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Long/short equity, contrarian, newsletter provider, research analyst
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My profession is market timing and analysis, so I consider the task of selecting a strategy that will work perfectly between the first and last day of August quite daunting. Reasonably, a strategy could reach inflection during these respective bookends and fail to show its ultimate potential.

Notwithstanding that challenge, the strategy that I have selected is based on current market trends. In my opinion, the market established a near-term bottom in mid-July and it is now poised to oscillate higher within my defined channel.

This is the same channel which makes up the strategic trading plan that I provide to my clients every day. Their objective is to remain on the right side of the curve at all times, and my correlated recommendation for August should provide ample guide for exactly that. My strategic plan is designed to take advantage of trading cycles which span one to three months, so reasonably it could coincidentally fit into our predefined bookends.

Most recently the support level of this dynamic strategic plan was tested and I expect the market to trend higher and test resistance accordingly. Technicians and market timers expect trends to hold, and this is no different. Although I expect higher market levels to prevail near term, specific stocks impose higher degrees of risk and should be avoided. Instead, market based ETFs and double weighted Proshares should be considered.

Before I continue with my specific recommendation I want to make sure that my longer-term market analysis is not misinterpreted. I am a long term bear. I believe that the market has already entered the third major down period in U.S. history, akin to the Great Depression and the stagflation period of the 1970s, and the risk of a greater depression is a real. My longer term economic and market analysis provides direction spanning decades and explains my position.

With that, oscillation cycles take place whether or not the overall direction of the market is higher or lower. Specific to today's environment, the market will move up and down as it trends lower over time. Although I believe that overall direction will continue to trend down, I also believe that the market will experience a temporary increase that is likely to extend the entire month of August. Support has already been established, and the increase has already begun. This alleviates the risk associated with picking exact bottoms by the way, and should comfort some concerned investors.

My correlated market timing and stock selection strategy for August is to buy the double-weighted Nasdaq Proshare QLD (NYSEARCA:QLD). Reasonably, a 10% to 20% return could be realized between the first day and the last day of August.

Although the Dow (NYSEARCA:DIA) is much weaker than the Nasdaq (QQQQ), avoid the temptation to bottom fish there. Technology has a much brighter outlook given the sector's reduced comparative exposure to energy and its efficient international pipelines.

After August market declines may resume.

Disclosure: Kee has already recommended a trading strategy specific to QLD to his clients, family and friends.

Source: August Market in Store for a Bounce