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Campbell & Co. President Michael Harris and Lowry Research Corporation President Paul Desmond discuss the sectors investors should consider in thi...
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The market panel joining us now Michael Harris president of Campbell and company we also have president of Lowry research corporation Paul Desmond -- most of you have similar -- slightly different perspectives here and I'd like to start with Paul like you're more bullish.
So so why having that what is it about this market is it something that you heard Scott resonate there.
Well there there are certain sign is that you look for for for internal weakness in the market.
That that that would suggest that the market was topping out.
We don't really see although signed -- more of them are curing every day but is still fairly early in the in the process of deterioration.
So what of what we fed as a big rally since June.
Without us -- a correction of significance and so we think now we're having a correction.
We are not at the bottom of it yet we think we're gonna go somewhat further down.
And then -- that correction should lead to.
A new rally but the new rally would be highly selective -- -- and investors.
Will need to pick their stock's very very closely.
We'll get into some of those -- -- a moment but Michael you've you've stuck with this rally and good for you for having done so.
Although the past couple of days it hasn't been good but how much longer are you willing to stick with this bull market do you think -- If if we have another week next week like we had this week is it time to pull out.
Well I think that's a really good point I mean our our systematic -- find models have been following this uptrend for the last couple of months but.
As you pointed out the last couple of weeks we've started to see a bit of a correction.
Other question is -- you reach this pivotal point.
Are we starting a new downtrend in the equity markets and if so our models -- pick up on that and we will quickly get short we've already seen our fast models get short this market.
And now -- medium term trend models are also picking up on the downturn.
So in a couple more days down moves we could certainly see our portfolio turned from long short -- what what would you short.
-- we're shorting S&P and NASDAQ futures in particular as I said we're still long at this point.
But with the concerns in Europe but we're hearing that the Greece.
They're like latest tranche of bailout may be delayed at this point we've got Spanish ten year yields now rising.
Back up above five point 8% heading back towards 6% and still rajoy hasn't asked for a bailout.
And now we're hearing that Germany may also be pulled into the European not crisis with slowing growth so.
As all of these factors now we have but continued continued concerns about the Middle East.
Now that they've taken a shot at one of our drones Obama may have to deal with the nuclear -- sooner rather than later right in this may set set stocks to the downside.
Okay it will also find all have some names that he's buying right now let's get to the sectors and you picking two stocks in each sector that you really like right now.
Well I think this has to be done carefully -- who were in an old bull market and and we're not at the bottom of the correction yet so we're insists a little lower early for for for picking stocks but the three.
Stronger sectors at the present time are industrials.
Financials.
And consumer not a signal -- And so then we go down into the industry groups and we find that in in the within the industrials probably the the strongest industry group.
Who's the building supplies.
And under building supplies we have gluten Louisiana-Pacific.
The ticker -- as -- -- PX.
And also order.
Industrials.
-- while in heavy equipment.
Is a company called Joy Global what's the -- symbol is JOY.
They build mining equipment.
In the financials.
It's it's a very selective.
Sector.
But the insurance stocks are showing.
Exceptional strength and and 22 stocks that we like -- Hartford financial.
Symbol HIG.
And first American.
FAF.
And then in the consumer non cyclicals.
-- -- Mostly tobacco him and that and liquor -- default 400 fans -- after eleven we loved.
Fortune Brands civil FB.
HS ND IGO.
Which is a symbol is.
Well but for me DI -- symbol is Johnnie Walker by that letting go back to Scott Bauer because Scott after after.
Throwing a little cold water over your theory that this sort of this market drop didn't have all that much I think did the market -- -- about 80% about the election.
But you don't but what about financials today.
The market was basically flat but financials had a pretty good -- not -- bang up day but it was a pretty good day for finances aren't they do for a rally.
I don't know I I wouldn't say they're due for a rally but I don't see the sharp sell -- that might I think financials here till the end of the year.
You know barring that there there's not know lot no.
Final decision on the fiscal -- -- probably are -- -- going to be a very tight range I don't think we really rally from the financials it in here and I know they did a leader in the marketplace over the last couple months.
I I don't I don't particularly like that -- -- not think it sort of by any stretch of the imagination.
I just don't see the appreciation and in the next six weeks -- -- good stuff guys -- thanks Scott we're gonna see your view.
My care is Paul Desmond thanks a million appreciate have a good weekend thank you.
