Tags: Sincere | stocks | bear | ETF

MarketWatch's Sincere: Jobs, Hot Money Data Signal Trouble for Stocks

By    |   Friday, 10 April 2015 06:20 AM

The S&P 500 index stands only 2 percent from its record high, but several indicators point to trouble on the horizon, says MarketWatch columnist Michael Sincere.
  • "Job growth is weak," he writes. Non-farm payrolls rose only 126,000 in March, the lowest gain since December 2013. "This is another clear indication that the economy is weakening," Sincere says. The labor force participation rate matched a 37-year low of 62.7 percent last month.
  • "Hot money is flooding the market." Equity exchange-traded funds (ETFs) enjoyed a $58 billion inflow in February, and investors now have more $1.28 trillion is U.S. equity ETFs. "This is hot money, which could be dumped at the first sign of a price breakdown," Sincere explains.
  • "Rallies have no legs. One-day rallies are the new norm," he adds.
So what's an investor to do?

"Sell some winners," Sincere advises. "If there's anything we've learned from previous markets, paper profits disappear in a heartbeat during a vicious correction or bear market. Based on current sentiment and technical indicators, this is the time to protect profits and not be greedy. The prudent action is to raise cash before the topping-out process ends with a market plunge."

The S&P 500 has returned 1.7 percent so far this year and 14.7 percent during the last 12 months.

Meanwhile, if you're thinking of purchasing a dividend stock, it's often a good idea to get in before its ex-dividend date to make sure you maximize your income.

You have to buy a stock before its ex-dividend date to receive the upcoming quarterly dividend.

Of the S&P 500 companies, 16 with dividend yields of at least 2.5 percent go ex-dividend between now and May 13, according to Bespoke Investment Group, USA Today reports.

They include:
  • Utility Entergy, with a yield of 4.25 percent, which goes ex-dividend May 12;
  • Pharmaceutical titan AbbVie, with a yield of 3.49 percent, which goes ex-dividend April 13;
  • Semiconductor giant Intel, with a yield of 3.07 percent, which goes ex-dividend May 5; and
  • Clorox, with a yield of 2.68 percent, which goes ex-dividend April 20.
Of course, don't just buy a stock because it is soon going ex-dividend. Make sure it has strong fundamentals and that you are buying at what seems to be a fair price.

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The S&P 500 index stands only 2 percent from its record high, but several indicators point to trouble on the horizon, says MarketWatch columnist Michael Sincere.
Sincere, stocks, bear, ETF
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2015-20-10
Friday, 10 April 2015 06:20 AM
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