Three sectors to avoid for now
Key points:
- When a market, index, or sector enters an unfavorable seasonal period, there are several potential courses of action (or inaction, as the case may be)
- One possibility is to consider playing the short side; This strategy is best pursued when a) price action is also unfavorable, b) there is a tendency for meaningful declines during the seasonal window, c) a trader understands the risks involved with selling short and managing risk while holding a short position
- The other possibility is to simply stand aside from that market, index, or sector until the unfavorable seasonal period runs its course (particularly if price action is not in a favorable configuration)
- With all of that in mind, traders might presently consider playing some defense regarding, and/or avoiding altogether, Master Limited Partnership (AMLP), high-yield bonds (HYG), and the materials sector (XLB), all of which have entered periods of typically significant seasonal weakness and which have been trending sideways at best in recent months
AMLP failed at resistance just as it enters an unfavorable seasonal period
The Alerian MLP ETF recently pushed higher to retest multi-year highs. So far, it has yet to push through to the upside. If the annual seasonal trend for AMLP holds, it may be a while before there is a sustained breakout to new all-time highs.

