Sector Strength - Sunday, Jan. 27

A bit of strength is showing for the mid and small caps which is a good sign, but small cap stocks need to improve much more. Bonds are still highly favored over stocks in general. The alignment is generally negative for the general stock market.

The defensive stocks still lead, and the cyclicals still lag which is negative for the general market. Technology is still a laggard which is never good for the general market.

The dividend-payers still lead, but the Semiconductors are coming on strong which is very bullish for stocks. The industry alignment is showing some strength.

Oil-exporter Russia and resource-exporter Brazil are leaders, while advanced-industrial Germany is dead last. It is good to see the emerging market strength, and probably means that the US Dollar strength is less of a risk for the general market. But the German weakness is not a welcome sign for the global market.

Outlook Summary:

The long-term outlook is negative, but improving.

The medium-term trend is up as of Jan-4. 

The short-term trend is up as of Dec-26.  

The medium-term trend for bond prices is up as of Nov-16 (prices higher, yields lower).

Investing Themes:

Cash
Dividend-Payers
Semiconductors  <-- new

Strategy During a Bull Market

  • Buy large cap stocks and ETFs at the lows of the medium or short-term market trends.
  • Buy small cap growth stocks on breaks to new highs in the early stages of market trends.
  • Reduce buying when the market trend is at the top of the range.
  • Take partial profits when the market uptrend starts to struggle at the highs.
  • The cardinal rule is never invest based on personal politics. The stock market can do well regardless of which political party is in control.

Disclaimer: I am not a registered investment advisor. My comments above reflect my view of the market, and what I am doing with my accounts. The analysis is not a recommendation to buy, ...

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