As we approach the end of the year, I found myself with some discretionary investing funds. I decided to try to an experiment, based on three factors that I believe will bias the market higher over the next 45 days or so.
- Most major indices are at all-time highs (the Nasdaq being one exception, though it’s making its own headway into multiyear highs). Stocks and indices that hit all-time highs on decent volume, such as we’ve seen, often continue to make new highs. They’ll retrace here and there, but overall the bias is higher.
- Second, the market traditionally moves higher in November and December. November and April share dibs as the year’s second-best month, performance-wise; the S&P 500 has gained 1.5% on average since 1950. December is the best month, adding 1.7%.
- Third, quantitative easing continues unabated. That means money will continue to flow out of the bond market and into stocks.
So I purchased five aggressive ETFs with the intent to sell sometime in January, maybe as late as Jan. 31, and I suggest you do the same.
However — and this is a big “however” — I also set a 6% stop-loss on the entire basket. I want to make it clear that this stop loss is essential with this strategy. The volatile nature of these leveraged ETFs means there is a lot of risk, and stop-losses should always be used in these circumstances (and even when you buy other stocks).
But if you’re willing to be aggressive, take a closer look at these five trades to make before the year is out: