Expect More Choppy Trading; STZ, GD, TAP Look Attractive

The Standard & Poor’s 500 index (SPX) rebounded from its rising 50-dma this week, after a selloff the previous week. This was an almost textbook perfect picture of how markets react in a bull market. “What’s next?” is the question most clients are asking the past few days. Despite the whip-saw volatility over the past four weeks, the technical backdrop has not changed materially.

Weekly indicators, tracking 1-2 quarter shifts, continue to incrementally turn down from overbought levels that developed in early 1Q, and are unlikely to bottom until well into 2Q.

Consequently, I continue to expect markets to remain in a choppy trading range over the coming 2-4 months which I’m expecting will present better opportunities to redeploy capital. For fully invested investors with flexibility to be tactical, I continue to recommend rotating capital from well advanced leaders to more defensive groups and stocks.

This week’s chart is of Constellation Brands (STZ) which appears to be in the early stages of bottoming at long-term support around its 200-week simple moving average (SMA). In contrast to the high momentum, high P/E technology leaders that are now well above their 200-day moving averages, STZ has spent the bulk of 2019 consolidating in a range between $175 to $210.

checkout-thomas-lee image
checkout-logo image

Become a Member To Access Fundstrat Research

Fundstrat Direct gives individual investors access to Tom Lee's research, previously only available to banks and hedge funds.

Monthly

$199/mo

First Month Free

Join Now

Annual

-15% $2,028/yr

List Price $2,388

Savings: $360/yr

Join Now

Why Join Fundstrat Direct?

Fundstrat Direct helps you invest confidently with the same research banks and hedge funds use to navigate the market.

Daily Strategy Icon

Daily Strategy from Tom Lee & Team

Stay ahead of consensus with daily updates on key developments & catalysts and opportunities ahead.

Real-Time Market Alerts Icon

Real-Time Market Alerts

Analysis on market-moving events and actionable opportunities delivered instantly from us to you.

Curated Stock Lists Icon

Curated Stock Lists

Choose the portfolio that best suits your investment style, preferred asset class, and time horizon.

Monthly Market Update & Top Ideas Webinar Icon

Monthly Market Update & Top Ideas Webinar

Attend engaging webinars with Tom & team featuring our top ideas and near-term market outlook.

Daily Technical Strategy Icon

Daily Technical Strategy

Receive tactical opportunities, actionable signals, and fundamental analysis from our proven research team.

Live Analysis on Your Holdings Icon

Live Analysis on Your Holdings

A monthly webinar featuring live analysis on member-submitted stocks and questions.

Disclosures (show)

Events

Trending tickers in our research