Went thru all my sector ETFs and really not too many stand out.
XLP - Consumer staples looks the most interesting IT/LT right here to me, but it may have 1 more high yet. Would like to see markets head higher and have this sector lag and start to rollover. Think it should top out prior to broad market top.
XLY - Consumer disc. would be 2nd choice. Different ST, but probably similar IT. Some strong companies here in ETF so broad market needs to top first or go much lower on food chain.
IDU - Utilities - Hurt by rising rates, richly valued. Problem is downside is somewhat limited due to stable divs so do you want to short to try to make 10-15% while paying 3% div? Not sure risk/reward is compelling on the sector as a whole.
TA wise, TAN (solar), IYM (basic materials), and the transports (IYT) look possible, but given the hit of late in the transports wouldn't be entering here. If anything can probably scalp an airline from the long side soon.
So probably just XLP and XLY for now, but have to be selective w/in space and probably would just take some initial small positions and then watch to see if it has one last high in store. Both have way outperformed from the 2008 lows and I don't think it's justified IT/LT.
As I mentioned to zman the amount of deals seems to be increasing here. Both companies are going up in these deals. Has the feel of 2007, but doesn't feel played out yet. Shorting is still dangerous for the most part, but good to start to put together a list as that should change in the next 6-12 months.
Moderating Dollar, mediocre growth in US and falling oil would be the most bullish scenario IT and it's certainly plausible here.
Energy stocks are ahead of themselves and I see oil falling again, but would rather wait and go long than try to short this sector. |
