It's "that" time of year again.The Winter Solstice is upon us,...

It's "that" time of year again.

The Winter Solstice is upon us, so End of Financial Year is coming up. We often see a bit of tax loss selling, then, as the End-0f-Year approaches (Thursday and Friday), Fund Managers look at how they can make their books look good and the market often goes up.

Technically, the picture suggests a bit of weakness coming up (that's in line with the tax-loss-selling thesis) as the XJO pushed into overbought territory.

The past week saw some weakness in the Book-Ends (Monday and Friday), while mid-week was strong. XJO finished up +1.48%

XJO:

XJO rose above its upper restraining line this week, then fell back on Friday.

On Thursday, the XJO was overbought with the RSI above 7o, and Stochastic, at 97.9, well above the overbought level of 80.

At this stage, the XJO is bullish on all time-frames, short-term, medium-term and long-term. Buy the dips is the preferred strategy.

What's Hot, What's Not.

Here's a chart of my Cumulative Momentum Index for all Sectors, plus Gold Miners (XGD). XGD is an industry sub-sector of the Materials Index (XMJ).

The CMI is an accumulated measure of the one-month + three-month + six- month movements for each sector. The three best performing sectors (using the CMI) are XTJ (Telecommunications), XMJ (Materials) and XIJ (Information Technology). XGD (Gold Miners) is outperforming all of those. This week, XIJ has replaced XHJ (Health). XIJ up +3.29% this week. XTJ is coming off the boil, down -1.84% this week, against the trend of the broad market. It was the only sector down this week. Look to buy the dip in XTJ (that means Telstra, which dominates the sector).

The large-cap gold miners in XMJ are NCM, EVN and NST.

Most of the large-cap stocks in XIJ, except for XERO, are not performing well. But XIJ has a number of volatile small caps (e.g. APT, ALU, APX, WTC) which provide smart traders with good opportunities.

Energy, improved this week, up +3.19%, but is the worst performer on the CMI. Energy is subject to topical factors. This week, the Middle-East tensions gave oil a boost. WPL was up nearly +6%. Just don't expect it to last as the Middle-East settles down again.

ETFs:

I use ETFs as a mechancial trading system based on Relative Strength and whether or not the short-term trend is bearish/neutral or bullish.

At the beginning of any month I hold the three strongest ETFs. Any of those can be dropped during the month if it turns short-term bearish/neutral. At the end of each month I review the ETFs and, if necessary, sell out of any which have weakened out of the top three and buy any which have moved into the top three.

For June, the three ETFs being held are SLF (Property), VLC (Australian Large Caps and IAF (Australian Composite Bond Fund).

This results so far this month for the three ETFs: SLF +5.44%. VLC +5.31%. IAF +1.09%. That's an average of +4.31% compared to the XJO +3.97%.