Index moves higher from October to early May, but underperforms average markets. The Index peaks in late April. After a corrective phase, another short term peak normally occurs in the second half of July approximately when the second quarter earnings report season reaches a peak. The Index frequently moves lower into mid-August followed by a strong advance into the latter part of the year.

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