The most powerful January in years resulted in huge returns for equity holders and should be able to support all but the most vicious sell-offs. Thus, all pullbacks should be viewed by investors as buying opportunities. Long-term investors should add to high-quality positions, and traders should focus on those sectors that have the best records of success.
However, stocks that have failed to perform in the rally that began in November, and those that are more than 20% above their 200-day moving averages, should be cut.
The other area that investors should scrutinize is long-term bonds. The Fed’s ability to control rates is having less impact. Investors are selling bonds and bond funds at a huge clip, and either shortening their maturities or putting money into stocks.
Here is our list of stocks to sell in February: