Looking for Yield?

I mentioned this morning that I’d come back and make some observations about the end of the day. Here’s what I saw:

Dow (DIA) came back to slightly positive but ended slightly down. Consumer staple dividend payers caught a bid – MO, VZ, T, KFT, JNJ, WMT, XOM all up. Large tech was slightly down (MSFT) to a bit more (CSCO). Many of the fast growing stocks and small caps are the stocks getting thrashed around – moving 1-4% intraday.

The MLP’s were flat and the precious metals looked weak. We may see an uptick here in boring dividend payers, such as telephone and power utility stocks. Remember, bonds aren’t paying much and when people need yield and the economy isn’t looking awful, they will likely find the conservative dividend payers attractive.

Bonds an Ill Patient?

Bonds looked sick – the moves aren’t enormous but having bonds (TLT, TIP) moving down on such a shaky day is not good for those markets. TLT is making a gradual descending triangle and TIP broke through moving average support. As I have mentioned before, it would not surprise me if money managers replaced bonds with stocks with bond-like yields.

Be careful out there.

At the time of this writing, I or my clients own the following investments mentioned in this column: MO, VZ, T, JNJ, XOM , Gold, Silver (just sold  out of TIP)

Note: this article is meant to be some helpful thoughts to share and not investment advice specific to you. Please consult your own advisor regarding investment and financial decisions. See our disclosures page

  • Qingling Ni

    Great comments on how the market will behave these days in previous post. It has been seesawing because of the buy-on-dip crowd. Fundamentally, there is really no big bad news for people to be bearish. The slowdown of China’s growth was expected. 10-day, 20-day MA are trending up. The trading volume is on the light side in general, so I was wondering if a lot of people are like me, still trying to figure out what all the economy news meant: factory orders down, service sector expands, the still weak housing market (not that I can tell from CA).

    Small caps pullback is probably not a surprise since they had outperformed the market for a while. I am curious on how Gold will trend going forward after the big pullback.

    • You would think that people would see that weaker econ = central bankers will print = paper money down = gold up; but like in 08, worried people still go to bonds however, as I mentioned yesterday, some worried people are buying yield (pension payments still need to be paid!).

      We’ll have to watch to the end of this day to see if BTD (buy the dip) has any life. I was expecting a mini flash crash though in this market, today could be it. Or my idea was wrong and it could be the start of more pain. We really can’t tell til something moves – prediction is a hard business:)

      • Qingling Ni

        Here you go, people didn’t follow in today. A pretty good prediction :).