iShares US Telecom (IYZ) – The IYZ telecom ETF is a good broad way to get exposure to lower beta but high dividend paying companies if the market turns defensive into early 2022. The IYZ recently has shown relative strength off November lows and had a great December clearing back above its 200 day EMA and 2021 VWAP near 32.30. The market continues to trade cautiously with defensive sectors leading the way in December despite a seasonal Santa rally in the broad markets. It may be prudent to allocate to these value sectors such as IYZ still as the risk of higher yields and interest rates hiking remains a risk in Q1 and especially once earnings season starts. The ETF sports a strong 2.84% dividend yield and a few of its top holdings like VZ and T have yields north of 5%. With the 21 day EMA crossing above the 55 EMA the technicals are showing strong change in intermediate term trend and the weekly MACD crossing bullish with RSI back over 50 points to a fresh uptrend underway from a longer term timeframe.

The ETF’s top holdings are CSCO, CMCSA, VZ, T, CIEN, CHTR, ANET, TMUS, MSI, LITE, JNPR with the first 3 names making up about 45% of the index. Certainly a bit top heavy and skewed towards those top 3 stocks. If interested in more of an equal weighted balanced version of the Telecom group then looking at XTL is a great alternative although it has a lower dividend yield. The strongest charts in the space within bullish uptrends and strong RSI readings include CSCO, CIEN, ANET, MSI, JNPR. Options action last week was strong in TMUS with large buys in January 2023 and 2024 $110 calls spread against $160 calls looking for longer term upside. Looking at single names with the best chart setups can be a nice way to play a multi month move or simply buying the ETF for a diversified approach.