Lets Play US Stock Market Charades - Part 3

Three days ago, I introduced a new game called, US Stock Market Charades. In this game, there are no non-verbal (no talking) motion clues, just charts and I put a bunch of charts in order to give you clues so you could guess what direction the US Stock Market Equities were heading next.

Lets Play US Stock Market Charades

Lets Play US Stock Market Charades - Part 2

Alright, are you ready for some additional clues?

Sector SPDR ETFs have become one of the most popular ways to invest in specific sectors of the stock market. Sector SPDRs track 11 different sectors in the S&P 500.

During economic troubled times, Smart Money rotates into Utilities and REITs because they act like bonds, meaning the stock dividends are equivalent to coupon rates, the yield paid by a fixed-income security. However, let me expand on this a bit more. Utilities and REITs are usually drowning in debt, but during economic troubled times, interest rates go down, so debt obligations put less of a strain on cash flow and more cash flow means consistent payouts of dividends.

So if investor can’t get a decent return on their capital from the equity markets, can’t get a decent return on their capital from bonds because interest rates continue to decline, the next best option is dividends. The barriers of entry are tough in the Utilities and the REITs sector, so with little competition and residual income, dividends are payout out consistently.

Clue 1

Clue 2

The top two SPDR sectors for the 3rd quarter were Utilities with a 8% return

and REITs with 7% return.

NOTE: what’s worth noting is both sectors are at all-time highs.

OK, you have 60 seconds to earn one point, where is the US Equity Markets headed???

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.