On the close of trading, on June 7, NASDAQ’s Best Eight Months Seasonal MACD Sell Signal was confirmed. This is the official sell signal for traders following the NASDAQ Best Eight Months investment strategy. Exit any remaining technology and small-cap related positions into strength. iShares Russell 2000 (IWM) was stopped out on June 7, when it closed below its stop loss at 62.93. Sell PowerShares QQQ (QQQQ) and iShares DJ US Tech (IYW) into strength. QQQQ and IYW will be closed out of the ETF Portfolio on the next advancing day.

This go around I am going to skip the full recap of our seasonal trades, it can be found in previous AI Alerts located here: Investor Alerts. The successes of our strategy have far outweighed its letdowns since September 2009. There have been 28 long positioned established and closed out of the portfolio since then. Twenty of these trades were winners with an average gain of 10.2%, while 8 were losers with an average loss of 6.2%. SPDR Retail (XRT) proved to be the best performing trade with a 22.2% gain. Oil, Natural Gas and Banking sectors were responsible for all of the closed out losing trades.

New Recommendations

Two sectors enter favorable seasonalities in the month of July, Gold & Silver and Utilities based upon the Philadelphia Gold and Silver index and the Philadelphia Utilities index respectively. During this go around we are going to pass on trading the Utility sector for two primary reasons. First, it has lagged substantially throughout the past year’s market recovery and it was not an effective shelter during the last bear market.

However, Gold & Silver’s prospects are much brighter. The worst case investment scenario for gold or silver would require perfect execution from all the major central banks around the globe. Central banks would need to achieve a perfect balance of just enough inflation and solid economic growth to ensure investors remain confident in paper currencies and paper assets. If this were to occur in the next six months then there would likely be a dramatic correction in the precious metals space. Odds do not favor this outcome. Consider the growing concerns over sovereign debt levels, a slowing economic recovery and a skidding Euro.

Although, our Sector Seasonalities are derived from indices that track mining companies we are going to steer clear of stock based ETFs and instead choose two hard-asset backed funds to trade the seasonality. iShares Silver (SLV) and SPDR Gold (Gold) are the top picks. They are the largest and most liquid of their peers. Less expensive funds, such as ETFS Gold (SGOL) and ETFS Silver (SIVR), are viable alternatives for the management fee sensitive trader, but assets under management and daily trading volume are also less.

Buy iShares Silver (SLV) on dips below 17.18 and set a stop loss at 16.03. Take profits at the auto-sell of 21.17. 



Buy SPDR Gold (GLD) on dips below 118.14. Employ a stop loss at 106.33. Lock in gains with an auto-sell of 145.55. 



Updates & Current Advice

As a reminder, five sectors exit their favorable periods in July: High-Tech, Computer Tech, Internet, Real Estate and Oil. Real Estate and Oil related trades have already been closed out of the portfolio. Today’s NASDAQ Seasonal MACD Sell Signal is our cue to close out technology and small-cap positions into strength.

Excluding iShares Barclays TIPS Bond (TIP), non-seasonal trades are currently suffering heavy losses. PowerShares DB Agriculture (DBA) is being pulled down with the broad decline in commodities and remains on hold. Alternative energy positions: Claymore/MAC Global Solar (TAN), FirstTrust Global Wind Energy (FAN), PowerShares WilderHill Energy (PBW) and Market Vectors Nuclear Energy (NLR) are down 29.4% on average. Again, general commodity weakness is a contributing factor, but fears relating to the disappearance of government subsidiaries and slowing growth in China are the majority factors. These are long-term trades that we will be looking to add to once signs of a bottom are in place.

Our defensive bond funds (IEI and IEF) and bear mutual funds (BEARX and GRZZX) have been performing well during the correction; average gain for the four positions has risen to 7.3%. Continue to hold these positions as a hedge against further market declines. 



New ETFs

An astounding 10 of 17 new ETFs are bond funds. When all that is being created in the globe is debt, then this is what the bulk of new ETFs are going to be. 



Disclosure Note: At press time, officers of the Hirsch Organization held positions in FAN, FCG, GRZZX, IEF, NLR, PBW, TAN, XES and XLE.