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Is it Time to Play Some Defense?

Sure, the market is stretched.

But overbought begets overbought.

With that being said, it may be time to take a look at some more defensive areas if you're looking to allocate fresh capital.

What is defense? Here are some characteristics.

  1. Higher Dividend. You'll be paying for income rather than growth.
  2. Boring industries. These are often well established companies.
  3. Low Beta. Movement is rarely volatile.

We normally think of defensive stocks as sectors such as healthcare, utilities, and consumer staples. A quick way run through these names is to look through the individual components of $XLV, $XLU, and $XLP, respectively.

Why do these names make sense here?

Think about market outcomes. If we continue to rip higher, a rising tide will lift all boats and you will see capital appreciation. If the market dips, then investors will most likely do what they did last quarter-- flock into the "safety" of high-dividend, low beta names.

Here's a look at some constructive charts:




by Steven Place

Steven Place is the founder and head trader at