We are now just starting a new trading month so it’s time to take stock of the various sectors and ETF’s and see where the leadership is at when it comes to the financial markets.
Last month it appeared that the S&P 500 might just drift in August, but with last Friday’s drop it now looks like it is going to have a pullback much like it did in May before it attacks its highs again.
That means it is going to be tough to make money in SPY this week and popular stocks like AAPL and FB that are lagging the overall stock market.
But money is flowing into leadership sectors and generally speaking the best way to make money in the markets is to be in the best stocks of the top performing sectors.
Gold stocks are now among the top performing sectors of the market and that’s a fact that no one can deny.
While SPY is currently up 17.0% year to date as of Friday’s close (remember the New Year started from a low level created by last year’s 20% decline in the fourth quarter) the GDX ETF, which tracks gold stocks, is up 31.67% so far this year.
Those in gold stocks are beating the market and winning.
Take a look at the chart for GDX, which is the VanEck Vectors Gold Miners ETF trading on the NYSE.
In May when the S&P 500 pulled back GDX simply went sideways and then when the stock market started to go up it exploded higher in a big rally that left SPY and popular stocks like AAPL in the dust.
That is what leadership sectors do. You see when the stock market pulls back they barely dip at all and then after a pullback is over they jump up for a big rally.
So look for this pattern of relative out performance against the S&P 500 to simply repeat again for GDX and mining stocks. I just posted up an interview with gold expert David Skarica about what is happening with the mining stocks and why they are going up you can listen to buy going to this post.
And yes I own GDX! I also own many leading mining stocks and we have been focusing on a few big winners like a laser in my private trading group.
Tomorrow morning I am planning to release my new top stock pick for this month. You will not want to miss that and my future updates. If you are not on my free email list then get on it by going here.
-Mike
