The most overbought sectors on the market July 28, 2016 Archives | Unsubscribe Good Riddance, Safety Trade! The most overbought sectors on the market Time to cash in Plus: Giving up on the chase  Greg Guenthner coming to you from Baltimore, MD... They're over-baked, overbought and burned to a crisp… That's right—it's time to bid good riddance to this year's overheated safety trades. If you own any of these so-called "safe" stocks, you need to jettison them from your portfolio while you still have the chance. Let me explain… Yesterday, we explained how the rally in speculative stocks is the spark this market needs to launch to higher prices. The next dominoes to fall are the safety trades that were red-hot when the market was in turmoil earlier this year. Investors have gobbled up anything and everything with a decent yield this year. They've bid up utilities and consumer staples stocks to prices not seen in decades. Like we said at the beginning of the month, you know investors have gone safety crazy when they start treating utilities like growth stocks. Utilities alone rose more than 21% during the first half of 2016. That's the sector's best performance in over 25 years. Consumer staples names jumped nearly 10% over the same timeframe. That's crazy—especially when you consider that the major averages barely squeezed out a gain over that 6-month period. Earlier this month, we told you that this trend would not continue much longer if the major averages broke out and posted new highs. Why? Because in more favorable market conditions, investors will only be willing to pay growth-stock prices for actual growth stocks. As Bespoke Investment Group noted earlier this month, the utilities sector has a higher trailing 12-month price-to-earnings ratio than the technology sector. That means investors are paying a bigger premium for a power company's measly dividend than a tech giant like Apple. If that's not madness, I don't know what is. And it looks as if investors are beginning to come to their senses. Yesterday's bearish action in utilities and consumer staples might be the beginning of the end for this overheated safety trade. After failing to build on last week's rally, the Utilities Select Sector SPDR (NYSE:XLU) dropped more than 1% on the day. The Consumer Staples Select Sector SPDR (NYSE:XLP) fared even worse. It dropped nearly 1.5% on the day. Both of these sectors are now well in the red for the month of July… Big breakouts in small-caps and other riskier assets are beginning to stick. That's great for the market rally—and bad news for groups like utilities and consumer staples that have fed off investor fears during the first half of the year. The utilities and consumer staples sectors won't repeat their historic first-half performance. Don't go chasing these stocks right now. Sincerely, Greg Guenthner [Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner] Why Does the U.S. Government Own a Patent for Medical Marijuana? Patent #6630507 might be the most controversial in United States history… According to documents submitted by the U.S. Government, a chemical found in the marijuana plant holds the key to treating a wide array of conditions – like Alzheimer's disease, Multiple Sclerosis, Parkinson's disease, Cancer, and even Huntington's disease. Is the government secretly cornering the potentially $291 BILLION dollar medical marijuana market? Click here to find out what's going on "behind the scenes."  Rude Numbers When to Buy... When to Sell 29 points were added to the Nasdaq Composite yesterday. Once again, the Nasdaq led the major averages as both the Dow and S&P finished in the red for the day... $1,351 is where you'll find gold futures this morning. The yellow metal is waking up this week. It's up another $16 in early trade today... $20.54 is where you'll find silver futures. Silver has found its mojo. It's up more than 2.7% so far this morning... $42.14 buys a barrel of crude today. Oil has halted its slide for now. It's up about 20 cents in early trade... 2,158 marks the spot for S&P futures before the morning bell. Stocks are set to open just barely in the red today... Ignore At Your Own Peril Today's Must Read Links How to Collect Monthly Checks as High as $9,517 >> Strange "4-Page Letter" Could Hold the Key to Happy Retirement >> Huge Wealth Secret Hidden in Sexually Suggestive 11-Second Video >> Add rude@agorafinancial.com to your address book: Whitelist us Additional Articles & Commentary: Daily Reckoning Website Join the conversation! Follow us on social media: The Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. 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