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Dividend Investor
Safe Income and Dividend Growth

The Market Could Be At A Turning Point

The market could be at a turning point. After rallying last week, the S&P is once again knocking at the 1,950 level, where the last recovery failed on February 1. And the VIX is signaling a moderation in investor fear, suggesting that the January-February lows could form a solid double bottom. However, there are still reasons to be cautious—the major indexes pulled back yesterday after JP Morgan revealed that it has more oil and gas exposure than previously thought, reminding us not only how fragile the market’s strength is, but also how close the correlation between stocks and oil has become. And even if the rally does succeed in breaking through 1,950, the S&P will have to chew through months of overhead resistance to get back to its highs around 2,100. Individual stocks will also face resistance as they stage their own recoveries. We’re cautiously optimistic but remaining conservative. Today I’m putting one of our highestquality stocks, Home Depot (HD), back on Buy, and adding another high-quality consumer name to the Safe Income tier. If this recovery is the real thing, we’ll gradually allow the market to pull us into a more aggressive position, but from our long-term perspective, there’s no hurry. However, if you’re champing at the bit, just flip to the educational section at the end of today’s issue, which is about turnaround stocks. Dividend-paying turnaround stocks can be great, lower-risk bargains, and I’ve found 10 turnaround situations that could make it into our portfolio in the coming weeks. More aggressive investors can start their own research into the candidates today and be ready to strike when the iron is hot.