(By Rich Bieglmeier) Stocks closed last week strong, and in doing so added a few new names to iStock bullish sector lists. We found that value is still preferred over growth, and that bigger is better than midsized of small stocks.
On the buy side, iStock sees three prominent themes, Oil & Gas, things you drink, and all things telecom. How they all fit together, is anybody's guess. For the bear camp, there really isn't any clumping of similar sectors to exploit.
Understanding which parts of the market appear ready to out or underperform the S&P 500 can help investors stay ahead of the game. iStock would suggest adding stocks from the strong sectors and monitoring current positions in weaker sectors closely.
Of course, as we always do, iStock will highlight at least one name from the bullish sector list later today. Exchange traded funds are another way you can exploit the list to your benefit. You could straight up buy a Telecom ETF like SPDR S&P Telecom (XTL) or an Oil & Gas fund such as Market Vectors Oil Services ETF (OIH), or maybe natural gas ETF United States Natural Gas (UNG) is more to your liking.
Using exchange traded funds or their constituents to pair trade potential performance is another possibility. Since sectors tend to be more volatile than the S&P, you might consider buying an ETF from the two bull lists and shorting SPDR S&P 500 (SPY). AS long as the bullish sector ETF outperforms the index, you'll profit no matter what Ben Bernanke, the European Central Bank, and computer programs do to the market.
On the flip side, investors who believe the markets are headed lower, but are unsure, should consider buying SPY and shorting a sector for the bear side of the ledger. Again, the same no matter what principle applies provided the S&P remains the stronger of the two.
Over the years, iStock has found our sector performance review to be one of the best resources and uses of our time for idea generation. Many times, it has put us ahead of the curve as we are on stocks before it becomes obvious to most everybody else.
Here is this week's complete list:
EMERGING BULL: Industries with positive technical analysis traits that are in the early stages, indicating possible above average returns in the near-term:
Oil & Gas
Integrated Oil & Gas
Exploration and Production
MATURE BULL: Industries that have outperformed and their charts suggest the above average returns could continue:
MATURE BEAR: Industries that have underperformed and, based on their current chart patterns, could continue to lag:
Travel & Leisure
Restaurants & Bars
EMERGING BEAR: Industries that have fresh negative technical analysis set ups and could have subpar performance in the weeks ahead:
Property & Casualty Insurance
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