If you read my post yesterday, you know what today’s post is all about…
What to buy.
If you didn’t you can check out yesterday’s post HERE before reading the rest of today’s.
For starters, let’s pick up where we left off…
Transports and industrials. I said yesterday that many of the stocks in this sector are a no-go because transport stocks like UPS and JBHT are showing consolidation and look to break even lower.
The exception here is airliners. With low oil prices, companies like DAL and UAL are doing quite well and look to continue trading higher the rest of the year.
Conclusion?
Don’t buy the companies that make the planes but the ones that make money on flying them — looks good for now!
Moving onto another potential buy, retail is interesting here, but there’s a difference between consumer staples (which are a buy), big box retailers (like TGT and M), and bargain retailers (a so-so buy).
My favorites in consumer staples are WBA, PG, KO, and PEP. WMT, which has been able to correct it’s downtrend as of this summer, has done a good job of competing with AMZN. Also, even in a recession, people will still shop at WMT, in fact, probably even more.
I do like WMT for a buy.
However, big box retailers like TGT and M are tough here. I do see support on the weekly charts, but the Earnings Kiss of Death (yes, it even reached retailers) got them as well. They gave back 6 months of gains overnight. I’m not much of a countertrend trader, but I think buyers are coming in at the lows, looking for a discount and hoping for a move higher.
Another retailer buy? COST has held up relatively well, and as it fits into consumer staples, I like it for a long term buy, and I’ll buy options on it if I see some consolidation after this last drop. I’m also a COST member, and I love their model and products. My son, Leo, loves to eat like 4 specific foods, so bulk has always been my friend. I imagine seasonally, they do well.
Now then, HD — this is a down trend. Short the rallies. This is part of the consumer discretionary sector that has taken a beating. XLY and HD are setup for a slight move higher just because they are so oversold but make no mistake, this is a downtrend. In a slowing economy, people will buy less of discretionary products and more of staples. Which, leads me to KR.
KR is alright, it’s a cheap stock and has held up relatively well throughout the Oct/Nov madness. I do like it for a long term buy but I wouldn’t trade options on it on a short term basis because I don’t have an aggressive, directional setup.
So depending on how you like to trade, that’s another idea.
But where do I want to place my money the most?
Health care.
Health care is honestly the strongest place, besides consumer staples right now. After the midterms, with a split Congress, it’s going to be hard for any repeals of the ACA.
Who benefits there?
Well, UNH. I also like MRK and PFE for buys. I have our traders in these names. They’ve remained strong, despite the correction, and I like them long term even in a continued bear market. We have a huge ageing population that needs drugs and healthcare. UNH is one of the biggest providers of Medicaid. I like XLV for a long term, ETF buy as well as these top names.
What’s my other favorite setup right now?
The long dollar. There is consolidation on the daily and weekly charts of $DXY, and I’m playing this through options on ETFs in UUP.
So there you have it. If you want to watch me put these ideas into action, or trade alongside with me, consider joining our Options Gold subscription. The first month is only $7. You can grab more information HERE.
