Defensives or defense?
The two most reliable groups right now at this very moment could be either the defensives or the defense stocks. The former could work because let's understand that this selloff is deeply rooted in the bond market -- namely, that the Fed might need to be on hold because of slower data.
The latter could work because it's been the most reliable sector in a world where Donald Trump or Mike Pence favor everyone paying their way when it comes to defending themselves, instead of just relying on us.
Now, I know that the defensives have gone completely out of favor, and the only ones that act well are those that are supposed to be the targets of Kraft Heinz (KHC) . It doesn't help that other than Clorox (CLX) and Action Alerts PLUS charity portfolio holding PepsiCo (PEP) , you really didn't see much to write home about when it comes to organic growth.
But the group has good international exposure and the weaker dollar will cause numbers to go higher. And it doesn't need any of the things that Trump was bringing to the party in terms of taxes or infrastructure or repatriation.
I like the defense stocks because the one thing that Donald Trump seems to excel at is making our allies pay their way by using our arms dealers. The group, particularly General Dynamics (GD) and Raytheon (RTN) , have had so few down days that you might think that makes them dangerous.
However, it's just the opposite. The only thing that has been able to bring this group down is a market-wide selloff, and you have to start buying, at least for a trade, the moment the selloff accelerates, because there are so many bidders underneath.
Of course, if yesterday was a one-day wonder and Trump can somehow get things to die down -- a real big if, because he has turned into the abominable headline risk president -- then the growth hounds will go right back to Nvidia (NVDA) , Broadcom (AVGO) and Lam Research (LRCX) , to name three that are just in lock-step with each other.
But my money says the day two trades of the selloff will be defense and defensives. They are easier and less contagious than the techs, and they are the polar opposite of the banks.
That's just about perfect for this environment.