Remember the war in Ukraine?
Yeah, it’s still raging on…
But with gas prices hitting $6 a gallon in California, inflation spiking, and the Federal Reserve rate hikes front and center, the news cycle has moved on.
When a war between Ukraine and Russia isn’t the top news story… You know it’s bad out there.
I’ve been claiming we’re in a bear market for weeks now.
I also believe the U.S. is in a recession.
In other words, this is no time to go into the market alone. This environment will not be kind to buy-and-holders. Even traders will struggle to time the dips. Especially new traders, who have likely never seen conditions like this.
So today, I want to look at a trap I think many traders — new and old — are about to walk into…
Three “safe haven” stocks are down double digits in the last month alone. And on paper, it looks like a great opportunity to buy the dip.
But the Greed Gauge is showing something very different…
More Weakness Ahead for These Household Names
In last month’s Market Outlook, I warned that safe haven stocks (especially consumer staples) were set to turn lower.
And sure enough, the weakness I was calling for is already playing out. Three stocks I looked at are down double digits in the last few weeks.
But if you’re itching to buy the dip, not so fast…
Mike’s Greed Gauge shows there could be more weakness ahead for these household names.
Take a look at Kraft Heinz (KHC), the condiment giant.
The stock has tumbled 15% in the last two weeks. But, as you can see on the chart, the Greed Gauge at the bottom is still red.
That means fear is trumping greed for the ketchup king. It’s not time to buy yet.
See, as good as Mike’s Greed Gauge is at spotting the rally, it can also help us avoid stocks that haven’t gained enough momentum yet…
Like Hormel Foods (HRL), down 10% in two months. The Greed Gauge is still red on the food processing company.
And even J.M. Smucker (SJM), the popular jelly brand, has dropped 15% in one month.
But even though it’s taken a beating, the Greed Gauge hasn’t flipped just yet…
For now, these knives are still falling. If you value your fingers (and your portfolio), don’t try to catch them.
Stay Away From Staple Stocks
I’m willing to bet you have at least one of these brand names in your pantry right now. And that alone might be your justification for buying them.
No matter how much the cost of food goes up, people always need these staple products. That’s why the companies that make them tend to outperform in volatile markets.
Don’t get me wrong, these names could rally hard in the near future…
But I’ll be keeping my distance until Mike’s Greed Gauge turns green.
Now, if even the “safe” stocks aren’t a buy right now, you may be wondering what is…
Well, Mike’s Greed Gauge just so happened to trigger on dozens of stocks in the last few days — but I’ll leave that to him to discuss.
For now, just know this incredible technical tool can help you see which stocks to buy AND which to avoid.
Chad Shoop, CMT
Editor, True Options Masters
Chart of the Day:
Oil Is Volatile, But Not Bearish
By Mike Merson, Managing Editor, True Options Masters
A lot of the stock market has been volatile in 2021. Most of the time, volatility comes with poor price action.
More rarely, though, we see assets that are highly volatile but still in uptrends. That’s the case with today’s chart of WTI Crude Oil.
Just look at the price of oil from the start of the year until now, and compare it to the two years previous. If the visuals alone don’t convince you, check the Bollinger Band width in the indicator at the bottom. We’re consistently seeing wider trading ranges in oil since the Russian invasion of Ukraine.
Yet, all this volatility is just powering more gains in oil and oil stocks.
I would normally say something this volatile is great to trade, but it honestly looks like a headache. However, buying and holding oil stocks has been a great trade despite this volatility. And I expect that trend to continue.
Managing Editor, True Options Masters