For example, Maxlinear Inc. (MXL), a current holding in the Seasonal Forecaster portfolio, is up 12.3% since our March 16th trade entry (the alternative trade I covered on 3/16 using a long call is currently up 65%). Maxlinear devices are used to deliver high definition video and content in cable, satellite, broadband, and fiber optic networks – a significant growth area.
But are all the ‘ducks in a row' for entering a position in SMH at this time? Not quite.
Seasonally, this sector has a poor track record over the next few months. Over the next 21 weeks, which this year takes us until the end of October, SMH has averaged a 7.4% drop, with gains in only 6 of the past 16 years:
On the other hand, there have been several double-digit losses: 18.3%, 31.4%, 38.4%, 19.8%, 44%, and 14.1%.
So what if you waited until late October to invest in the semi sector? Instead of an average 7% loss you'll be looking at a track record of an average 5.5% gain over the following 7 weeks, and an 81% success rate compared to a 38% success rate right now.
This is almost a perfect ‘Sell in May and Go Away' example. If you don't already have a good semiconductor stock like Maxlinear in your portfolio, think twice about trying to catch the recent semiconductor sector strength by buying this popular ETF. Be patient. The odds for a successful semi sector trade will be much higher in the fall.
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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