Here’s How a Little Green Spot Can Save You From a Market Crash…
So far this year, every single trading day has been a wild ride.
You wake up, pour a cup of joe, then spit it out all over your computer screen when you notice the huge hole futures dug for themselves overnight.
Who needs to go to they gym before work when you have the market to toss a bucket of ice water over your head every day? As crazy as it might sound, living on the brink of complete annihilation can be kinda fun…
After wrapping up our 2016 trade of the year ideas, today we’re hopping back in the saddle today with a stock that’s actually finished in the green every day this week — even though the market is hemorrhaging.
More on this idea in just a second. But first, let’s take a look at yesterday’s bloodbath:
That’s a heat map of the S&P 500. As you can plainly see, it’s red. Very red. Fewer than 20% of the S&P 500’s components are green this week. And Thursday’s 2%-plus drop in the major averages drags us even father into the quicksand.
But these heat maps can help us zero in on what’s working with just a glance. See that little cluster of green just north of dead center? That’s the only concentrated area where we saw any positive movement yesterday. And this little green spot is hinting that we might have found a safe space to take refuge in.
So what is this green spot? Believe it or not, you’re looking at retail stocks.
Yes—those retail stocks—the one’s that Amazon has absolutely pummeled recently. These are the names that are sneaking higher while everything around them flames out.
As you already know, Amazon has knocked Walmart off its throne as King Retailer. Amazon’s market-cap jumped above Walmart’s for the first time ever last July when its shares rocketed higher on upbeat earnings. Amazon hasn’t looked back since. The “E-tail” monster posted dominant holiday sales, prompting investors to dump traditional retail names in droves.
But all that changed once the calendar flipped to 2016…
One of the big surprises to start the year has been a sharp rebound in the brick and mortar retailers everyone supposedly hates. Take the aforementioned Walmart, for example. The home of everyday low prices is sneaking higher after a dreadful 2015. Over the past month, Walmart shares are up more than 7%. Meanwhile, the S&P 500 is down more than 6% over the same timeframe. Take a look:
What’s even more incredible is that Walmart has finished in the green every single day this week. That’s pretty amazing considering the S&P 500’s down 5% year-to-date… and we don’t even have a full week of trading under our belts.
Do I think Walmart’s performance can magically save the markets from free-fall? Probably not. But when we encounter turmoil like this, the best move is to find the strong, safe names to help your portfolio ride out the storm. And in most cases, you’ll find these plays in a bucket of beaten-down names. Right now, that’s brick-and-mortar retail.
Also, it’s important to note that you don’t need to go “all in” on your trades while the market is in flux. In fact, I suggest you only buy half of the shares you normally would if you feel the need to trade this week. This strategy will help keep you from getting whipsawed too badly if the market continues to misbehave…