There are times in a market cycle when there are not many reasons to buy, and even less reasons to sell. We get the feeling that we are stuck, yet are we?
I have always looked at these periods as periods of consolidation. When the weaker performing stocks begin to move up in price and the better performing stocks begin to pull back.
We are not talking about major moves here, especially if the trading volume is relatively normal. I have usually seen 1-5% moves in any particular stock at this time of year and during these periods of consolidation and re-balancing.
What's Going On?
Well, there is a confluence of buying and selling by the largest stockholders. Mutual Funds, Hedge Funds, Institutions, Corporate Pension Funds, Teachers Pension Funds and the major re-balancing of the largest individual investors.
All of this movement results in an almost sideways move to the markets with a bias to the upside. In my opinion and experience, the upside bias is mainly due to the buying of better performing stocks by mutual funds that do some holiday window dressing. The mainstream news media call this period the “Christmas Rally." I see it as a time to buy some stocks that tend to move higher based on their past performance, not necessarily their future outlooks.
My Year End Shopping List
OK, so now we take a look at our portfolio, as we have selected to track, and look at some of the stocks to buy now. Obviously my crystal ball is just as good as anyone else’s, but hey it’s holiday shopping season right? So let’s buy some stock.
Annaly Capital Management (NLY): Price-$16.29/share, 15.00% dividend yield, ESS rating of neutral.
NLY has underperformed in 2011. It began the year at $17.80/share and hit its low of $15.48/share on
