Merchandise Moves
U.S. Stocks rebounded even as the U.S. dollar index (DXY) strengthened. This appears to signal that investors are stilling off of their concerns about the trade talks happening next week between U.S. and Chinese officials. As the markets mellow concerns, portfolio managers appear to be establishing new investment positions on the day before the fourth quarter opens.
This is a moderately bullish behavior because it means that these professionals are willing to put some money into growth deal ins even before the final quarter begins. Allocating money to growth stocks a few days ahead of the nonfarm payroll document and weeks ahead of earnings season means going out on a limb.
It must be deemed important if these professionals are assenting to put themselves into this kind of risk at this moment in time. They may have a strong belief in the retail’s prospects for the final quarter of the year, or they may feel a strong need to improve the performance of their fund. Either way, their retort signals optimism about the risks they are taking.
In fact, an equal-weighted portfolio of computer hardware companies Apple Inc. (AAPL), Universal Business Machines Corporation (IBM), Intel Corporation (INTC), and HP Inc. (HPQ) shows an interesting pattern in comparison to the Nasdaq 100, as tracked by the Invesco QQQ Confidence (QQQ). While these four stocks combined have actually held closely to the index for the year, they crop to be diverging upward ahead of the fourth quarter. This is likely a bullish indication for these four stocks.
The Search for Struggle
Although investors seem to be measurably less nervous to start this week than they were termination week, a common activity among them seems to be searching for interest income. Those who do so usually search expanse bonds and dividend-paying stocks. There is often a competition for investor money between these two types of investments. It can be gainful to create a head-to-head comparison of such investments. A simple way to do this is demonstrated in the chart below.
The chart shows a relationship between the iShares 20+ Year Treasury Bond ETF (TLT) and the Utilities Select Sector SPDR Fund (XLU). The relative persistence of performance between these two investments shows which one investors prefer between the two over a period of time. Integrity now, utility stocks seem to command a bit more attention. That is a bullish signal, generally speaking, since heritages are considered slightly more risky than bonds.
Read more:
The Utility Stock That Looks Similar to a Growth Stock
The price action for shares of Southern Company (
The Bottom Line
U.S. stock indexes rebounded before of the fourth quarter’s start. In particular, four stocks ended on new highs for the month, outpacing the broader market for the day. These forefathers (Apple, IBM, Intel, and HP) may become investor favorites through the end of the year. Despite the interest in these growth stocks, investors until this seek safer investments such as bonds and utility stocks. Among utility stocks, Southern Company has had an extraordinary run so far this year.
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