3 ETFs for a defensive stance
It's time to start thinking about an exit strategy.
Stock indexes are very overbought. While overbought doesn't mean over, it is time to start thinking about an exit strategy. I haven't seen readings this overbought since early 2011. If you remember, we made new highs in April, then waffled around at the highs into July and then promptly dropped 20% from intraday peak to intraday low in October.
Long story short, it's time to get defensive. Yes, we may see a last-gasp-punch higher, but it could be explosive. And unless you are willing to live in front of your computer screen or use very sensitive stop loss points you might want to start thinking about taking some money off the table and/or taking a more defensive stance with your stock holdings.
Here are three ETFs you can use if looking to get defensive.
Utilities Select Sector SPDR (XLU)
This ETF yields 4.14% and will give you coverage in such utility stocks as Duke Energy (DUK), Southern Company (SO) and PP&L Corp (PPL). It is the epitome of a defensive sector because no matter what happens, people need electricity.
The dividend along with its low-volatility nature makes this ETF a perfect place to ride out the coming storm. It can be bought here with a $30 stop and a $42 target.
PowerShares DB Agriculture (DBA)
This is a more non-traditional safe haven in the commodity food sector. This ETF will give you exposure to the price movements in sugar, live cattle, corn, soybeans, cocoa, coffee, lean hogs, wheat and cattle feeder.
This ETF is non-correlated to stock prices and it can be bought in the $27-$27.50 range with a $25 stop and a $30 target.
iShares Dow Jones US Healthcare (IYH)
The drug stocks have been doing very well over the last year. This trend should continue and we should see relative outperformance by this sector. This ETF will give you coverage in such names as Johnson & Johnson (JNJ), Pfizer (PFE) and Merck (MRK) along with a 1.69% dividend yield.
Use a pull back to $82.50 to get long with an $80 stop and a $92 target.
MORE ON MSN MONEY
VIDEO ON MSN MONEY
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market finished the Wednesday session on an upbeat note with the Nasdaq (+1.3%) ending in the lead. The S&P 500 settled higher by 1.1% with all ten sectors posting gains.
The benchmark index spent the entire trading day in the green, rallying to new highs during the last hour of action. The tech-heavy Nasdaq, meanwhile, briefly dipped into the red during morning action, but was able to recover swiftly.
Stocks began the trading day with modest gains ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|