One of the biggest things I highlighted in The War Room recently was an unmistakable sector rotation that’s occurring right now in some unique market segments.
Specifically, over the last week, traders have been selling high-flying names such as Okta, Roku and Twilio, just to name a few.
Look at these pullbacks so far just in the month of September.
- Okta: $130 down to $102
- Roku: $170 down to $147
- Twilio: $135 down to $109
What does this tell you?
Most importantly…
It tells you that investors and traders alike are moving into what’s perceived as more value and safety positions.
In case we fall into a recession – or in case the U.S. markets react negatively to the drone strikes that knocked out about half of Saudi Arabia’s daily crude production – it’s smart to start getting more defensive here.
After all, a sharp rise in oil prices is ramping up worries about how the U.S. economy can handle such a sudden price increase. If this price hike slows economic growth – even in the smallest way – it could threaten an already fragile economy.
How do you manage this?
That exact question came up last week during a panel discussion at The Oxford Club’s Private Wealth Seminar in Carmel Valley, California. When the microphone was passed to me, I used the example of taking safety in a name like Kimberly-Clark (NYSE: KMB).
My rationale: No matter whether we’re in a recession or not, new mothers will still buy diapers from Huggies and Pull-Ups.
Oxford Club Chief Trends Strategist Matthew Carr also jumped into the discussion, saying, “You won’t go without buying toilet paper either.”
As the maker of branded products such as Kleenex, Scott and Cottonelle, Kimberly-Clark is one of my favorite recession-proof plays available today. To me, that means the company’s pullback is buyable.
Action Plan: The $126 to $128 level represents a June support zone on Kimberly-Clark that we’re watching carefully. To receive updates and learn more about other trading opportunities, sign up for our free Trade of the Day e-letter.