Time to Buy the Safety Trade – Utilities

Welcome to the elevator to hell, buddy.

Thursday, the S&P 500 tumbled to close lower for the fifth day in a row. And it could keep going. Wanna get out? Too bad. All the other buttons are busted. I hope you like hot weather.

Anything and everything that was working so far this year got whacked yesterday Small-caps tanked. Homebuilders took a kick to the gut. Not even the red-hot biotechs were spared.

So today, it’s time to look for some more gains from last year’s favorite safety trade: utilities.

We’re heading for safety. And I’ll show you exactly how to play it in just a sec…

Listen, when the market gets pissed, big money flows into the utility sector. And we’ve had plenty of chances to books gains on this safety trade over the past several months while the market’s had its little fits.

“Social media stocks tanking? Buy utilities. Retail stocks suck? Buy utilities,” I reminded you last month. Hey, utilities weren’t one of the best performing major sectors in 2014 by chance…

And if stocks continue to break down from here, utilities will be the perfect place to ride out the storm. They aren’t just a safety net, though. They can also give you a fatter wallet.

Don’t believe me? Check out a utilities trade we booked last year. Back in August, the utilities sector slipped on a banana peel. The safety trade overheated, and utility shares took a spill. It was down almost 10% in a month. That’s when we pounced.  Six months later the sector is up a cool 20% from its August lows.

And over the past week, guess which sector has outperformed all the others as the market has slumped? Bingo. Give that man a Gurkha Black Dragon.

Look, until stocks can find their footing, your best bet is to have this safety trade to fall back on this month.

Trade smart!


Greg Guenthner

for The Daily Reckoning

P.S. Until stocks can find their footing, your best bet is to have this safety trade to fall back on this month. If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE.

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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