A more defensive rally in November: Is the market losing momentum?
Stocks continue to move up but investors are getting more defensive.
You can see it in a list of what sectors led the stock market in November and which lagged.
The Standard & Poor’s 500 Stock Index was up 6.4% in November.
Sectors that trailed the S&P for the month include energy and finance. Those sectors led the market rally off the March bottom until the fall.
Sectors that outgained the S&P 500 include materials, industrials, healthcare and utilities. Those last two are the classic refuge for money that’s starting to get nervous about stocks—but isn’t nervous enough to move out of stocks completely.
The move to defensive sectors and the slightly outperformance for the Dow Jones Industrial Average, home to big company stocks with, in many cases, hefty dividends, are signs that this rally is getting tired and, absent a shot of concrete good news, is in danger of losing momentum.
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Jim,
Absent a crystal ball, how would lost momentum affect your strategy for Jubak’s Picks since about 50% of YTD performance reflects and 8.4% gain in the 3rd quarter.
Jim, Since I read your book, I have kept a trailing stop loss of 10% on most of my stocks. Lately, a few of Jubak’s Picks have been sold off on a dip, and then I repurchased them. If we are approaching a correction and not a bear market what is the best strategy for your picks? Do I remove the stop loss and weather the correction or do I let the stocks be sold off and repurchase on the dip? Thanks
I will admit to taking my gains on what I feel are higher risk stocks and moving into stocks I am more comfortable holding through an extended downturn.
I don’t think any correction will have much staying power. After many months on the side, I started putting money back into stocks. Theres alot of people sitting out like me. Should the market have a few bad days, I’ll buy more on those dips…I am interested in your dividend income portfolio. thanks again for your work
Yeah Jim, I love what you’re doing. When you write it I can actually understand it and not feel like you’re trying yo sell me something or impress me as do so many of the other experts. I’m with shavdog on the dividend income portfolio. You promised a while back you would update the portfolio. We’re not pushing but just anxiously waiting. Not to be mean but when one views it it’s a bit like reading yesterdays papers. I also appreciate that researching and writing three columns a day takes up a lot of your time. I will patiently wait.
Zabuni,
Jim has kept some of the stocks updated on why they are still in the portfolio. I guess I think of dividend stocks not being “exciting”, therefore not needing as much watching or updating.
Dividend stocks are like a snowball rolling down the hill at the same pace overtime steadily getting bigger and once at the bottom decades later, it knocks you over. Not like an avalanche that brings out “experts” from the desert.