NEW YORK (Fabian Capital Management) -- Growth investors have benefited from the resiliency of stocks for quite some time now. The SPDR S&P 500 ETF
(SPY) has traded above its 200-day moving average for 16 straight months and nearly every modest dip is bought with gusto.
However, many investors are starting to notice swirling currents beneath the surface that threaten to change the path to profits moving forward.
In 2013 the hot tickets were small-cap stocks, biotechnology companies and solar names, which all produced market-beating returns. However, the market leadership has changed dramatically in just the first three months of 2014. We are starting to see a confirmed shift to defensive areas of the market that have altered sector momentum and may perhaps even lead to more volatility.
Fortunately, there are a number of key strategies you can employ that will allow you to get out ahead of this near-term volatility and thrive as a result.
1. Value beating growthLast year investors all focused on growth stocks that were posting fantastic gains despite valuations becoming stretched. However, the shift in strength this year has led to considerable outperformance in value stocks. The chart below shows how the iShares S&P 500 Value ETF (IVE) has begun to pick up momentum versus its counterpart in the iShares S&P 500 Growth ETF (IVW). This move is characteristic of a shift to stalwart dividend paying companies such as utilities, telecommunications, and even large-cap technology firms with cash-rich balance sheets. My favorite exchange-traded fund to play this value opportunity is through the First Trust Nasdaq Technology Dividend ETF (TDIV). This ETF is chocked full of technology and telecommunication stocks with large cash positions, mature business models, and established dividend histories.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV