I’m running through a lot of the defensive stocks, and they’re all on their heels. (April 21, 2016)
This isn’t your Chart of the Day video, this is like Charts of the Day video. I was just looking at a bunch of different stocks and I thought, “I want to share this stuff with everybody.” The S&P 500 ( INDEXSP:.INX ), 2100.00, now it looks like we’re going to get a little bit more of a pullback. I’m doing this on Thursday evening, Google ( NASDAQ:GOOGL ), Microsoft ( NASDAQ:MSFT ), Starbucks ( NASDAQ:SBUX ), reported earnings. Not good. Visa ( NYSE:V ), also down. Not good. Goldman Sachs ( NYSE:GS ), kind of down a little bit, this is a Dow component. Not good. So there are all these reasons for the Dow ( INDEXDJX:.DJI ) to be trading lower tomorrow. And of course, I believe all the stocks in the Dow-30 ( INDEXDJX:.DJI ) are S&P ( INDEXSP:.INX ) stocks, but even if they’re not they should be. The bottom line is, I think we go lower here.
Of course we’ve seen this all along. We go lower here too. We went lower here, for two days. Here we went low for a day. Here we went for three days, kinda. You get my point. The uptrend is still in tact, but there’s one thing that’s different, the Defensive names. HURL, as I like to call it, Hormel ( NYSE:HRL ), they make SPAM, now you know why I call it HURL. This has fallen out of bed; nice volatility squeeze. I remember looking at this thing and thinking, “Okay, if this thing breaks higher that could go well for the bulls; as long as it gets to this level and stays there.” But the thing about these squeezes is, sometimes they work the other way. So you get a breakdown, looks like, “Oh, it’s going to bounce,” and then it doesn’t. And then the next thing you know it’s trickling down. By now, which is April 8th, you’re looking at this as a downside resolution from a squeeze. Not all volatility squeezes are like this, where they just move up. Or even like this, where they just move up. Sometimes they’re like this, and they move down. So you’ve got to trade these things both ways.
So you’re looking at this, you look at some of the other stocks, “Well maybe it’s okay.” But this just keeps going, and going and going. This is Hormel ( NYSE:HRL ) for crying out loud. This is supposed to be a safety stock. No matter what happens with the economy, people still need to eat. But it just keeps going. My point is, I’m not talking about Hormel ( NYSE:HRL ) for a trade, maybe it will hit the 200-day moving average, good for you. I’m looking at these things in general. Campbell Soup ( NYSE:CPB ), falling out of bed. Clorox ( NYSE:CLX ). Clorox ( NYSE:CLX ) for crying out loud! Everybody needs bleach. I put in my little fountain out back to keep the frogs away (don’t tell the ASPCA). So Clorox ( NYSE:CLX ) is falling out of bed. Mighty Mo, Altria Group ( NYSE:MO ). Mighty Mo ( NYSE:MO ) is falling out of bed; irrespective of the 3.7 percent dividend. Reynolds American ( NYSE:RAI ). Nice pullback here to the 50-day moving average. Now, not so much, it’s down another 5 percent. Will it hold at the 200-day? Sure, fine, maybe.
But I’m not talking about this as a trade. I’m looking at all these things, and they all have two things in common. First, they’re thought of as Defensive names, hence, Coca-Cola ( NYSE:KO ) in the Consumer Defensive Sector, not working out. Pepsi ( NYSE:PEP ), things don’t necessarily go better with Coke or Pepsi, this is also pulling back. So all of these stocks are telling you one thing. And that is, even the Defensive Sector is on defense. Then you look at the XLK ( NYSEARCA:XLK ), well that seems to be okay, right? Maybe tech is going to work. I’ve seen some of these on financial TV that where, “Oh, tech is where you want to be.” Well, it’s better than being in the tobacco stocks these. But do you think after Google, or I guess now we’re calling it Alphabet ( NASDAQ:GOOGL ). Do you think after Alphabet ( NASDAQ:GOOGL ) and Microsoft ( NASDAQ:MSFT ), do you really think that XLK ( NYSEARCA:XLK ) is going to breakout? I don’t. Frankly, I think where you want to be is the railroads, I’ll be talking about that in the Strategy Session. Just be careful about where you’re investing right now. The Defensive names are telling you that it’s time to be on defense.
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