Brooke Thackray is research analyst with Horizons Investment Management. His focus is on seasonal investing and technical analysis.
Top Picks:
Advanced Micro Devices (Shorting)
Over the last 22 years, AMD has performed strongly in the period from the end of February to the beginning of May. It has then put in a reversal and has produced an average negative performance with a rate of high frequency until the end of July. Over the last 22 years it has produced an average loss of 17.7% and has been negative 18 times.
Intel
Over the last 22 years, Intel has produced an average positive performance from May 5th to July 29th, making it an ideal part of a pair with a short position in AMD. Intel has recently announced a new energy efficient chip for the ultra laptops, which should help with sells in the late summer.
SPDR Consumers Staples Select Sector (ETF)
The consumer-discretionary sector has been substantially outperforming the S&P 500. It is time to rotate into the more conservative staples sector as it tends to outperform during the weaker summer months.
Past Picks:
Oct. 27, 2011
Industrial Select SPDR
Then: $34.26
Now: $36.76
Total return: +8.51%
Consumer Discretionary Select SPDR
Then: $29.94
Now: $45.73
Total return: +15.52%
PotashCorp
Then: $50.46
Now: $42.52
Total return: -15.33%
Total Return Average: +2.90%
MARKET OUTLOOK
Over the last six months the S&P 500 has produced a positive return and has outperformed the TSX composite, which has produced a loss. We are currently moving into the six-month seasonal period where both the U.S. and Canadian stock markets often have weak results. Despite its poor performance, the TSX composite is still not an attractive proposition. Despite a positive earnings season for the stock markets, the macro environment is not encouraging: Europe is slowing down under the weight of its austerity programs, China has lowered its growth forecast and is showing signs of slowing down, and more recently the U.S. and Canada look like they are joining the slowing trend. At this time, investors should favour the defensive sectors: consumer staples, health care and utilities. The gold and agriculture sectors also present attractive seasonal investment opportunities later in the summer.
Compiled by Franklin Cameron/BNN Market Call Tonight
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