45 Days Without a 1% Slide Equals a Coming Correction

In fact, according to the statistical whizzes at Bespoke Investment Group, this is one of the longest runs without a 1% "correction" (extending a day or more) since 1990. The most recent previous instance was 42 days from March to May 2007.

What are we to make of this long one-way street? The historical record is mixed. When a lengthy string of low-volatility gains occurs in the early stages of a bull market, it usually means higher stock prices in the weeks and months to come.
But the 2007 example is worth heeding, too. In that case, the blue chip indexes still had five more months before reaching a final cyclical top. Right after the winning streak ended in May, however, market breadth fell apart, with the financial stocks, in particular, lagging far behind the broader indexes.

We're overdue for another pullback of 5% or more on the major indexes. I'll be watching carefully to see how the process unfolds. Although I'm not expecting another breadth breakdown a la 2007, we want to be ready if the climate begins to change.
Meanwhile, my advice is to be extra picky about any stocks you buy in here -- and don't be afraid to take a few profits, either, on some of your overextended winners. In today's market, I consider a stock overextended (and vulnerable to short-term selling pressure) if the share price is quoted more than 6% above its 50-day average.

So how do you find a stock to buy in this market? Well, I'm spotting an opportunity for income investors to lock in a generous dividend with electric utility Exelon (EXC). As the nation's largest owner-operator of nuclear plants, EXC is well positioned to benefit from increasingly stringent carbon-emissions standards in the years ahead.

Profits will likely dip in 2010, the result of soft wholesale prices for electricity. (EXC earns about 70% of its net from power sales to other utilities.) Even so, this year's earnings will cover the dividend a comfortable 1.8 times -- and at less than 12X depressed 2010 profits, the stock is a rare bargain in today's market. Exelon has a current dividend yield of 4.7%. It's bond rate may not be as attractive as other dividend stocks that are a lock to boost payouts, but EXC has a great track record of dividend increases so you can stick by it for the long term.

Finding high yield dividend stocks is important for low-risk investors in any market, so don't sweat the likelihood of a correction. EXC should pay off no matter what temporary speed bump the market throws us.