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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 he told CNBC that cracks were formed that threatened historic patterns. “Trading nation” On thursday.

“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, Nasdaq Composite Index The index is less than 5% off record highs, with about one-fifth of its components reaching a 52-week low and nearly two-thirds trading below the 200-day moving average. It serves as 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 settled on finding a name that was profitable, relatively cheap, and capable of rising in any market environment. CVS health As one of his favorites.

“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.”

Between concerns around New coronavirus mutant And that Federal Reserve System Push faster than expected Tighten monetary policy, Market risk is certainly rising, said Matt Marie of Miller Tavac in the same interview.

“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 protective play that Marie chose is Energy Select Sector SPDR Fund (XLE).

“Looking at energy stocks, they are outpacing the move. West Texas Intermediate Oil“XLE has fallen less than 7% from recent highs, while oil has fallen 20%, he said.

“”[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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