It's a drill. You just have to look at it like a drill. We saw it before in February. We get an event, last time it was a hotter-than-expected labor report, and the VIX spikes because not everyone gets washed out the first time and because there's "easy money" to be made. This time it's the tariffs that are the cause and we all have to suffer through the VIX slam and deal with the margin calls and try to find spots that are truly hurt versus ones that are just going to get stronger despite the tariffs on aluminum and steel.
What to watch for?
- You can't buy anything that uses steel and aluminum because those are blast zones. That means no autos-like you needed those- and no pipe, like those haven't been horrible.
- You have to wait a couple of days for the big international companies of all kinds to see who retaliates if any, since the countries that dump have big markets here and vice versa. Watch Boeing (BA) , it's a big exporter and it will tell you the truth. So will Caterpillar (CAT) .
- Begin to scrutinize the tech stocks that have the greatest trends going for them. Here watch Nvidia (NVDA) , which is the hottest, Salesforce (CRM) which just reported so there can be no surprises and Splunk (SPLK) which delivered a massive upside set of figures last night. They are bargains if they get hit versus where they were.
- Best Buy (BBY) is the last retailer to report a fantastic number. The chart is weak but it makes sense. So does TJX Cos. (TJX) . On the restaurant side where people are convinced that stagflation is back, monitor Darden (DRI) which has the least problems.
- Avoid consumer packaged goods. They are being singled out as having higher costs and possible retaliation candidates. Procter (PG) with a 3.5% yield will be your tell.
- Bristol Myers (BMY) , after a two-year hiatus, is back doing no wrong in the drug world. Stay away from biotech; high multiple loser with no catalyst.
- Oil stocks don't work. Oil can't get out of its own way. Rig count today will show a number that will be interpreted as negative.
- Financials are just okay because of the flight to quality and that will provoke an attractive trade going into the March 9 payroll report.
- VIX got to 37 last time; it's at 24. Natural that it gets up to at least 30 with the S&P oscillator at only minus .3. We bottomed at minus ten so you have to pick a spot to start buying-negative .3 is still a sell zone for bad stocks.
- Wait for tariffs are universally feared-they aren't yet-to do anything big.
I don't think there is more to it than that but there's always someone who gets margined out that makes you feel at 2:47 p.m. that something terrible is going to happen after the close. The 2:47 time marked the bottom along with a vicious spike in margined ETN speculators using double and triple instruments. They have to be wiped out again. Moth to flame to death.
Go forth and lose money and then conquer.