Looking back a couple of weeks and the expression of my vain hope that the market had changed character for the better, it is clear now that it was either a temporary respite or the markets had conspired to make an absolute liar out of me. I suppose that it matters not other than to my ego, but we are once again in an unhappy place in the markets, where, apparently, we cannot hold an open to the upside.
Although my IntersectionX list (those stocks on both the IBD and ST 50s) held its own this week versus the other watchlists, the performance of the two main watchlists was pretty dismal. The percentages of losers completely overwhelmed the winners. 12% winners in the IBD and 16% in the ST50. The overall markets also bested not only the lists but also their top-10 choices. The Christmas Silly Season is upon us as well, so I will be watching my stops like a hawk and sitting the rest of the year out, with the exception of monitoring opportunities in gold.
As I write, I am unseasonably pessimistic about the immediate prospects for the markets which I think may just give us more of the same with volatility. It is time, I think, to dust off some of my options textbooks. Otherwise, the sidelines are looking pretty good right now.
I have posted my thoughts on gold separately, so I will not repeat them here. I will say that running through the charts of the commodity ETFs, it is clear that there are substantial opportunities building, just not yet. One metal that is attracting my attention for a future purchase is platinum. I am not much interested in its industrial alternate, palladium, as I think there is too much retail interest in PALL which, in my opinion, has recently contributed to its volatility. Platinum is currently cheaper than gold and has sold off substantially this year. It probably has some room to the downside but PPLT is on my watchlist. I check it every day.
Looking at our Vanguard ETFs which we use as proxies for various views of the market, our sector winners were certainly in the defensive end of the spectrum. REITs topped the list and made a strong showing from Wednesday morning, adding 3.4% from Tuesday’s close:
The interesting action though, at least to my eyes, was in what I call the segments. High yield dividend stocks were the clear winners and not by a small margin. This is also apparent in my watchlist of dividend ETFs where ticker FDL, First Trust Morningstar Dividend Leaders ETF has lost least since December 7th, with Wisdom Tree’s high yield dividend ETF, DHS, hot on its heels. I started my self-directed investing life way back with the Motley Fools when they were pursuing a dogs of the Dow strategy, and I have been thinking for some time that that Dog may be about to have its day again.
Value is back in vogue on the style side. Looks to support the high-yield argument.
I may miss next week, so in case, a Merry Christmas to you all.