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| November (Photo credit: kurafire) |
Since 1950, November is tied with April as the second-best month of performance for the S&P 500 with an average gain of 1.5 percent, according to the Stock Trader’s Almanac. Of course, some sectors outperform others at any point during the year and that is certainly the case in November.
For example, over the past 25 Novembers, the energy and natural resources sectors have only posted monthly gains 11 times. So this probably is not the month to go running to the Energy Select Sector SPDR (NYSE: XLE) or the Materials Select Sector SPDR (NYSE: XLB).
The following represent some of the better ideas at the sector for the month of November.
iShares Dow Jones US Telecom Index Fund (NYSE: IYZ)
Already being touted as a viable play on an Obama reelection, IYZ and comparable ETFs are in the sweet spot of favorable seasonal trends.
Already being touted as a viable play on an Obama reelection, IYZ and comparable ETFs are in the sweet spot of favorable seasonal trends.
In Novembers dating back to 1987, the telecom sector has posted up months 16 of 25 times with a mean gain of 1.67 percent, according to Allocationforlife.com. That number is slightly skewed by an almost 11 percent gain in 1999 and a plunge of nearly 22 percent in 2000, but telecom names perform well in November. Period. An Obama reelection could just be icing on the cake for IYZ, the Vanguard Telecommunications ETF (NYSE: VOX) and related funds.
PowerShares QQQ (NASDAQ: QQQ)
With the way Apple (NASDAQ: AAPL) lately (off almost 11 percent in the past month), shying away from ETFs heavy on the technology sector might seem like a smart move. Seasonally speaking, it is not a good idea. With an average gain of 1.6 percent in Novembers dating back to 1971, only two months of the year, January and December, are more kind to the Nasdaq.
With the way Apple (NASDAQ: AAPL) lately (off almost 11 percent in the past month), shying away from ETFs heavy on the technology sector might seem like a smart move. Seasonally speaking, it is not a good idea. With an average gain of 1.6 percent in Novembers dating back to 1971, only two months of the year, January and December, are more kind to the Nasdaq.
As luck would have it, traders will quickly be able to figure out what November 2012 has in store for QQQ. The ETF is currently found resting at critical support. That support level is also QQQ’s 200-day moving average. If that gives out, QQQ could have significant downside ahead. If buyers step in and do so quickly, QQQ should rally into the first quarter.
The tech sector has climbed in 15 of the past 25 Novembers.
Market Vectors Pharmaceutical ETF (NYSE: PPH)
Like IYZ, the Market Vectors Pharmaceutical ETF is perceived to be a low-beta play and low-beta has worked this year. PPH shares some other things in common with telecom ETFs. The pharmaceuticals fund has given back some of its gain recently and this ETF is another one that could see near-term upside if President Obama wins reelection.
Like IYZ, the Market Vectors Pharmaceutical ETF is perceived to be a low-beta play and low-beta has worked this year. PPH shares some other things in common with telecom ETFs. The pharmaceuticals fund has given back some of its gain recently and this ETF is another one that could see near-term upside if President Obama wins reelection.
And like the telecom sector, health care has a penchant for performing well in November. The sector has climbed in 17 of the past 25 Novembers, according to Allocationforlife. Regarding PPH, the ETF is different today than it was when it debuted in 2000 (it used to be HOLDRs ETF), it is worth noting the fund has risen in nine Novembers since 2000. ... Continue to read.
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