Pre-Market Plan [10/2]: Finding Relative Strength Opportunities
Good Morning -
My previous emailed Pre-Market Plan was on Monday 9/30, where I wanted to share the observation that this first week of the month in October carried the most macro risks from the economic calendar for U.S markets.
Why is the first week of the month so event-risk driven for today’s market circumstances? It is because there is heavy scrutiny over growth-related data (PMI/ISM) and jobs related data (Jobs Openings, ADP, Non-Farm Payrolls). The first week of the month releases this type of data, which makes for higher volatility sessions especially now that investors are sensitive to growth fear concerns or labor market deterioration.
All this suggested to me that I needed to find ideas for our Members that are outside of my typical coverage universe.
On Monday 9/30, we shared an opinion that Alcoa and XOP ETF could benefit from China stimulus. Geopolitical turmoil developments on Tuesday allowed the XOP ETF to trade +2% despite broad market weakness.
And as I watched Semiconductors and Big Tech bear the brunt of the selling in yesterday’s Tuesday session, I watched for relative strength opportunities within the U.S. indices
I found UNH and LLY to be promising names and shared that with the folks.
UNH saw a nice +2% (+$10/share) rally in today’s pre-market session.
Sure enough, these moves aren’t large but together they add up to a nice little defense against a weaker market index environment.
Our general approach in falling markets is to find names that have relative strength or are still rising.
More nuanced opinions on U.S. and China strategy in our Notes for Members later today.
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