Seasonal/Historical Trends: Tech and Financials are “In,” Cyclicals and Real Estate are “Out”
01 October 2007 at 12:11 pm by Gary Gordon
For as long as I can remember, I’ve been a huge fan of the "Stock Trader’s Almanac." Call it a fascination with market history. Think of it as a desire to get an "edge."
Yet, there’s one item in the annual review that has impressed me more than any other: seasonal trends. I just can’t get enough info on the performance of individual months or stand-out periods per economic sector.
In the "Stock Trader’s Almanac," you’ll find that November to January constitutes the most vibrant gains for stock assets. You’ll learn that technology owns Q4. And, you’ll discover that October, feared for its infamous crashes in 1929 and 1987, is the premier month for ending bearish downtrends.
So what’s on tap this October? According to Jeffrey A. Hirsch in a CBS Marketwatch feature, Mr. Hirsch wouldn’t touch Consumer Discretionary/Cyclical stocks or Real Estate-Related stocks with "Monopoly money." So much for the SPDR S&P Homebuilders Fund (XHB) or the Consumer Discretionary SPDR (XLY).
Hirsch points to a number of sectors and corresponding ETFs for the October run. And while there are 10 ETFs that the author pointed out, a general theme centered on strength in technology and financials. (8 out of 10 October recommendations had some tie to the these segments.)
For example, the authors suggest a variety of financial stock strategies that include Claymore/Clear Glbl Brkr/Asset Mngrs (EXB), iShares S&P Global Financials (IXG) and ProShares Ultra Financials (UYG). Similarly, tech gets ample representation with the likes of the Internet Infrastructure HOLDRs (IIH), iShares S&P Global Tech (IXN) and ProShares Ultra Technology (ROM).
I must admit, I’ve been writing about the same probable trends for Q4 2007 for quite some time. For my review on why tech and financials must be in your portfolio, you may want to read my feature on these sectors from September 26, 2007. Or if you prefer reading about tech stocks alone, "Tis the Season for Information Technology" may be worth a quick perusal.
Disclosure Statement: As a Registered Investment Advisor, Pacific Park Financial, Inc. may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.
