NEW YORK (TheStreet) -As so-called momentum stocks like Whole Foods (WFM), Tesla (TSLA), Amazon (AMZN) and Facebook (FB) continue to suffer, it is instructive to dive into the strength in the overall market.
In particular, the Dow has been the outperformer versus the S&P and certainly the Nasdaq particularly in recent days. What's behind this? Ultimately, a flight to quality to blue-chip companies, in the Dow and outside of the Dow. Look at the chart of Proctor & Gamble (PG) after a ho-hum quarter, McDonalds (MCD) (particularly relative to Chiptole (CMG)), Schlumberger (SLB), and Johnson & Johnson (JNJ). How about Chevron (CVX) (wow, what a move!), Caterpillar (CAT), Disney (DIS), and Kellogg (K). The list goes on. The shift to safety kicked off back when Janet Yellen suggested a more robust market (and thus accelerated tapering and interest rate rising) back on March 19th. While she has clarified herself many times since this date, the flight to safety and the dropping of the momentum names has continued. And, as we've seen from the 10-year yields, rates have remained low, further increasing the appeal of dividend names--certainly a very different scenario than was anticipated in December, when investors were hyping the steepening yield curve (with financials and industrials as beneficiaries). After all, for investors like Grandma Jan that own treasury bonds and not getting the yield she wants, she certainly isn't going to jump to Facebook. She is going to look at Johnson & Johnson.