Todays Lesson of the Day: August seasonality update Yes you can make money swing trading stocks! Please subscribe at Nortstaractiveequitytrading for immediate access to our online swing trading course and to receive our daily stock picks. Historically speaking, the consumer sector tends to begin its favorable period near the end of September and typically remains strong until the beginning of June in the following year. Back-to-school and holiday spending combined with the effects of the “Best Six Months” is the most likely driving force behind this seasonality. Year-to-date many consumer-related stocks have struggled. An unusually long and harsh winter deterred shoppers early in the year and summer vacations have likely tempered sales recently. Second quarter GDP showed that when winter ended shoppers returned; this leaves little reason to expect differently when summer ends. Based upon the no-longer-calculated Morgan Stanley Consumer Index (CMR), this trade had produced an average 10.4% gain over the last 15 years. A similar seasonality and average returns exist when the S&P Retail Index (RLX) is analyzed. Last year’s two ETF trades based upon this seasonality returned an average of 5.5%. Like past years, a two-pronged approach to trade this seasonality will be utilized. SPDR Consumer Staples (XLP) can be bought on dips with a buy limit of $40.50. Employ a stop loss at $36.45 and an auto sell of $49.18. Top five holdings: Procter & Gamble, Coca Cola, Philip Morris, Wal-Mart, and CVS Caremark. These names have traditionally been defensive names that have performed acceptably during periods of sluggish growth and should growth accelerate and stabilize at a higher rate, they will also perform. These five names constitute nearly half of XLP’s total holdings. P&G alone is 13.45% of the ETFs total assets as of August 6. SPDR Retail (XRT) can also be purchased on pullbacks using a buy limit of $79.25. Set a stop loss at $71.33 and take profits with the auto sell at $96.24. Top five holdings: SuperValu, PetSmart, Lithia Motors, Family Dollar and Shutterfly. Unlike XLP, XRT is widely diversified and these five companies represent just 5.78% of XRT’s total holdings. As of August 6 retail apparel companies were nearly 25% of the fund and specialty stores were second largest, comprising a little of 16% of total fund assets. At of yesterday’s close, UNG was down 2.0% and FCG was off 4.9%. Natural gas, the commodity, was down nearly 14% in July as cool summer weather dampened demand while supply remained more than ample. It’s MACD, stochastic and relative strength indicators have all improved. Continue to hold UNG and FCG. Sincerely, Northstar Active Equity Trading Team
Posted on: Sun, 10 Aug 2014 19:52:54 +0000
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