Articles

By: Costas Bocelli — November 6, 2019

How to Capture the Market’s Biggest Moves

Didn’t you get the memo? - It’s a great time to be in stocks!

Costas

Earlier this week, all three major U.S. stock market averages (S&P 500, Nasdaq Composite and Dow Jones Industrial Average) hit new all-time record closing highs.

The S&P 500 has gained 22% year-to-date with seven weeks remaining in 2019.

With the index breaking out above the previous record highs in July, there’s little in the way of overhead resistance.

(Click on image to enlarge)

spx

And the S&P 500 is working on its fifth consecutive weekly gain.

Yet, if you ask the millions of individual investors about their feelings towards the stock market, it’s not exactly what you’d call giddy.

In fact, just as the major averages are breaking out to new all-time highs, bullish sentiment among individual investors is running below the historical average, according to the American Association of Individual Investors (AAII).

aaiiIn a recent sentiment survey, 34% of respondents are bullish on the stock market over the next six months.

That’s four percentage points below the historical average.

And get this…

With the calendar having rolled over to November, we are now moving into what’s statistically been the strongest six-month period of the stock market (November through April).

Seasonal forces have turned favorable:

There's the “Santa Claus” rally… Then the “January Effect”…

And next year, we'll be in the final year of the presidential election cycle (2020) which has generated a positive return in the stock market 80% of the time since 1950.  Yet, investor enthusiasm is subdued at best.

That’s actually great news because sentiment is often a contrarian indicator.  So the less enthusiasm on Main Street is more bullish for Wall Street.

How to Capture the Market’s Biggest Moves

.Now that stocks are on the move, where are the best segments of the market for your investment dollars?

The rally pushing the major stock market averages to new all-time highs is in large-part coming from the cyclically sensitive sectors of the market.

Think Industrials, Financials, Transportation and Technology and you’re on the right track.

With the Fed slashing short-term interest rates (three rate cuts this year) and restarting its bond buying program (yes, a mini-version of quantitative easing has commenced), the Financials have rallied and broken out big time.

Have a look at the Financial Select Sector SPDR Fund (XLF) where you’ll find it leading the rally since early-October.

(Click any image to enlarge)

xlf

You’ll find a similar setup in the Industrials as large institutions are piling into this cyclically sensitive sector.

Expectations of reaccelerating profit growth, increased business CAPEX spending and improving US/China trade relations are some of reasons why capital is flowing into this segment of the market.

Here’s a chart of the Industrial Select Sector SPDR Fund (XLI) where the strong performance over the past several weeks has led to a big breakout.

xli

But for those looking to generate monster returns, it’s all about Technology.

Technology has been the best-performing broad sector of the market for more than three-years.

It’s been a fixture atop our broad sector relative strength rankings since the 2016 general election.

Technology is the sector that deserves the most weighting in the portfolio.

It’s also outperforming the S&P 500 by 15% since the beginning of the year.

Here’s a chart of the Technology Select Sector SPDR Fund (XLK) where we find it too, breaking out to new all-time highs.  The XLK is up 37% year-to-date with seven weeks remaining in 2019.

xlk

This is a great time to be in the stock market.

While most investors aren’t sufficiently bullish about the market, you should be, as there are many opportunities at hand to profit.  Especially in Technology.

And on that note...

I’ve got great news for you.

Because next week on Tuesday, November 12th, at 1 p.m. Eastern Time, True Market Insiders will be hosting an exclusive event for our readers.

We’re calling it the “Technology Crossroads 2020 Summit”.

During the event, Bill Spencer, our Editor-in-Chief, will reveal three life changing technologies that are already impacting every person on the planet.

Bill’s been on a mission crisscrossing the country and witnessing these technologies first hand.

And on Tuesday, November 12th, at 1 p.m. Eastern Time, he’s going to fill you in on all the details and how you can get a stake in the next big thing in Technology

If you haven’t signed-up for this exclusive event, its’ free to attend, but seating is limited.

So click here and secure your seat now.

Seeing you there.

Costas

Costas

Archives

FREE e-Letter Sign Up