The market has a new source of worry – The Federal reserve going to be more aggressive when it comes to raising interest rates. This has resulted in dramatic selling in growth stocks. The market also has another debate to settle – How will the aggressive rate hike play out? Will it result in recession or just a gentle slowdown? The big question – How are the market participants positioning themselves for the new future.
In a Bull market, the money chases growth whereas, in a Bear market, the money chases safety.
Fearful money chasing the following stocks: 1. Coca-Cola 2. Walmart 3. J&J 4. Costco All breaking out to a new high today. The list clearly states how the institutional money is positioning itself. Should one buy any of the above names? It depends. If you are a trader, then no. But if you are an investor, looking for safety, the answer would be Yes. These stocks can rally 15% in the next six months.
The market loves surprises. Twitter can be a surprise stock of 2022
Elon Musk taking a 9.2% stake in the company is a phenomenal positive development. There was a Gap up move and the stock now appears to be a STRONG BUY.
The Breakout in motion: Eli Lilly LLY
Eli Lilly LLY stock broke out above 280 on March 18 2022 and since then has been trading sideways. Today, Morgan Stanley analyst upgraded the stock with a price target of $364 and the stock is in motion. I missed the stock when it was trading near $285. This is not a market to chase the stock so I will give it a pass for now.
The new theme in motion – Self Storage/Warehouse REITs
There are three REITs that appear interesting: 1. Public Storage PSA; 2. Prologis PLD and 3. EXR Extra Space Storage. Again these are REITs and they do not deliver stunning returns.
Fearful Trade: Buy CVS
CVS Health is the leading health solutions company. It has built a base at 99 and seems well set to rally as traders dump growth stocks.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
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