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Seasonal Demand Trades June 2014

Seasonal demand is just what it sounds like.  What seasons certain things see higher demand such as natural gas for A/C and heating or gold for jewelry manufacturing and sales.  With that in mind I thought I'd flip through our Seasonal Charts for hints of possible trades here and in the months approaching.  My unscientific belief has been that larger players begin to buy long futures contracts before the season hits so I begin to watch for divergences and support in charts.  Click on the charts below for a better view.  Let's take a look:

Consumer Staples Which can be traded via $XLP or one of it's components are items which consumers feel they cannot do without.  They're considered non-cyclical, meaning that they are always in demand, no matter how well the economy is performing (or not performing).  Think diapers $KMB, personal hygiene $PG, discounters like $WMT, beverages such as $KO, cigarettes $MO and $PM, pharmacies such as $WAG and $CVS.  There are many other names, but you get the picture.  They're slow but steady growers with dividends which heat up in the Summer and ramp until end of year.  The type of thing yo can buy at the 20d SMA but back up the truck at the 200d. 

Natural Gas  Yes as much as I hate to think it, nat gas demand increases as the Summer heats up.  It's one to watch the weather channel however. Mild temps and it will fall like a rock.  Extreme heat and you have a trade as the shorts are squeezed.  I wouldn't recommend investing via $UNG (very flawed) but rather prefer $FCG or one of it's components.


Bonds  Whether it's the 2yr, 5yr or 30yr (shown) bonds or flight to safety tends to ramp up Spring through end of year when tax receipts are into the government via income taxes and "sell in May, go away" begins.  idk if I'd chase them here but on a pullback, maybe for a trade.  $BND is just one of the numerous bond ETFs out there as well as the well-known 20yr treasury$TLT

They are TRADES right now - not investments.  Stay nimble.

Corn and Soybean shorts.  Once they're in the ground, seasonal demand drops through Fall.  $JJG and $CORN are two ways to short grains although thinly traded.

Crude Oil and Gasoline  longs.  We're talking Summer driving season, then a lull when the kiddies return to school but then a ramp again into the Fall/Winter holidays.  We've already recommended long $USO and will most likely be adding to that position this week.  Stay tuned.

Lastly we have everyone's favorite Gold which catches a season bid going into India's festive wedding season however it should be noted that purchases of the yellow metal fell in Q1 by 26% supposedly due to government restrictions and tariffs.  Still India is #2 to China in gold importing and with China's slowdown, one has to wonder if India will come out on top in 2014. 

$GLD is deeply oversold; maybe a short covering rally?  Watch the charts for a signal.

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