Yesterday both the DOW and S&P 500 closed in the red. The Nasdaq went up just a little, but the Russell 2000 beat all three of those indices to go up one percent for the day while the energy sector simply saw more money go into it as the XLE ETF rallied again for a 3.07% gain.
We are simply seeing a continuation of what has been happening now in the markets for over six weeks and that is a rotation out of the big cap tech winners of the summer – the so called “stay at home” stocks and wonder companies like Amazon – and into more cyclical stocks that had been lagging the markets. People are looking forward now to when the virus will fade away next year and the economy can pick up in a sustainable way.
Things remain bad now, but traders and computer trading robots bet on the future and they are doing it now by selling stocks they had big gains on to get into stocks that had not gone up so much and are poised to benefit more next year from where we are now.
It’s only going to continue and this is also helping put a bid under commodities and related stocks.
And this is why I talked about oil stocks Tuesday in my post titled Energy Stocks Are Poised To Rally Now. One stock I talked about that I owned are shares of Exxon, now paying an 8% dividend. Two other stocks I also own that are in decent buying positions on their charts are KMI and CVX.
Now shares of Kinder Morgan are paying a 7.03% dividend. The company is a natural gas and midstream energy giant. It announced just the other day that it plans to boost its dividend 3% next year, showing that its balance sheet and revenue stream are doing just fine.
I also own Chevron, which probably needs no introduction.
CVX is paying a of 5.53%.
The US stock market is gapping down this morning and could easily churn here for a week or two after the big gains of November. We also have a Fed meeting on tap next week and gold and silver tend to get into a holding pattern in the days going into one. I still have the same outlook of the markets now that I talked about in a video I made Wednesday afternoon after the Nasdaq dumped. In case you missed it here it is.
If you are new to stock trading and investing then grab my book Strategic Stock Trading.
-Mike
