Sam Collins

8 Sectors for Long-term Investors

by Sam Collins   08/10/09

Gold futures also fell due to a stronger dollar, with the December contract down $3.40 to $959.50 an ounce.

What the Markets Are Saying

On Friday, I opined about the jobs numbers. Like everyone, I was concerned that we might have to deal with the market's reaction to a nasty report. Instead the report was positive and so was the market, and that supports the view that momentum will likely take the market to new highs.

But even with good news, the former leading index, the Nasdaq, is having a tougher time making new highs.

On Friday, it missed again, closing at just about the midpoint of the day's trading range and smack on our near-term target of 2,000. On top of that, the Nasdaq received a sell signal from the Moving Average Convergence/Divergence (MACD) indicator.

The S&P 500 closed at 1,010.48, just above our near-term target of 1,005 to 1,010. But the Dow has been lagging and is still about 300 points shy of our near-term target of 9,650.

At such lofty levels it would be wise for traders to nail down some profits, especially on stronger days, while long-term investors should hold and focus on pullbacks as opportunities for further gains.

The dollar rose with the more positive jobs report, but the trend for the dollar is still down, so the following groups are still positive sectors for future investment:

• Precious Metals
• Emerging Markets (both fixed income and equities)
• Energy
• Homebuilders (undervalued and moving up)
• Oil Service
• Banks (but overvalued)
• Mid-cap Stocks
• Small-cap Stocks