Defensive Stocks

Consumer defensive stocks have quietly risen out of bottom patterns over the last few weeks, and many of them showed a burst of bullish energy yesterday.  I’m beginning to wonder if we’re starting to see a quiet institutional rotation toward safety with so many of tech stocks priced at or near perfection levels.  Please understand I’m not making a prediction I’m only pointing out what I see in charts.

The current trends are still up, and the Bulls continue to hold onto control as the majority of earnings thus far have been positive.  Like I always do I will be ringing the register and taking some profits to lower my weekend and risk.  Next week is another huge week of earnings so rest up this weekend because we could be in for another wild ride next week.  Remember to take a look at those defensive stocks.

On the Calendar

We start the Friday Economic Calendar at 8:30 AM Eastern with the GDP report.  If consensus is correct, the President is going to get the reading on GDP that he wants with a four in front.  GDP expects a very strong 4.2 as the first estimate of the 2^nd quarter with Consumer spending rising 2.9 percent.  Forecasters see Consumer Sentiment at 10:00 AM to come in unchanged with a solid reading of 97.1 in July.  The Baker-Huges Rig Count will close out this light calendar day at 1:00 PM.

On the Earnings Calendar, we have nearly 80 companies reporting with the vast majority of them coming in before the bell.  Some of the noteworthy are, XOM, PSX, CVX, WY, TWTR, CL & GT.

Action Plan

Overnight Asian markets finished the day mixed while Europian markets are rising across the board with the trade tensions now in the rearview mirror.  AMZN reported well last night but INTC another tech bellwether disappointed the market and is indicated sharply lower this morning.  Consequently, US Futures indicate a mixed open with Dow pointing higher and the Nasdaq flat to slightly lower.  Of course, that could easily change as we move toward the open due to a large number earnings reports before the bell.

Friday’s are more of a take profits focus rather than adding new risk ahead of the weekend.  Although it’s likely, I will stick to that pattern but never say never as there are always possible trades setting up.  So far the vast majority of earnings reports have been positive even with the disappointments from some of the so-called FANG stocks.  However, there still seems to be a bit of tentativeness in the overall market with so many stocks priced for perfection.  There was a noted improvement in consumer defensive stocks yesterday which may be a clue to an underlying rotation to safety.  I wish you all a fantastic weekend.

Trade Wisely,

Doug