"Sectors with the highest dividends are trading at rich premiums to the broad market, relative to the historical norms, warns Vadim Zlotnikov, chief market strategist at AllianceBernstein... Utility stocks, which yield about 4%, are more expensive than they have been roughly 90% of the time. Likewise, telecoms, which yield about 4.5%, are costlier than they have been about 80% of the time..."The risk of owning these [dividend-paying] stocks is that they are 20% to 25% overvalued," and any increase in inflation or bond yields could cause them to tumble."
Full story at...
http://online.barrons.com/article/SB50001424053111904628504577593280244506506.html
My comment: Sure investors are
defensive – with good reason. The 10% mini-correction last summer was awfully small to clear the issues
facing the markets. I wouldn't give up on defensive stocks yet.
The S&P 500 seems to be topping out around 1410, since it has not
managed to close above that value after several tries since the 16th
of August. I'll be watching the NTSM analysis to see if there is a sell
indicator. There was no repeat of yesterday's huge climb in the VIX so there
was little change in the NTSM recommendations today.
Breadth (percentage of
stocks advancing) is going down while the S&P 500 has been nearly
stationary. That’s a bad sign for the
short term. So is the Smart Money Index,
because the pros are selling in the last hour of the day as I noted yesterday. Those negatives were not reflected in the
NTSM analysis though.
NTSM
The
NTSM analysis remained HOLD Tuesday based on analysis of sentiment, price, volume and VIX.
The NTSM system is beating
the S&P 500 by ½% for 2012. Not
much, but 89% of all hedge funds are underperforming the S&P 500 this year
(per CNBC) so it could be worse.
MY INVESTED POSITION
Based on the BUY signal, 6
July, I moved back into the market on 9 July (after the weekend) at S&P 500
1352.
I now have a 50% stock
allocation overall. For my age, that is
what most advisors recommend, however, I am normally much more aggressive. I have less invested in stocks now because
there’s a lot of risk.
With so many indicators
that I watch in positive territory, I am still considering moving back into the
market to 100% invested – a truly crazy, risky position, but I am a risk
taker. At this point, it does not look like I will get
a chance to move to that 100% position in August and I have decided not to push
it, since as I noted above, there are a couple of technical negatives that concern me.
