Long-term traders often use the final weeks of the calendar year to look over their portfolios and make adjustments that will help position them for success in the following year. As you'll read in the paragraphs below, in the case of 2019, a few broad themes such as strong dividend-paying companies, materials, and semiconductors are ones of specific interest and could be worth increasing exposure to heading into 2020.
Active traders who want to gain exposure to companies with a consistent history of paying dividends for five or more years may want to take a look at the iShares Select Dividend ETF (DVY). As you can see from the chart below, the price of the fund has been trading within a defined range since the early days of summer. For those who follow technical analysis, it is worth noting that the upward slope of the long-term moving averages suggests that the bulls are in control of the momentum.
Since the moving averages have acted as strong levels of support and resistance for most of 2019, it would not be surprising for traders to use these as guides when determining the placement of their buy and stop orders heading into the New Year. The recent break beyond the upper trendline is also a signal that the bulls are in control of the trend and that we could be in the early days of a prolonged move higher.
From a fundamental perspective, the massive level of increasing demand that is being placed on semiconductor companies is positioning the sector for higher stock prices for years to come. Taking a look at the chart of the iShares PHLX Semiconductor ETF (SOXX), you can see that the price has been trading within a defined range since early June.
The consistent bounces off of the support of the 50-day moving average, combined with the series of higher highs, will likely be looked to as confirmation that the bulls are in control of the momentum. Active traders will also want to note the price breakout above the upper trendline and the coinciding bullish crossover between the moving average convergence divergence (MACD) and its signal line. These short-term signals also suggest that now could be the ideal time to buy into semiconductors.
The global materials sector spent all of 2019 within horizontal channel pattern. This prolonged period of consolidation recently came to an end, which you can see from the breakout on the chart of the iShares Global Materials ETF (MXI). The close above the upper trendline suggests that traders will be placing their target prices near $72, which is equal to the entry point plus the height of the pattern.
The Bottom Line
The final days of the year are a good time for investors to take a look at their portfolios and make necessary adjustments to set themselves up for success over the coming year. As discussed above, at this point in time, it seems as though followers of technical analysis will likely want to increase exposure to dividend-paying companies, semiconductors, and global materials.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.