It’s a precarious time in the stock market nowadays. So much so, it’s becoming more difficult each day to find good assets to invest in for July.
On Tuesday, 60% of stocks in the Nasdaq 100 were trading above their 50-day moving averages. On the Nasdaq composite index, only 23% of stocks were trading above their 50-day MA.
What does that tell us? Well, it tells me we’re heading toward — or are already in — a bear market.
And when you take a closer look at the Nasdaq, you’ll see the top 5 performing stocks on the index are some of the biggest hero names of all time.
Which isn’t good at all.
This situation reminds me of the Los Angeles housing market right now: The rich are getting richer while the poor are staying poor.
And to make matters worse, 95% of all assets making 90-day highs in the market are index funds — not individual stocks.
They’re able to do this because of those same top 5 stocks making highs. However, this isn’t sustainable for the market in the long run. At some point, this is going to catch up to the market since it can’t keep running with only a handful of stocks leading it higher.
So how are investors finding profitable assets to invest in for July while Wall Street is being led around by the same names?
I can tell you how I did it: I looked at the bond market.
4 Assets to Invest in for the Rest of July
I took a look at the bond market awhile back and it gave me the perfect idea for a Money Link pairs trade.
However, the timing on this trade is everything. Heck, I’ve been waiting like a patient school boy for weeks to pull the trigger on it — waiting for bonds to get even more stretched out.
Now that rates are going to go up in the near term — no matter what B.S. the Federal Reserve is feeding the public — I’ve decided it’s the perfect time to go short on bonds.
On Tuesday, I sent out a trade alert telling members to go short on iShares 20 Plus Year Treasury Bond ETF (Nasdaq: TLT), and long on Financial Select Sector SPDR Fund (NYSEArca: XLF).
Financials are oversold and bonds are way overbought right now, so this is a clean pairs trade to get into.
As yields have fallen dramatically, XLF has gotten battered. Frankly, all of the movement in the yields is too much too fast — so it’s a great spot to fade this trade. This is, of course, a counter trend trade, and I expected it to work in our favor right away.
I already warned members on Tuesday that this is the type of trade that’ll either work immediately, or fall flat fast.
And, guys, it’s working.
However, those aren’t the only stocks on my radar this week…
I have two more trade ideas burning holes in my back pocket that are setting up to take off by the end of July.
Check out my short video below to learn more about the four best assets to invest in for July.
Also be sure to share your thoughts in the comments section below.
And as always, send any trading questions to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.
