Here’s the Only Kind of Stock You Should Own Right Now…
Would you rather be a have…or a have-not?
If you want to be a “have” in this market, you’d better read on because the difference between the haves and the have-nots is growing.
And today I’m going to show you exactly how you can profit from inequality in the stock market. You’ll even get a shot at picking up a rock-solid stock that’s definitely in the “have” category.
Let me explain…
Market inequality is becoming one of the top trading themes of 2015. The “haves” in a few powerful sectors are hogging all the gains, while the “have-nots” in the utility and energy sectors are left with scraps at the stock market soup kitchen.
After sputtering through the first half of the year, stocks put on a show last week, pushing well into the green. And as you’ve probably already guessed, the winners kept winning. And the losers? Yeah, you know where this is going…
The healthcare sector—led by the blistering biotechs—is outperforming the S&P 500 by about 10% year-to-date. Energy and utilities, on the other hand, are trailing by that same amount.
The biggest theme over the course of this rally has been a lack of participation. Fewer and fewer stocks are generating most of the market’s gains. And the list of these haves appears to be shrinking by the week…
The percentage of stocks above their respective 50-day moving averages has trended lower most of the year. Take a look for yourself:
As it stands right now, only about half the stocks on the S&P 500 are above their 50-day moving averages. That means nearly 50% of the 500 biggest and best companies on the market aren’t locked in strong uptrends.
That’s why you don’t want to own weak stocks in this market environment. So how bad are things getting?
My friend Ryan Detrick notes that since 1998, the S&P 500 has never been up on a day when only 137 of its 500 components were in the green like we saw on Friday. Not one. This crazy divergence doesn’t mean you should cut and run, but it does illustrate one thing: when dealing with a bull that’s getting a little long in the tooth, being selective is vital. You need to stick with the “haves”.
That’s why our trading portfolio is only populated by the strongest outperformers, like Google and select biotech stocks that have already delivered you double-digit gains twice over the past week…
Better to have than to have-not…
Greg Guenthner
for The Daily Reckoning
P.S. Don’t be a “have not.” If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE.
Originally posted here:
Here’s the Only Kind of Stock You Should Own Right Now…
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