Don Vialoux, portfolio manager, JovInvestment Management, and sub-advisor to the Horizons Seasonal Rotation ETF visited BNN on May 13, 2011 to discuss his thoughts on the market, as well as share his thoughts on what to do now that its May.
Since May has now solidly arrived (and with a thud!), many investors are revisiting the classic adage, or rather question, "Sell in May, and Go Away?" Don Vialoux, and his co-sub advisors, Brooke Thackray, and Jon Vialoux, on the Seasonal Rotation ETF (HAC-TMX) believe, the answer to that question is "Yes!" But, the old adage has some interesting exceptions, and is not the only seasonal investing idea ...
We start off with a special 4-part video series featuring Brooke Thackray and Jon Vialoux, who provide insight into their 'Seasonal Investing' model, and cap it off with Don Vialoux's thoughts, buy recommendations, as well as do-not-buy recommendations.
First, the 4 part series on Seasonal Investing:
1. What other opportunities are there over the next 6 months? (Brooke Thackray)
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/] 2. From a seasonal perspective, is this a good time to be in the markets? (Brooke Thackray)
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3. Are there any sectors of the market that tend to do better over the next 6 months? (Brooke Thackray)
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4. Discuss three investment selections? (Jon Vialoux)
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Here are Don Vialoux's thoughts, followed by his buy, "DON'T BUY", and "WAIT for the right time" recommendations:
First of all, during his appearance, last week, on May 13, 2011, one of the seasonal ideas Vialoux touched on was the Agriculture sector. Seasonality is right from the middle of July until the end of the year. The position he owned (MOO-N) went up 50% last year. This is the season when farmers are growing their crops and selling them before the end of the year for taxes. To reduce taxes, they buy fertilizers, tractors, etc. This year is even better because grain prices can go significantly higher.
He also shared his comments on the CAD$ vs. US$? The CAD$ historically bottoms around the middle of February and then goes strongly on the upside until the end of May. Looks like seasonality is peaking out a little early this year.
Vialoux also noted in one of his comments that May 2nd, 2011 was a crucial date in the US market when all the economically sensitive sectors all of a sudden turned out the lights. Then the market started rolling over and continued moving lower, most noticeably in the materials sector, and in silver and gold. The Canadian markets peaked on March 7th and so they've been in a corrective phase for 10 weeks. Be cautious.
Here are Don Vialoux's TOP PICKs as mentioned during his May 13, 2011, visit to BNN.
TOP PICK – HAP Floating Rate Bond ETF (HFR-T) 10.130
He likes the Floating Rate Bond ETF. It's a money market instrument but is very high yielding at 2.5%. A way of hiding in the market for a period of time until you need cash.
TOP PICK – Claymore Premium Money Market ETF – (CMR-T) 50.010
(This has been a TOP PICK April 30/10. No change.) This a Money Market fund. Great liquid security where you can go in and out very quickly. He is looking for some seasonal trades coming up this summer.
TOP PICK (A TOP PICK April 30/10. No change.) 5-month Treasury Bills. Looking for markets to go into a corrective phase until probably the fall, so a good place to park your money.
DON'T BUY – Husky Energy (HSE-T) 27.780 This one has been having a difficult time technically along with most Canadian energy stocks. Sector peaked out a lot earlier than normal. Developing a downward trend.
DON'T BUY – Kinross Gold (K-T) 13.810 This is not only in a downward trend but it also just broke a key support level. Relative to the other gold stocks, this is not a good performer.
DON'T BUY – Hudbay Minerals Inc. (HBM-T) 13.980 Technically Hudbay is currently in a downward trend. Has not been following the seasonal patterns that other base metal stocks have been following. There is support around $11. Copper and zinc prices have been trending down. WAIT for support.
DON'T BUY – CitiGroup (C-N) 41.530 They are doing a reverse stock split, 1 for 10. Problem with this type of split is that a lot of people who previously owned 100 shares now only own 10, which is an odd lot. A lot of people do not like odd lots so end up selling them. It puts a cap on for a long period of time. Trending down with no indication of a bottom.
DON'T BUY – Teck Resources Ltd.(B) (TCK.B-T) 44.850 Teckh historically does very well around November to January each year. It's currently in a downward trend. There is minor support at the current level. It is currently outside of the period for season strength.
DON'T BUY – PetroBakken Energy (PBN-T) 16.260 This stock just had a breakdown a few days ago. Its in a distinct downward trend so stay away for now. Seasonally you want to buy oil stocks around the beginning of November. The real sweet spot is beginning of January until the end of April.
DON'T BUY – Paladin Resources (PDN-T) 3.290 Vialoux has some concerns on uranium stocks right now. This one is currently in a downward trend. The low in 2010 seems to be a logical level for support but he is concerned that both Cameco (CCO-T) and Denison (DML-T) just broke through key support levels. Downward trend is not over yet. (not to mention the Japan Nuclear Fiasco)
WAIT – Agnico-Eagle Mines (AEM-T) 59.440 Like other gold stocks this one shows a distinct downward trend. Gold stocks tend to do well from July to December and this one's had a pretty good run last year. WAIT until about the middle of July when you see support.
WAIT – Potash Corp of Saskatchewan (POT-T) 49.920 This is one that you going to want to buy some time in June. POT Recently broke down through a key support level.
WAIT – Barrick Gold ABX-T 43.630 Now in a downward channel but downside risk is probably not too much from current levels. Historically it bottoms right around July and then moves higher until the end of the year.
Don Vialoux, Brooke Thackray, and Jon Vialoux, of JovInvestment Management are sub-advisors and portfolio manager for (HAC-T) - Horizons AlphaPro Seasonal Rotation ETF, listed on the TSX.
Source: Commentary - BNN, Stockchase.com
Source (Video): Horizons ETFs
