Labor Day Rotation

It is that time of the year. Summer vacation's final week!  Historically this is a low volume week, followed by a selloff going into the labor day weekend. We believe a sector rotation is shaping up to take place over the next two weeks. The focus has been on the financials and tech stocks over the last few weeks, and the market has seen a steady rise due to a low volume volatile trading period. We believe the financial sector is going to see a downtrend following the Holiday, but money will start being dumped into oil and retail stocks. We don't see the broad based market taking a big hit this week, but we plan on buying into the financial bear ETF at the end of the week, and buying up some natural gas stocks. Hurricane season is now upon us, and the winter months will be here before you know it and natural gas demands we believe will rise more than projected. There are an abundant of natural gas power plants in the final stages of commissioning, and will be ready to go for the harsh winter months. There are also a number of combine cycle plants being built across the country that will be looking for natural gas futures. With the winter coming, it is also smart to start following companies that produce stockpiles of Flu vaccines. The CDC has said this could be one of the worst years for the spread of the flu, and new strains may be formed from the presence of the Swine Flu. We recommended a buy on Vical Corp. (VICL) which saw a 7% gain on Friday. This may be a good option play for those who play the option market. Another option play that has seen and recieved a lot of attention as of late is Hemispherix Biopharma (HEB). We plan to buy options with a potential demand for their vaccine boosting drug, Ampligen. Be careful with the small cap stocks that have seen sudden rise, for they may take a hit with investors ready to take profits coming into the holiday season. Good luck and come back for a follow up at the end of the week!