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Potentially difficult December defense play: Traders

According to Joule Financial’s Quint Tatro, December stock prices can be unusually tough.

The market usually rises in the last month of the year (sometimes called the “Santa Claus Rally”), but when cracks are formed that threaten historical patterns, he told CNBC’s “Trading Nation” on Thursday. I told you.

“We actually have the story of two tapes that most passive investors are completely unaware of,” said the company’s chief investment officer. “There is a great deal of confusion about what is happening in the index and the broader markets.”

For example, the Nasdaq Composite is less than 5% off record highs, but about one-fifth of its components hit 52-week lows and nearly two-thirds are below the 200-day moving average. A major long-term price indicator.

“The question is whether the bottom catches up or the top goes down,” said Tatro.

In the absence of a clear solution, he chose CVS Health as one of his favorites, focusing on finding a name that is profitable, has a relatively low valuation, and has the ability to rise in any market environment. I was surprised.

“They trade like retailers and are actually more involved in the healthcare sector,” said Tatro. “I think this company not only can withstand the big financial challenges, but also realizes that Wall Street needs to wake up and be valued like a healthcare company someday.”

In the same interview, Miller Tabak’s Matt Marie said that market risk certainly increased between concerns about the new coronavirus variant and faster-than-expected moves by the Federal Reserve to tighten monetary policy. Said that.

“It doesn’t mean we can’t have a Santa Claus rally in any way, I think it’s coming from a lower level,” said the company’s chief market strategist. “Here, people need to be a little more defensive.”

The conservation activity Marie chose was energy through the Energy Choice Sector SPDR Fund (XLE).

“Looking at energy stocks, we’re outpacing West Texas Intermediate oil’s move,” he said, while XLE fell less than 7% from its recent highs, while oil fell 20%.

“”[The XLE is] It’s not really oversold yet, and it may be necessary to test the 200-day moving average down to nearly $ 52. “

“I think it will create great buying opportunities for the group and I think it will continue to be as good a play as last year.”

XLE fell nearly 1% at $ 55.23 per share in Friday morning trading.

Disclosure: Tatro and Joule Financial own a stake in CVS Health.

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Potentially difficult December defense play: Traders

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