Wall Street legend has just uncovered one tiny Maryland company that could become the next Nvidia. Few in the media are talking about this story yet… but in the next 6 months that's all they'll talk about.
Below details the sector returns for the first quarter.
The top group was Communication Services, with a top-notch 15.57% gain.
In second place was Energy, with a pump of 12.69%. Technology rounds out the top 3 with a 12.48% gain.
Also interesting to me is what didn't work. Real Estate was the only negative-performing area, falling 1.36%.
This broadening out under the surface is very important. For the beginning of the year, a handful of stocks were making all the gains. That is clearly shifting, with both Financials and Industrials each outperforming the S&P 500.
So, in this same vein, I asked a question given Real Estate's down-and-out return in the first quarter. When S&P 500 sectors show a negative performance in the first quarter, how do they behave in Q2 on average?
What I learned was eye-opening. Since 2002, the S&P 500 sectors tend to bounce hard after a negative Q1.
Additionally, and likely the hallmark for today, the Real Estate sector is by far the leader of the pack in the second quarter following a negative Q1. On average, the high-yielding group bounces a mind-numbing 8.44%:
I'll admit, hanging your hat on rate-sensitive Real Estate stocks is about as popular as a steamy latte on a hot summer day right now.
But consider the fact that one reason they've been in the penalty box is higher interest rates. It stands to reason they'd benefit from the cuts coming later this year.
And the REIT sector is broad — including mortgages, equities, infrastructure, data centers, and more. Odds are a few of these areas will shine sooner than the crowd expects.
So here are our main takeaways for Q2:
Keep betting on energy stocks in the coming quarter.
And don't forget about beaten-down REITs… there's a decent shot that three months from now you'll have something to write home about.
If you're looking for the best stocks to play for these potential uptrends, look no further than TradeSmith software.
There's no simpler way to tell if a stock is a winner or loser than this software.
Type in any ticker, and you'll immediately get a company's Business Quality Score (BQS) — a quantitative measure of fundamentals. Higher the number, better the company.
You'll also get access to the Ratings gauge — which uses several different fundamental and technical factors to determine how a stock should perform in the near future.
For example, here's the Ratings gauge for Toll Brothers (TOL) — the biggest U.S. homebuilder:
It earns this Strong Bullish: 86 rating due to its technical health… the fact that it's in an uptrend… isn't overbought or oversold… holds a respectable BQS of 76… and appears on two institutional investor portfolios.
All that information contained in one single gauge, and available on the thousands of stocks we track in our database.
Lucas Downey Contributing Editor, TradeSmith Daily
P.S. Don't forget: It's an election year. And that means the potential for chaos and uncertainty is at its highest since 2020.
That's the word from my friend and colleague Louis Navellier, who believes that in a few weeks, just six words uttered from the elites in Washington, D.C., have the potential to disrupt not just the election, but financial markets as well.
He doesn't aim to sit idly by while this happens, though.
With this breakthrough, he's been able to navigate uncertainty with ease… sharing several investment ideas with the potential to multiply starting positions as much as 10x…
TradeSmith is not registered as an investment adviser and operates under the publishers' exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith's content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results.
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