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Three top picks from Horizon’s Don Vialoux

Don Vialoux is a research analyst at Horizons Investment Management. His focus is on technical analysis and seasonal investing.

Top picks:

Market Vectors Junior Gold Miners

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Seasonal influences on gold and gold equities are positive until the beginning of October. On the charts, both gold and gold equities reached an intermediate bottom in late June. Recent weakness has returned both investments to the top of a previous trading range, a natural level to add to existing positions.

Cash Equivalent ( e.g. iShares 1-3 Year Treasury ETF)

Short-term equity market concerns suggest a conservative investment approach into this fall. Equity market concerns into the third quarter will take their toll on equity markets. Best to hide in short term money market instruments until these events are past.

ProShares Short Dow 30 ETF

Downside risk for U.S. equity markets exceeds upside potential between now and early October. Seasonal influences are slightly negative. The Dow Jones industrial average is underperforming the S&P 500 index and broke below its 20-day moving average earlier this week.

Past Picks: August 15, 2012

Market Vectors Gold Miners ETF
Then: $44.15
Now: $26.74
Total return: -38.81 per cent

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iShares S&P/TSX Capped Energy Index Fund
Then: $16.10
Now: $16.02
Total return: +1.94 per cent

Cash (Third pick)

Total return average: -12.29 per cent

Market outlook:

U.S. equity markets entered into an intermediate corrective phase on August 2 that likely will last until at least the beginning of October. Downside risk ranges between 2 per cent and 10 per cent. During the next two months, equity markets will face a series of challenges including Federal Reserve tapering rumors, the Jackson Hole economic conference, selection of a new head of the Federal Reserve, hurricane season, downward adjustments in third quarter earnings estimates by international companies and the debt ceiling debate. Now is the time to protect investment assets by taking seasonal profits. Look for a re-entry point thereafter

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