The stock market is still hovering near record highs following its performance in the first half of 2017. Can this be sustained in the second half? Many analysts and investors are concerned about how stocks can continue to move higher from here. This concern was also publicized by Goldman Sachs in a recent letter to clients and an article in the Wall Street Journal. I agree with this discussion as investors must identify a new strategy to compound returns to continue to capture income in the rest of 2017.

Goldman Sachs told clients that the environment is more difficult for picking stocks of quality companies, and as a result investors should be willing to accept longer holding periods and hold fewer stocks.

"Quality investing faces challenges it isn't used to," Goldman's Hugo Scott-Gall wrote in a research note. Returns aren't as strong from simple buy-and-hold quality strategies, he said. "With returns on capital falling and growth lower, fewer companies are in the virtuous compounding circle."

Clearly, investors should consider changing up their investing strategy at this time. There are numerous methods to compound returns using income generating strategies.

Looking at the S&P 500 chart, I see a little top at this point and a pullback or sideways action will occur in the coming weeks. I entered some trades looking at a SPY pullback last Thursday and luckily had great timing. I see the SPY being more range bound in the second half as this market is topping at this point according to its chart.

So how can an investor create compounding returns for the second half of the year? The market volatility increased this week but is still below normal levels. I am using various option strategies to generate income from option premium. I like to use directional credit spreads on the SPY, TLT and other ETFs. This has proven to be a consistent strategy for income. Also, I like to let the market pricing facilitate my income opportunities. I use a put selling strategy to enter a new stock position as this generates income and lowers the stock entry price. I only use this strategy on stock I want to own but at a lower entry price. If put to me, I then sell covered calls to continue generating income on the stock until it is called away. then, I can start the cycle again if I still like the stock. If you select dividend paying stocks, you can collect dividends along the way too. 

This strategy creates income but also provides downside protection if the market pulls back or corrects from its record highs. This income play has proven to be a profitable and consistent income strategy with a high rate of winning investments.