NEW YORK (TheStreet) -- Stocks had a mixed reaction to the October employment report. On the surface the nonfarm payrolls were below expectations but the economy continues to create more than 200,000 jobs per month.
The major averages have been trading back and forth around the flat line in reaction to the data, but weakness has not been enough to remove the underlying strength of technical momentum.
Given the potential for additional volatility, investors should reduce allocation to momentum stocks, raise cash to lock in gains and continue to allocate assets to the safety of dividend stocks.
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The two leading equity averages for the year to date are the Dow Jones Utility Average, up 22%, followed by the Dow Jones Transportation Average, up 21%. The tech-heavy Nasdaq 100 follows with a gain of 16%, the S&P 500 up 9.9% and the Dow Jones Industrial Average up 5.9%.
The biggest surprise in 2014 has been the steady rise of the dividend stocks in the utility average. This was not the case in 2013 as utilities were up just 8.3%. Transports were the big winner in 2013 with a gain of 39%.
Recent gains in transports has been fueled by the 30% decline in crude oil from $107.68 on June 13 to as low as $75.84 into November. Recent gains in utilities gathered momentum as the other major indices peaked on Sept. 19. Conservative investors have been selling momentum stocks to buy the safety of dividend stocks.
Here are the key levels for five actively-traded exchange-traded funds.
SPDR Dow Jones Industrial Avg ETF (DIA) ($175.29) is well above its 50-day and 200-day simple moving averages at $169.20 and $166.04, respectively. The Dow 30 ETF declined 8.7% from $173.31 on Sept. 19 to $158.27 on Oct. 15 then rallied 11% to an all-time intraday high at $175.41 on Thursday.
The weekly chart stays positive given a Friday close above its key weekly moving average at $170.23. Investors should book profits using a "good 'til canceled" limit order to sell strength to a key technical level at $180.