Sector Rotation Into Great Reopening Stocks
It's getting ugly out there today. The tech wreck of 2020 is underway. If you look at today's heat map of stocks, there are only a few that are up.
Disney (NYSE: DIS) announced that its parks are full to capacity and gained a couple of points. General Motors (NYSE: GM) and McDonald's (NYSE: MCD) are also bucking the trend.
The big high-flying stocks are down. Tesla (NASDAQ: TSLA) has fallen some 30% from its highs and still has a P/E ratio over 900. It is obvious that the market got ahead of itself — especially the five large tech names that together make up a quarter of the Nasdaq 100.
Furthermore, we have entered the September/October months, which tend to be a bit squirrelly. The looming election will add volatility with surprise “gotcha” news releases.
But there is plenty of good news for the bulls out there. Mitch McConnell has said the Senate will vote on further COVID-19 relief as soon as this week.
And the plague numbers have been dropping. Even taking into effect that it was a holiday weekend, no states have reported more than 50 COVID deaths yesterday. This is the first time this has happened since July 5.
As you can see here from data compiled by Covidtracking.com, the trends are all down:
Testing is high, cases are falling, and hospitalizations and deaths are all trending lower. Locally, Howard County, Maryland, was only using four hospital beds for COVID-19 patients as of the end of August. That's more like a bad car accident than a pandemic.
If these trends continue, this will be over in four–six weeks. It is time to start using the current sell-off to buy stocks in companies that will benefit from reopening the economy. Movie theaters, airlines, hotels, cruise lines, and yes, even Disney.
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Bespoke put out this chart showing that the number of airline passengers is increasing:
It should be noted that American Airlines (NASDAQ: AAL), Delta (NYSE: DAL), and Southwest (NYSE: LUV) are all up today, while the DJIA is down 485 points.
All the best,
Christian DeHaemer Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.
Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.
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