Trade These 3 Big-Money Sectors

If you want to book consistent gains trading stocks, you have to know where the money is flowing. July 07, 2014     Trade These 3 Big-Money Sectors   Following first-half gains Riding the strongest sectors Plus: Do you trade like a moron?   Greg Guenthner coming to you from Baltimore, MD... Greg Guenthner If you want to book consistent gains trading stocks, you have to know where the money is flowing. Right now, if your cash is tied up in consumer staples and industrial names, you're doing it all wrong. These aren't the stocks that are outperforming the S&P 500. You'd be better off buying an index fund and spending the rest of your summer trying to get rid of your farmer's tan at the beach... But if you want to put an end to your puny returns, you have to ride the market's strongest sectors. Stocks in motion tend to stay in motion. And the in-favor sectors will probably continue to lead the market... It's stock market physics in action! Today, I'm going to dissect the S&P to show you the three best performing sectors of 2014--and how to play them for outsized returns. First up is healthcare, the third-best performing sector during the first half of the year. Back when biotech shares were melting down a few months ago, I told you healthcare stocks could be a safe "hideout" for your trading dollars. Well, the sector hasn't disappointed... The Health Care Select Sector SPDR ETF (NYSE:XLV) has gained more than 13% year-to-date. In fact, the health care sector posted more than half of its year-to-date gains in just the past two months. If you're looking for some fundamental catalysts, the Affordable Care Act and an aging population both remain big themes in the long-term... While XLV is trading near the top of its range right now, it remains a "buy-the-dips" opportunity during the second half of 2014. Next up is the utilities sector. Back when traders began pushing momentum stocks down the stairs earlier this year, investors fled to anything paying a dividend. That's right-- the boring, dividend-paying names everyone ignored while the market was ripping higher were bouncing like growth stocks. High-yielding utilities were among the big winners. And even as momentum stocks recovered in June, utility shares continued to post new highs. The Utilities Select Sector SPDR (NYSE:XLU) is your best bet at playing this sector. These stocks have sharply fallen from their highs this month. But if XLU can bounce higher near $42, the uptrend will remain intact. Finally, we come to the year's best performing sector: Energy. The Energy Select Sector SPDR (NYSE:XLE) has gained nearly 15% year-to-date. Unless you've been sleepwalking all year -- or just not reading your emails-- you know energy has been one of our biggest investing themes of 2014 (wipe the crud out of your eyes and catch up on how your can profit by clicking here).         Here's your 2nd chance…   If you missed out on the fortunes to be made with Microsoft, Google, Amazon or Tesla, don't despair. Another door has recently opened up for you. One that could make you richer in as little as 12 short months.   And you can do it from the comfort of your home. It's more substantial than some trendy social media start-up or bio-tech.   What is it, and how can you reap a bona fide fortune from it? Click here now.           Rude Numbers Targets, Predictions and Wild Guesses   $2 trillion has been added to share values since April, despite the first quarter contraction in GDP, according the Bloomberg. $3 billion in cash was enough for Archer-Daniels-Midland to buy Wild Flavors, a maker of natural food ingredients. Wild Flavors' popular Capri-Sun brand was not included in the deal... $1,317 is where you'll find gold futures this morning. Gold has dropped about $4 in early trading to start the week... $4.28 is the price of natural gas early this morning. Natty is tumbling to 5-month lows after a brutal winter that saw prices nearing $6.50... 1,972 marks the spot for S&P futures. Stocks are looking to open slightly lower this morning after registering new record highs last week...     Rude Trends When to Buy... When to Sell   Hey, dummy. You might actually be a lot smarter than you think-- even if you aren't exactly a deep thinker. In fact, over-thinking your investment moves can actually get you into a heap of trouble. "Too many people think that you need to be a master of prediction in order to find success in the markets," explains our resident trading expert Jonas Elmerraji. "But you don't. Instead, trading should be reactionary. Contrary to popular belief, you don't need to layer complex algorithms on top of one another in order to get an edge on the market. Instead, price tells you everything you need to know. Too many people overthink trading -- and that's exactly why you should trade like a moron." Jonas uses a simple "green light go" trading strategy. And you should, too. At a traffic light, the light turns green, and then you hit the gas. You don't try to predict when the light will change - you just react when it does. "Trading like a moron means that you shut your brain off and trade your plan," Jonas continues. "It doesn't mean that you let yourself make moronic mistakes when you trade, however - the point of trading like a moron is to stay unemotional and robotic when a buy or sell triggers. The intelligent thinking still happens for all the other stuff: the analysis, position sizing, and price levels to watch. But all of that happens long before you trade, when the heat of the moment can't force a mistake... "By its nature, a technical trading approach is going to spit out trading signals that you won't want to follow from an emotional standpoint. That's the beauty of using technicals, though: they cue us in on buy signals that the herd is too scared to play. Don't overthink your next trade. Instead, just hit the gas when the light turns green." [Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner]     Ignore At Your Own Peril Today's Must Read Links   The government is NOT happy about this new kind of "cash"... Is This Man a Villain or a Hero? [you decide]‏ The One Retirement Plan Obama Can't Touch     BE SURE TO ADD dr@dailyreckoning.com to your address book.       Additional Articles & Commentary: Join the conversation! Follow us on social media:         The Rude Awakening is committed to protecting and respecting your privacy. 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