Bullish sentiment returned to its declining ways this week, falling for the sixth time in the last eight weeks.  According to AAII, bullish sentiment fell from 28.79% down to 25.47%.  This makes it 50 straight weeks where bullish sentiment has been under 40% and the 84th week in the last 85.  One fact weighing on overall sentiment of individual investors is certainly the election.  In this week’s special question, respondents were asked how much of an influence the election was having on their expectations for the market.  According to the results of the survey, nearly half (49%) said the election is only having a minimal impact.  That said, 23% of respondents noted that the election is having a large impact.  That would suggest that once the election has passed, the increased certainty would be positive for the market, but the way investors have hopped from worry to worry over the years, something tells us that come November, investors will find something else to worry about — most likely the Fed.

Although bullish sentiment saw a three point decline, bearish sentiment increased by nearly twice that, as some neutrals also migrated into the bearish camp.  This week’s increase was the fifth rise in the last eight weeks, and as the chart below illustrates, the trend higher off the late 2015 lows remains intact.

Bespoke’s Paul Hickey appeared on CNBC’s Power Lunch today to discuss the FOMC minutes and the upcoming earnings season.  To view the segment, please click on the image below.

As shown in the six-month chart of the S&P 500 below, the index has basically traded sideways since it broke to new highs in early July.  Since closing at new highs on July 8th, the S&P 500 is up just 50 basis points.  So far, support levels have held, but it’s been a sideways market.

While the broad market has been sideways, we’ve seen big performance disparities among the eleven S&P 500 sectors.  We’ve been highlighting this quite a bit for clients over the last couple of months, but we wanted to point it out to our Think B.I.G. readers as well.  As shown below, Technology, Financials and Energy are the only sectors that are up, and Technology is up nearly 10%.  On the downside, Utilities, Telecom, Real Estate, and Consumer Staples are all off more than 5%.

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At the start of each year, we always provide clients with the new “Dogs of the Dow” list.  You’re more than likely already familiar with this strategy, but if you’re not, it says to simply buy the 10 highest yielding stocks in the Dow Jones Industrial Average at the start of each year.  (You can read more about the strategy at this Investopedia link if you’re looking to learn more about the reasoning behind it.)

Today we checked up on the performance of this year’s Dogs of the Dow, and we found that the strategy has been absolutely crushing the market.  As shown in the table below, the ten Dogs are up 12.82% on an equal-weighted price performance basis, and that doesn’t even factor in dividends.  The remaining 20 stocks in the Dow are up just 0.57%, so basically all of the Dow’s gains this year have come from the 10 Dogs.  Not one Dog is in the red for the year, and 8 of 10 are up double-digit percentage points.  Caterpillar (CAT) was a stock that no one wanted to touch with a ten-foot pole coming into this year, but it’s currently the top performing stock in the entire index with a 28.78% gain.  IBM and Exxon Mobil (XOM) are two other names that had been left for dead, but they’re both up more than 10%.  The same goes for Chevron (CVX) and Wal-Mart (WMT).

With stock price gains across the board for this year’s Dogs, all but one (CSCO) has seen its dividend yield decrease this year.  Caterpillar’s (CAT) dividend yield has dropped the most at 1.01 percentage points from 4.53% down to 3.52%.  Even still, CAT would be a Dog once again if 2017 began today.  The three 2016 Dogs that would fall off the list at this point, though, are Merck (MRK), Procter & Gamble (PG), and Wal-Mart (WMT).  All three now have lower dividend yields than Coca-Cola (KO), Boeing (BA), and McDonald’s (MCD), which would be the three new additions.

There’s still nearly three months left of trading before the end of the year, and performance can change dramatically rather quickly as we all know.  That being said, the run for this year’s Dogs has been quite remarkable.

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