Every week The Correct Call screens more than 500 Industry & ETF charts looking for emerging trends. We see some overall arching themes this week that investors should prepare for and possibly take advantage of. First and foremost, the charts are saying interest rates are going higher. If you are thinking about refinancing, assuming the bank lends you the money, you might consider doing it sooner than later.
If you have fixed income CDs, Bonds… maturing in the near-term, you may think about staying in cash or reinvesting the proceeds in very short-term maturities. Rates could be much more attractive for fixed income investors in the months ahead. One caveat though, if the election brings higher taxes on investment income, the real return, despite higher rates, might actually be less attractive. Our advice in a rising tax environment, invest in AMT Exempt Muni Bonds. If taxes go up, money will pour into Tax-Free bonds.
Another trend we see entrenching itself is the preference for value stocks over their growth counterparts. We see clear evidence that growth stocks could be headed for a period of underperformance. Investors looking for a value ETF posting a recent technical buy signal might find the timing to be right for iShares S&P 500 Value Index’s (IVE).
We hit upon two additional appealing ETF plays. iShares S&P Global Consumer Staples (KXI) short-term MACD averages just crossed over their longer term cousins. This is usually a reliable buy signal. iShares NYSE 100 (NY) looks a bit oversold to us and could be headed for a nice bounce.
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