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Three top picks from TimingTheMarket.com’s Don Vialoux

Freelance columnist Don Vialoux

J.P. MOCZULSKI/j.p. moczulski The Globe and Mail

Don Vialoux is a technical analyst with TimingTheMarket.ca & EquityClock.com. His focus is technical analysis and seasonal investing.

Top Picks:

iShares Global Agriculture ETF (COW-T)

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Seasonal influences for the agricultural sector are positive between the end of September and the end of December. Grain prices finally have shown signs of bottoming after a long downward trend. The Grain ETN JJG completed a base-building pattern today.

United State Natural Gas Fund (UNG-N)

Seasonal influences for natural gas are positive from the beginning of September to the middle of December. The intermediate trend for natural gas prices already is upward. Early signs of a La Nina suggest the likelihood of colder-than-average weather in North America this winter, implying higher-than-average demand for natural gas. U.S. inventories already are below their 20-year average.

First Trust U.S. Technology ETF (FHQ-T)

Questrade ETF is currency hedged and the First Trust ETF is not hedged.

Seasonal influences for the technology sector are positive from early October to the first week in January. Consumer technology goods (e.g. the iPhone 7) are expected to be hot items this Christmas season. Technical trends and relative strength already are positive.

Past Picks: Aug. 5, 2016

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iShares S&P TSX Global Gold Index Fund (XGD-T)

Then: $17.03 Now: $12.87 -24.43% Total return: -24.43%

Global X Silver Miners (SIL-N)

Then: $50.54 Now: $38.55 -23.72% Total return: -23.72%

Cash

Total Return Average: -16.09%

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Market outlook:

On average during the past 20 years, the Dow Jones Industrial Average and the S&P 500 Index have reached their seasonal low on October 15th (the TSX Composite reached a seasonal low on Oct. 5). Chances are high that the low this year for U.S. equity markets was yesterday when major U.S. equity indexes briefly broke support, but came back strongly. Strength between now and early 2017 is justified by an expected recovery in earnings growth. Consensus for third quarter S&P 500 earnings on a year-over-year basis calls for a decline of 2.1 per cent followed by a gain of 5.5 per cent in the fourth quarter and a gain of 12.9 per cent in 2017. Third-quarter earnings outlook for the Dow Jones Industrial Average companies and TSX 60 companies is more positive. Consensus for Dow companies on a year-over-year basis is a gain of 1.8 per cent, while consensus for TSX 60 companies is a gain of 6.1 per cent.

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