Hey 5-Star Trader!
Traders continue to ask me what this market volatility means for their portfolios, and how they should position in light of interest rate hikes, inflation, earnings season, and more. Well, I’ve got a treat for you, as I’ve asked one of my very esteemed colleagues, Mary Ellen McGonagle to step in for today’s episode and share some of her knowledge!
I love collaborating with fellow investors, especially those that follow methodologies that fit within my scope of interest. Mary Ellen is a fantastic investor and educator to learn from! She has over 25 years of experience in the markets and a great track record of picking winning sectors.
I’m also looking forward to getting a chance to collaborate with her on April 13th at 7:00 PM Central time)! Sign up here and we will see you then.
Twice each week, Mary Ellen produces her MEM Edge Report, where she highlights where the strength is in the broader markets and identifies stocks poised to capitalize on that strength. Today, she is giving us a sneak peek into her report, where she reviews the move into defensive areas, just for you, 5-Star Traders!
Let’s jump in…
Earlier this week, Mary Ellen sent out a special Tuesday report that alerted investors to the sharp move away from Growth stocks in the face of Fed comments pointing to a more aggressive approach to tightening their monetary policy. As a result, Treasury yields rose.
Rising interest rates are not favorable for Growth stocks as the future value of their earnings are reduced. The increased cost of capital is a negative as well.
In yesterday’s Midweek Report, Mary Ellen reviewed the continued move into defensive areas of the market such as Utilities, Consumer Staples and REIT stocks. These higher yielding stocks are a great hedge against inflation and each of these areas have successfully been able to pass along increased prices to customers, which has improved their growth outlooks.
Additionally, last Sunday, Mary Ellen added REIT stock Crown Castle (CCI, pictured below) to her buy list and the stock is among the top 10 performers in the S&P 500 after rallying 4.5% for the week. The stock is poised for further upside as it heads toward a 3-month base breakout at $310.
Healthcare stocks are another defensive area that’s outperformed recently and Wall Street upgrades to select Pharmaceuticals such as Pfizer (PFE, pictured below) have pushed the stock into a bullish uptrend with a break back above its 10-day moving average today. This is another pick from her MEM Edge Report and the stock was among the top 10 performers in the S&P 500 yesterday. PFE is also poised for further near-term upside.
Mary Ellen would not be adding to Growth stocks at this point as the Nasdaq is only 0.8% above its 50-day moving average and a break below that would signal further downside with the next area of support being 6% away.
As demonstrated above, Mary Ellen has a wealth of knowledge under her belt as well as an impressive track record throughout her 25 years of trading. Her understanding of the market is admirable, and I can’t wait to continue my collaboration with her! After all, good trading comes from a community. Don’t miss your chance to be a part of it!