In Friday's posting (Missed the Train in the Semi Sector?) I covered the negative seasonal pattern in the Market Vectors Semiconductor ETF (SMH). While the index looks ready to break above the December 2015 highs, I pointed out that the ETF does not have a good seasonal track record over the next several months. Institutional traders just have not displayed much enthusiasm for buying semiconductor stocks in the summertime.
Surely it would be a good defensive move to buy Consumer Staples, right? For example, the top ten holdings in the Consumer Staples Select Sector SPDR ETF (symbol XLP) are all products or retailers that people regularly buy or frequent. Whether the economy is good or bad, no matter if it is the quiet time for tech product announcements, and even if Disney's latest movie release is a flop, Coca-Cola and Colgate toothpaste still fill shopping carts, people go to CVS and Walgreens for BAND-AID®'s, and who can't live without Costco pastries and discount wine.
Over the next 4 weeks, XLP, in all 17 years of its existence, had not been able to muster one gain. Seventeen years of losses for the next 4 week period. If you feel every trade you've tried recently has turned into a loser, you probably still don't have as bad a track record as XLP:
If you want to be defensive, consider moving to cash, and in a few weeks or so, as long as the markets aren't in a dive, the odds will be a little more in your favor, should you be determined to take a position in XLP. And if they are in a dive, go to Costco for a bottle of discount wine to help you analyze the situation.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
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