Several bits of news coming out of Washington might not be great if you’re a banker on Wall Street or an individual in need of heath insurance. That news, though, could be good for regional banks and health care exchange traded funds (ETFs).
For investors seeking to capitalize on a short-term timeframe of, say, the next few weeks, there are two sectors worth watching right now for signs of any potential long-term uptrends. Kevin Marder for The Street has some ideas for these prospects going forward:
- Playing it small: Regional banks are not expected to be as impacted by the Obama administration’s restrictions on the banking sector as the behemoths on Wall Street will be. Regional banks also were relatively unscathed during the financial fallout of 2008, and have so far reported fourth-quarter earnings that exceed expectations. [How regional banks are beating the odds.]
- Keeping profits healthy: Health care issues have benefited of late as industry fears of a profit-tightening health care plan from the administration were somewhat relieved following a surprise Republican victory in the Massachusetts election. [Play Obama’s state of the union speech.]
A simple strategy we suggest to find areas to invest is trend following. When an ETF moves above its long-term trend line (the 200-day moving average), it’s considered a buy signal. When it moves below or 8% off the recent high, it’s a sell signal. [How to follow trends.]
- SPDR KBW Regional Banking (NYSEArca: KRE)
- iShares Dow Jones U.S. Regional Banks (NYSEArca: IAT)
- iShares Dow Jones U.S. Healthcare (NYSEArca: IYH)
- Vanguard Health Care (NYSEArca: VHT)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.