But the stars of the month are not the major stock indexes. Plain, boring old utility stocks were hot. XLU, the SPDRs Select Sector Utilities ETF, is up 14.4% since early December. It has a Relative Price Strength of 91, meaning it is outperforming 91% of all other companies in terms of price performance.
The other star is GLD, the Market Vectors Gold Miners Trust ETF. GLD is up 17.6% since mid-December. It too has a Relative Price Strength of 91.
GLD's 50-day moving average is about to cross above its 200-day moving average, a technical pattern called the ‘Golden Cross'.
Seasonal patterns don't mean much for GLD right now. GLD does not have much of a history (it has been in existence only 11 years). Besides, the fundamentals of the gold market have overwhelmed technicals over the past few years.
XLU, in recent years, has averaged a 4.4% gain over the next nine weeks. Over the past nine years, XLY has had only one small loss. There were seven 4% or greater moves.
The recent rally of the major indexes may be enticing you to ‘come out and play'. But check the volume patterns. On the S&P 500, the NASDAQ Composite, The Dow Jones Industrial Average, and IWM, the ETF based on the Russell 2000 index of small-cap stocks, the recent advance has been accompanied by below average, declining volume. Sustainable rallies seldom show that.
If you want to play defense, you can take small positions in the two sectors that are showing strength – utilities and gold/gold miners. If they continue to work upwards on good volume, you could add to the positions. These sectors are where the money is going.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
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Gregg Harris is the Chief Technical Strategist at MarketTamer.com.
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