{"id":89268,"date":"2016-05-06T06:58:27","date_gmt":"2016-05-06T10:58:27","guid":{"rendered":"http:\/\/countingpips.com\/?p=89268"},"modified":"2016-05-06T06:58:27","modified_gmt":"2016-05-06T10:58:27","slug":"make-the-most-of-may-safe-gains-hiding-in-plain-sight","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/05\/make-the-most-of-may-safe-gains-hiding-in-plain-sight\/","title":{"rendered":"Make the Most of May: \u201cSafe\u201d Gains Hiding in Plain Sight"},"content":{"rendered":"
May 6, 2016<\/div>
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By WallStreetDaily.com<\/u><\/a> \"Make<\/p>\n

May has finally arrived, and is once again wreaking havoc on investors.<\/p>\n

We\u2019ve all heard the old adage \u201cSell in May and Go Away.\u201d So far, the market hasn\u2019t disappointed the folks who propagate it.<\/p>\n

Right now, the S&P 500 Index is down about 2% and its chart is pointing towards a further downturn before the month is done.<\/p>\n

And you\u2019ll recall that the index, which fell more than 10% to start the year, has only recently recovered from the decline.<\/p>\n

Well, forget about seasonality. This pullback is exactly <\/em>what the market needs after two months of scorching gains.<\/p>

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Here\u2019s how you can trade the dip with momentum behind you.<\/p>\n

The Laggards Now Lead<\/h2>\n

After leading the market for most of this seven-year bull market, growth stocks are taking it on the chin this year as earnings fail to justify lofty valuations.<\/p>\n

Investors are rotating out of growth and into cheaper equities.<\/p>\n

As a result, value stocks \u2013 which have underperformed the market over the same period \u2013 have risen from the dead.<\/p>\n

The S&P 500 Value Index is up 2.5% on the year versus a decline of 1.5% for the large-cap growth index.<\/p>\n

And there\u2019s plenty of value in the market. That is, if you know where to look.<\/p>\n

Rising Rates Will Lift These Boats<\/h2>\n

The financial sector holds some of the deepest value in the stock market today.<\/p>\n

Years of record low interest rates around the world have choked bank profits and kept a tight lid on stock performance.<\/p>\n

Over the last 10 years, large-cap financials have declined 31% while the broader market gained 59%.<\/p>\n

But now, financial stocks sport a valuation that\u2019s too low to ignore.<\/p>\n

At 14.8 times earnings, the sector trades at a 22% discount to the S&P 500 \u2013 the largest of all 10 sectors.<\/p>\n

And if the Federal Reserve follows through with an interest rate hike next month, these stocks won\u2019t be this cheap for much longer.<\/p>\n

As you may know, financial stocks perform well in a rising interest rate environment.<\/p>\n

Net interest margins \u2013 the difference between the interest that an institution earns from loans and interest paid out to depositors \u2013 increase as rates go up. The higher the margin, the larger the profit.<\/p>\n

With a possible hike on the horizon, this could be your best chance to seize upon the sector\u2019s weakness\u2026 before the rest of the market catches on.<\/p>\n

A Safe Way to Play<\/h2>\n

Amerisafe Inc.<\/strong> (AMSF<\/a>) is a leading American insurance holding company.<\/p>\n

Licensed in 47 states and the District of Columbia, the company provides workers\u2019 compensation insurance to hazardous industries, like construction and manufacturing.<\/p>\n

Propelled by outstanding earnings growth, Amerisafe shares have gained 161% over the last five years.<\/p>\n

That\u2019s more than triple<\/em> the gain of the S&P 500 over the same period.<\/p>\n

Despite the impressive rise, shares still trade at just 13.1 times forward earnings \u2013 a slight premium to its peers but 31% below the benchmark index.<\/p>\n

Amerisafe\u2019s chart paints an even more attractive picture.<\/p>\n

\"Flying<\/p>\n

As you can see, shares just broke through an ascending triangle pattern to set a new all-time high.<\/p>\n

One of the most bullish chart patterns out there, an ascending triangle pattern indicates that in the face of overhead resistance, demand for a stock is on the rise.<\/p>\n

Going all the way back to January, the stock\u2019s rising support line has gone unbroken for the last five months.<\/p>\n

Furthermore, the stock hasn\u2019t closed below its 200-day moving average in nearly a year \u2013 a key indicator of long-term support.<\/p>\n

The increased demand this year gave shares the boost they needed to break through the resistance around $52.85.<\/p>\n

And stocks making new highs, especially all-time highs, entices investors looking to buy into established momentum.<\/p>\n

This greatly increases the likelihood that the bullish trend will continue.<\/p>\n

Best of all, the recent pullback in stocks this month has helped carve out an even nicer entry point for new buyers.<\/p>\n

Now\u2019s the time to buy the dip, and trade the trend of one of the year\u2019s hottest value stocks.<\/p>\n

On the hunt,<\/p>\n

Jonathan Rodriguez<\/p>\n

The post Make the Most of May: \u201cSafe\u201d Gains Hiding in Plain Sight<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

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By WallStreetDaily.com May has finally arrived, and is once again wreaking havoc on investors. We\u2019ve all heard the old adage \u201cSell in May and Go Away.\u201d So far, the market hasn\u2019t disappointed the folks who propagate it. Right now, the S&P 500 Index is down about 2% and its chart is pointing towards a further […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-89268","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/89268","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=89268"}],"version-history":[{"count":3,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/89268\/revisions"}],"predecessor-version":[{"id":89288,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/89268\/revisions\/89288"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=89268"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=89268"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=89268"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}