August Seasonal Trades

Strong 2nd quarter earnings in the US and Europe continue to drive the markets; 181 companies in the S&P 500 index have reported 2nd quarter earnings thus far with 77.3% of those companies having beat estimates. In Canada, Rogers reported 2nd quarter earnings of 80 cents which beat the street; however, the stock traded down on the news as forward guidance was unchanged. Also moving markets at the open was the Case-Shiller 20-city home price index which was up 1.3% in May month-over-month, and over 4% year-over-year. Driving the gain are seasonal factors and the now expired government home-buying tax incentives.

Last week I introduced 3 seasonal trades for the month of August: agriculture, gas, and health care. According to Thackray, August tends to be a poor month across all sectors. If there is a summer rally, it tends to end in August. The best August this past decade was in 2000, when the TSX Composite Index was up 8.1%. Tomorrow morning I'll talk about agriculture and in the afternoon gas.

GB