When you try to divine down days, you have to remember what you want to see happen, and if it happens you can't let the "tape," the "action" so to speak, re-define your thinking.
I wanted to see three things: higher oil, lower dollar and lower interest rates. These produce a plethora of things to buy that have nothing to do with China.
You can buy a stock like General Mills (GIS), with low commodity prices as a tailwind and a 3% yield. That's so much better than the 2% you get from the 10-Year. Plus there are so many changes afoot at the company to make it more natural and organic, I can't just say "nope, action's bad, stay away."
If oil can hold, then you can go back to what Bob Lang traced out last night on Mad Money: buying the oversold names like EOG (EOG), Occidental (OXY), Chevron (CVX) and Exxon (XOM), the last three offering bountiful yields that I think are safe -- although of course if oil breaks down hard these will, too. We're holding EOG and Occidental in the Action Alerts PLUS charity portfolio, which I co-manage.
The fact is though, after inventories being down and the dollar being weak, that should put a bid under oil even if we hear about supply glut around the world.
Our exports are all being hurt by the turmoil in China. However, we are not really an export economy other than the obvious business that's done in China -- more on that in a moment. We are letting the Chinese do a number on our steel stocks. However, other than Nucor (NUE), has anyone cared about them in ages?
Now, let's talk exports. There is a story today in the USA Today about companies that sell into China. The top one is Skyworks Solutions (SWKS) ¿ which is held in the Growth Seeker portfolio -- at 83% of revenue. I have gotten a breakdown of Skyworks sales from the company's annual report.
China's big, no doubt about it, at $1.5 billion in sales. But it has total Asian sales of $2.1 billion and it has sales to Europe of $47 million, and $73 million to the Americas. That means China's at 67%, not 83% according to the most recent annual report.
More important, the figures USA Today uses are not just at odds with the annual, they also could be perceived as misleading. Skyworks is most likely selling its parts in China to Chinese manufacturers of Iphones, which are sold all over the world.
China accounted for 23% of Apple's (AAPL) business, and that's mostly Iphones, all of which have Skyworks Solutions products in them. Again, that number shows that there is no way 83% of Skyworks' business is with China.
So, while I want to be as negative as possible because of China turmoil, I am struggling because of the dollar, interest rates, oil and the third party sales to China that are the real source of the alleged 83% figure.
That means, be skeptical. The world is still not ending.