At the same time, however, the month of August is historically the toughest period for the stock market to trade higher. Trading volume is light, which naturally invites a higher level of volatility that can spell trouble.
And volume certainly was light on the way down into this latest dip; technicians would tell you that there could be more to go on heavier volume if the market doesn’t hold its Friday bounce. The S&P may well trade back up to its 50-day moving average at 1950 and then pause and possibly retest 1900 by the end of the month.
If it plays out that way,investors in high-yield dividends will have an excellent buying opportunity to catch some great prices as the market sets up for a post-Labor Day rally into year-end. At this point, the U.S. economy is on very good footing, which bodes well for persistently low interest rates and higher prices for high-yield dividend stocks — such as the three energy plays I’m recommending today.