Three stocks to profit in the Great Rotation

December 27, 20136 Comments

 

From 2000 until late 2013, US markets had been in a secular sideways market. After the S&P 500 took out its 13 year resistance of around 1560 this summer, it became clear that we had entered into a new secular bull market – the last one being from 1982 to 1999. One of the signs of the emergence of the new  secular bull market has been the rotation into stocks that were stuck in trading range for much of the past decade. I call this emergence of the last secular bull market leaders ”The Great Rotation”.

txn

I’ve mentioned a few of these re-emerging giants in my BNN appearances and Investors Digest/ Moneyletter columns. You can read all of the ID and ML columns by visiting the ValueTrend website (www.valuetrend.ca) and clicking on the “Keith’s articles” box at the bottom of the home page. A couple of these important bellwether stocks that are emerging from long termed consolidations are American International Group (AIG-N) and Texas Instruments (TXN-N) – charts above & below. We at ValueTrend took positions in these stocks a while ago when they broke through the ceilings noted on the charts. AIG in particular is still very early in the breakout stage.

AIG

Another bellwether stock that has recently broken out from a multi-year consolidation pattern is Microsoft (MSFT). We took a position in this stock after confirmation of the breakout. The 13+ year consolidation breakout suggests a significant upside for MSFT. Not only is this important to those who hold the stock– its significant for the overall markets as an secular bull market mover. Like AIG and TXN mentioned above—MSFT was a market leader during the 1982 – 1999 secular bull market. To me, it’s just one more piece of evidence pointing to a new secular bull market that could last for 15 + years.

msft

 

At ValueTrend, we have been buying positions in the new leaders for the coming secular bull market- and we’ve been rotating out of the former leaders. Big breakout stocks like MSFT are the place you want to be in the coming years. Our portfolio is comprised of several such emerging leaders.  If you feel that your portfolio is not poised to take advantage of this “Great Rotation”, perhaps you should be contacting us. For a complementary, no obligation, review of how your current portfolio is positioned for the Great Rotation, contact ValueTrend by emailing my associate Craig  [email protected] or myself [email protected] –or you can call 888-721-8736.

We will confidentially discuss how your current strategy sets up for profiting in the “Great Rotation”.

Next week: Outlook 2014

6 Comments

  • Regarding possible upside resistance. In your opinion the further back in time is overhead resistance the less meaningful it is? In the above chart of MSFT I see resistance overhead in late 1999 but because it’s so long ago it is not as important. Thanks

    Reply
    • You are correct–old resistance still counts, but not as significant as more current resistance. I think MSFT may blow through $60 levels seen in 1999 eventually–even if not, that’s still 50% return from here.

      Reply
  • And fundamentally speaking I think MSFT is getting it’s act together. I just purchased a windows smart phone and It very good.

    Reply
    • Sometimes the best type of research is that of “taking it to the streets”–awesome!

      Reply
  • Hi Keith,

    Are you still bullish on AIG long term? It has broken 50 but hasn’t held unfortunately.

    Reply
    • We still like it. Technically, it needs to stop hitting $48-$50 or so and break out definitively–which it hasn’t done. But we’re using a bit of fundamental bias (heaven forbid!) on this one, just because the technicals are not bearish–they are “neutral” at this point. So–we’re holding it. We’re up a bit from our buy price, plus the USD has worked for us on the stock, so, we can hold it and see if the fundamentals are eventually rewarded.
      Having said that, any kind of break in formation would inspire me to sell

      Reply

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