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Tuesday, 19 December 2017

Short Term Sector Performance in Wall Street: 19 December 2017, Tuesday, 11.04pm Singapore Time

Short Term Sector Performance in Wall Street: 
19 December 2017, Tuesday, 10.50pm Singapore Time
Chart Courtesy of StockCharts.com
(Click on Sectorial Chart above to Enlarge)

Whether one is an investor or a trader, it is important to note that as we come to the end of the year 2017, smart monies had generally been further grabbing up financial stocks (Banks, Insurance Companies, Finance Companies) and dumping away utility companies (Companies that are provider of water, gas, power, electricity, telecommunications and public transport) to close the year. The rush towards getting rid of dirt and loading up of jewels can be tracked as we close the year 2017. By tracking the 1-month sector performance in Wall Street, this is the best time to peer into the black box of what would be jewels for 2018 and what would be dirt based on smart money action (refer chart above).

As we go into the new year 2018, expect the dumping of utility sector stocks and loading up of financial sector stocks to carry on. This will bring a heavy selling pressure on utility stocks; on the other hand there will be a strong upwards buying pressure on banking and finance stocks.

In addition, something I would like to highlight as well is another asset class called REITS and Trusts, which are often high leveraged and packaged as dividend-income equities. In a rising rates environment, they will not do well and they lose their shine as interest rates close the gap. They are a straight sell for 2018. As smart money, I will definitely get rid of REITS and Trusts from January 2018 since interest rates are lifting off, unloading before others do.

Where Wall Street goes, so goes the world generally. Why are utility companies which give good dividends getting sold off? It is not difficult to learn why. Quoting Investopedia:"The utilities sector is a category of stocks for utilities such as gas and power. The sector contains companies such as electric, gas and water firms, and integrated providers. Because utilities require significant infrastructure, these firms often carry large amounts of debt; with a high debt load, utilities companies become sensitive to changes in the interest rate.". Banks and Finance companies, on the other hand, will continue to earn very good profits in 2018 under the rising rates of 2018. The good performance of industrials and the final rush to grab the industrial sector stocks mean that 2018 will be a strong bull market year. We will have a whole year of bull market in 2018.

Merry Christmas and a Happy New Year 2018 in advance to all.

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