Markets of 2014

In some ways, 2014 was an odd year.

Even though the broad market ended better than 10% higher, things were decidedly choppier and more volatile than in 2013. We saw a wider dispersion between top- and bottom-performing sectors. And, interestingly, there was a changing of the guard with respect to the top-performers of 2013 and 2014.

By and large, there was very little correlation between 2013’s sector trends and 2014’s.

Here’s a chart that shows this…

Image Graph 2014

See larger image

Each sector’s performance — relative to the S&P 500 — is plotted, for both 2013 (green bars) and 2014 (blue bars). And the chart is sorted based on 2013 performance.

As you can see, there’s not much of a pattern here. Here are a few examples…

• Negative Reversals: The Consumer Discretionary (XLY) and Industrials (XLI) sectors outperformed in 2013, but underperformed in 2014.
• Positive Reversals: The Utilities (XLU), Technology (XLK) and Consumer Staples (XLP) sectors underperformed in 2013, but outperformed in 2014.

• Positive Trends: The Health Care (XLV) and Financials (XLF) sectors outperformed in 2013… and that outperformance continued on through 2014.
• Negative Trends: The Materials (XLB) and Energy (XLE) sectors underperformed in 2013… and they continued to underperform in 2014.

In a sense, the lack of correlation between sector performance in 2013 and 2014 shows the difficulty in a buy-and-hold strategy.

And it shows why I recommend Cycle 9 Alert subscribers to hold their positions for two to three months at a time.

• On medium-term “swing” trades, there were good gains to be made in each and every sector.

• By buying bullish call options on a popular health care ETF, we captured a net gain of 74% between January and March.

• We made a bullish play on a utility sector stock between mid-March and early-June… and that trade handed us a net gain of 54%.

And a bullish play on the financial sector netted us 84% between August and early December.

All told, Cycle 9 Alert is a great place to learn which sectors are moving up… and which are headed down. And, of course, I give specific instructions on which plays to make… and how to position yourself to capture double-digit returns in just two to three months.

Adam-ODell2

 

 

 

Adam

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In our new infographic What Killed the Middle Class?, we take a look at some shocking numbers to show how bad it’s become and what has been fueling this middle-class revolt.

 

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Categories: Investing

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.