A Defense Stock Set to Run in Market Winter

Written by Rob Goldman   

In the latest edition of The Goldman Guide, we feature a defense stock that is a pure way to play all of these UFOs and unmanned aerial systems the US has shot down in the past week. Plus, we declare a stock market winter is upon us based on too many signals we just can't ignore.

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The Goldman Guide

  • VOLUME 8
  • ISSUE 5
  • February 12, 2023

INSIDE OUR 10 MIN PODCAST:

  • The Stock Market Today
  • Get Defensive
  • New Featured Stock

INDICES & CATALYSTS

KEY TAKEAWAYS

  • Fundamental data, metrics, and sentiment have quickly turned negative and appear to stay that way for a spell
  • Technical data is even worse than fundamentals
  • Our featured stock is in the defense segment and there is a reason behind this play

KEY FIGURES

Fwd P/E RSI
DJIA 18.1 49.7
S&P 500 18.6 44.9
NASDAQ 25.2 38.7
RUSS 2K 23.3 42.0

Stock Market
Winter is Here

We have been preaching for a month that once we reached the tail end of the earnings season stocks would start to swoon. Well, after rocking two weeks ago, they began a downtick last week. So, we are calling it now. It’s winter time for stocks. Or swoon time. If you have some gains, take them off the table. Be especially discerning with new ideas, and unless they are extenuating circumstances, buy Growth at a Reasonable Price (GARP)-style stocks.

The negative data is just too negative on a fundamental and technical basis. Here’s what happened and where we stand.

Oil prices, which were down sharply YTD a week ago, rose 9.2% last week, prompted in part by Russia. Conversely, the VIX was up a whopping 12% last week. Both of these have an inverse relationship with attractive/up markets. The AAII Sentiment Survey’s Bearish figure is now too far below historical averages, which often portend future drops.

There was also a massive ETF outflow last week in the SPDR S&P 500 Index ETF (SPY)—to the tune of $7.1B. Inflows in general were poor as the top 3 inflow levels were less than the top ETF inflow a week ago. This shows waning confidence across the board. Finally, the indices’ RSIs crashed and are either Sells or Neutrals. Plus, nearly all the 20, 50 and 200 DMAs for these indices are screaming Sell.

We have been anticipating a negative economic data-focused market would follow earnings season and we are here. We still like the 3 stocks previously highlighted in the Guide, suggest having exposure to the VIX Index through VXX and are introducing a new Defense stock for the times.

Have a good week!

The Stock Market Today

Notable Numbers

AAII Sentiment Survey (figures rounded)

Current Last Week Long Term Avg
Bullish 38% 30% 38%
Neutral 38% 36% 32%
Bearish 25% 35% 31%

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