Vanguard High Dividend Yield (VYM)

Today shares of Vanguard High Dividend Yield ETF (VYM) entered into what some call “oversold territory”, it traded as low as $58.36. “Oversold” can be defined by looking at the Relative Strength Index (RSI), a technical indicator used to measure momentum. A stock may be considered “oversold” when the RSI reading falls below 30.

In the case of Vanguard High Dividend Yield, the RSI reading hit 29.2. The current RSI reading for the S&P 500 is just above 33.

VYM’s low point in its 52 week range is $52.09 per share, with $62.38 as the 52 week high point

I currently hold ISHARES INC EMERGING MARKETS DIV ETF (DVYE), which is down 9.27% YTD. VYM is down 5.84% YTD, slightly worse than the S&P500 which is down 5.23% YTD. Extending the comparison out to 1yr shows DVYE -21.32%, VYM +11.51%, and the S&P500 +15.76%. The dividend yield for DVYE is 5.06%, while the dividend yield for VYM is 2.98%.

Emerging markets have been getting hammered since the start of 2013, and the trend does not look to be reversing. It may open an opportunity to either add to a stake in DVYE or open a new stake in that fund. VYM, by contrast, has doubled in the last 5yrs, and is up 16% since its inception in 2006. For anyone looking to add a dividend fund to their accounts, VYM is starting to look very appealing at these prices. If the down trend in VYM, and the broader market, continues I will look to add this to my long-term retirement accounts.

Small Cap Picks

I believe that the overall economy is healthy, and that the business cycle is generally on the upswing. I travel for work and pleasure and see that the airline industry is doing quite well, see my pick of AAL which is up 35% YTD (just over a month). I also know that when I was a consultant I did not think twice about paying for onboard WiFi, as it was just another, relatively inexpensive, business expense. I think that combined with the families I see traveling (buy TV keep the kids entertained) position in-flight entertainment in a good spot. To that point I have made an entry stake into Global Eagle Entertainment (ENT)

Global Eagle Entertainment Inc. (ENT), formerly Global Eagle Acquisition Corp., is the full service platform offering both content and connectivity for the worldwide airline industry. Through its combined content, distribution and technology platforms, the Company provides airlines and the millions of travelers they serve with the offering of in-flight video content, e-commerce and information services. Through its Row 44 subsidiary, the Company utilizes Ku-band satellite technology to provide airline passengers with Internet access, live television, shopping and travel-related information.

My timing may not have been ideal, as the market tanked the following day, putting the stock down about 4% from my purchase price. I believe this is a mid-term to long-term play, I will be keeping an eye on the stock but not looking at it day-to-day, as I do believe this one may take some time.

In a completely different direction, I have opened a small stake in Synta Pharmaceuticals (SNTA). Synta is a small cap ($362M) biopharmaceutical company working in the area of cancer and inflammatory diseases. Their main drug in the pipeline, if approved, is expected to hit annual peak sales of $425 million to $600 million. Interestingly the consensus target price for the stock is a huge $15.85 a share, SNTA is currently about $5.

I'm not much for "swinging for the fences" or "home run" stocks, but this is exactly that. If the stock is able to make consensus price it would be a nice 300% return for current investors. The risk for this possible payout is quite large, if they do not get approval for their drug it could spell the end for them. In my minimal experience with these types of companies, there is a very short lead time from success of failure for the investor to make a move either in or out. A stop-loss or trailing stop-loss may be advisable.

DJIA is now down 1,000 points from its high

For all those looking for and predicting a pull-back, safe to say we are seeing it.