Archive for November, 2009
My last post stated that the markets overall will do terrible on Black Friday because of Dubai’s disaster on not paying back their debts. You have to admit, $60 Billion Dollars is just a bit too much money for one city.
Gold as predicted fell to the low $1130.10. Traders, that is more than $65 down from $1195.00.
As for Oil, the low for today was $72.39, down from $77.94. Again another massive loss.
As for financials, it varies from different banks, but at the end result, they all did very bad today.
If you read my post for Wed, then you know that Shorting was the right option if you wanted to make a lot of money. Even if there is a downside in the markets, you can always be a winner.
Again have a Happy Gloomy Thanksgiving (for those who did not short their positions).
I have studied the charts for Gold for some time now and I see Gold running into a big storm. Investors, Gold has been way overbought! As the saying goes, when everyone is buying, you should be preparing yourself to sell. India normally buys Gold during this season, but this time they are not. Gold is overbought and too expensive for them to afford which will definitely affect the prices of Gold.
I see Gold falling more than $60 by the end of Friday (Yes I SAID $60!). So don’t take your chances to buy gold, SHORT IT and SELL IT! In fact, I have bought the inverse etf of Gold, HGD.TO. It’s another way to Short Gold. Buy it, hold it, and make your profit.
I also know a few big guys in Dubai and I’m telling you the news in Dubai is not good. They are in debt and owe the government/banks more than $50 Billion Dollars. So watch the prices for Oil tumble as well by the end of Friday.
As for financials, because Dubai owes so much money, you’re also going to experience a big tumble for the financials. Black Friday will be really black for the markets.
Have a Happy Thanksgiving and please…Sell it all off!
In the past I have written about the U.S. financials having their seasonally strong period from December/January to April 13th. The Canadian bank sector is different than the U.S. bank sector in many ways. From a seasonal standpoint, Canadian banks have their year-end at the end of October and release their results in late November. In comparison, the U.S. banks have their year-end at the end of December and release their results mid-January. As a result, the seasonal period for Canadian banks tends to start earlier – October 28th.
The risk of entering the bank sector earlier is if the U.S. banks come out with disastrous news before their year-end, banking sectors around the world will be questioned and will perform poorly. Compared with banking sectors in other countries the Canadian sector is very healthy and should be able to weather U.S. negative news.
This sector trade is part of the pair trade with the consumer sector, rotating back and forth from one sector to another every six months. The favourable season tends to favour higher beta and therefore rewards discretionary over staples. We have just entered the time of the year when this strategy shifts from the staples sector to the discretionary sector. Investors should consider switching their consumer staples ETF for a discretionary ETF.
The period of seasonal strength for this sector is from January 29th to May 6th. The sector also does well from November to the beginning of May. One of the questions that I get asked a lot is, “does the U.S. seasonal period for the materials sector apply to the Canadian sector?” The Canadian sector has a different composition and as a result its entry date is earlier. The U.S. materials sector has a large percentage of its holdings in chemical stocks: the Canadian materials sector has a large percentage of its holdings in gold stocks and fertilizer stocks. As a result the sector’s seasonal trade is more akin to the Metal and Mining sector as compared with the U.S. sector. This trade is setting up for a good entry mid-November.
In the pasts posts, I recommended that investors should consider selling gold for the month of October and reentering the position at the beginning of November. The seasonal trade from July to September had produced a good profit and October is typically the worst month of the year for gold. As the U.S. dollar weakened in October gold remained firmly above the $1,000 mark. The fact that gold did not decline in the month that it typically has negative performance does not take away from a positive seasonal trend from the end of October to December. Gold typically performs poorly from the beginning of January into the early summer and is not a good seasonal trade. Remember to consider exiting the position in December.
Currently gold is trading at $1,096 with $1,000 acting as support. There is a possibility that the support line will be tested, but the expectation is that it will hold over the next few months and gold will be higher by the end of the year.
The American consumer never seems to give up. Responsible for approximately two-thirds of the country’s GDP, they keep spending money. Although the retail sector’s strongest seasonal period is from January 21st to April 12th, the seasonal trade from October 28th to November 29th is still favourable. This one month trade ends just after the start of the U.S. holiday season on Black Friday. Once again, the seasonal trade ends when the event that is driving the outperformance, starts. In other words, seasonal investors take advantage of other investors who enter the sector before American Thanksgiving trying to benefit from expected positive retail sales during the holiday period.
By the way, Happy Remembrance Day!
Last month, I stated that the technology sector was an attractive October purchase, either in the second week or last week of October and given current market conditions I would favour the last week of October. The second week of October proved to be at least a shortterm bottom as the sector is currently higher. Two of the bellwethers in this sector, Microsoft and Apple, came out with results that “pleased” investors and moved the sector higher. In the pasts posts I had made, I also stated that investors should watch the relative performance of technology stocks compared with the broad market. Strong performance would indicate positive strength in the market. Even though the technology sector has been outperforming, there is still a long way to go in this seasonal trade. As I mentioned, the technology sector usually does well until January 17th, but investors should consider reducing positions at the start of the Consumer Electronics Show in Las Vegas (January 7th to January 10th). This is the world’s largest electronics trade show and investors often take positions in the sector shortly before the trade show in order to catch a positive movement that is a result of any major technology product announcements. In essence, seasonal investors take advantage of this phenomenon by entering the sector before the other investors and exit after the sector has been pushed up and is over-crowded.
The sector as represented by the ETF (XLK) is currently just below resistance @$22. It is possible that the sector will have some short-term trials at this level, but once it gets through, look for a movement to $24 or $25.