The time may be right to look at mid-cap stocks. This ETF includes companies with market capitalizations between US$ 1.4 billion to US$ 5.9 billion.
SPDR S&P MidCap 400 ETF (MDY)
From Systems and Forecasts
The recent upgrade in our assessment of market conditions makes this an opportunity to add cautiously to equity exposure. The SPDR S&P MidCap 400 ETF (MDY) is attractive to buy now.
I usually do not like to chase rallies by purchasing small or midcaps because these styles are more volatile than the S&P 500 but have not been more profitable over the past six years. Moreover, buying into small- or mid-caps late in a market advance frequently produces losses, as they give back previous (missed) gains more rapidly just prior to the occurrence of sell signals.
The exception is that after market corrections, buying the more volatile mid or small caps frequently produces better gains. This appears to be such a time.
The MDY chart shows that midcaps are still near the low end of their relative strength range versus the S&P 500 Index. (Top clip in chart.) This suggests significant potential to outperform SPY going forward.
The price chart of MDY (lower clip) suggests a trading range of $230-$265, with upside potential to $280 if the 2015 highs are retested.
Dr. Marvin Appel and Gerald Appel, Systems and Forecasts, www.systemsandforecasts.com, 800-829-6229, March 3, 2016