EarningsBeats.com Digest for January 26, 2022
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Defensive Trades Make A Lot of Sense To Me
We have seen so many areas of the market get obliterated in 2022 thus far, but money is still finding its way into defensive sectors. Over the past month, energy (XLE) has been the clear leader, gaining nearly 19%. Next up, however, is consumer staples (XLP), which is down just 0.50%, while the overall market is down considerably more.
That slight loss compares quite favorably to the aggressive technology (XLK, -12.37%) and consumer discretionary (XLY, -11.66%) sectors, where the sellers have barely come up for air. Within staples, I like Church & Dwight (CHD):
Part of trading for me is to develop a plan. When I see a stock like CHD, which clearly has been a leader since November, I look to key areas where I might be interested in taking a position to maximize return, but minimize risk. Given the negative divergence in play here, which suggests slowing momentum, I believe CHD could pull back to test its 50-day SMA and have its PPO fall back to or near centerline support (pink arrows). Should that
occur, I believe the reward to risk would be solid for entry into CHD. Of course, none of this guarantees trading success, but patience and a solid strategy provide the best opportunity for success, in my opinion.
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Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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