Monday, April 11, 2016

Isolationism? Another Sell Rating, Sell Ratings On SPY, QQQ, IWM And Several Companies

 

Last period of major isolationism 1930-1944 coincided with down markets.
Both sides of political candidates leaning to isolationism.
Dollars are being sold which could be a warning sign for market selling.
The general ETFs that we would have a sell rating if you believe in this thinking would be the largest market ETFs ($SPY), ($QQQ), ($IWM). A case can be made to trade the leveraged ETFs but there is probably better liquidity in the straight ETFs even when factoring in the lack of leverage. We don't like recommending to go on margin because stock markets are risky and leveraged ETFs help someone go on margin without realizing it.
As for stocks, if you believe the isolationist scenario, then probably anything is a sell rating. We want to focus on the stocks that have the largest international exposure or beta and an already declining 'relative strength' to the S&P 500. The thinking being is that if these stocks are already underperforming in an up tape, they should trade lower in a down tape. There are many counterarguments for this, of course, but that's our thinking.
The international companies with the largest international exposure that we feel already have negative relative strength:
WYNN ($WYNN):(Below in white versus the SPY in blue), non-US exposure:70%
To see full report click here

Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. Disclosure: These trades can lose you money and principle especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS

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