Strongest Stock in the Sector (w/ Steve Strrazza) | Trade Ideas | Real Vision™

TL;DR

Steve Strazza of the Chart Report suggests buying Church & Dwight (CHD) in the consumer staples sector as it is showing strength and is poised for further upside potential.

Transcript

Welcome to Real Vision's Trade Ideas. Today, we're sitting down with Steve Strazza of the Chart Report-- great to have you here. Glad to be here. So this is your first time on Trade Ideas. Can you give us a little bit of your background? Right. So my name's Steve Strazza. I began my career as a Big Four CPA, auditing some of the largest broker deal... Read More

Key Insights

• ✋ Safety trade: New highs in defensive sectors like utilities and real estate indicate a risk-off environment.
• 😘 Rotation into staples: Investors are favoring sectors with lower volatility and stability, such as consumer goods.
• ✋ Church & Dwight (CHD) stands out among staples, showing relative strength and breaking out to new all-time highs.
• 🙈 Technical analysis: Steve Strazza's trade idea is based solely on price action and ignores fundamentals.

Questions & Answers

Q: Why are defensive sectors like utilities and real estate seeing new highs?

Defensive sectors tend to perform well in a risk-off environment as investors seek safer options and lower volatility stocks. Falling bond yields and recessionary fears contribute to this trend.

Q: Why is there a rotation into staples?

Staples, such as consumer goods, tend to be more stable and offer slow but steady growth. Investors are reaching for yield and prefer the stability of sectors like utilities, real estate, and staples in risk-averse times.

Q: Which specific stocks in the staples sector should be considered?

Steve Strazza mentions large caps like Pepsi, Hershey, and Mondelez hitting new all-time highs. He also recommends Church & Dwight (CHD), which has shown consistent relative strength and is breaking out to new highs.

Q: What levels should investors consider for Church & Dwight?

The entry level for CHD should be above $69, with a stop-loss set at $65.50 to allow for potential whipsaws. The price target is around $83, based on the Fibonacci extension, offering a 4 to 1 risk-reward ratio.

Summary & Key Takeaways

• Steve Strazza highlights the safety trade, with new highs in defensive sectors like utilities and real estate, as well as the collapse in bond yields globally.

• He notes a rotation into staples, indicating a risk-off environment, and recommends looking at names like Pepsi, Hershey, and Mondelez.

• Strazza specifically likes Church & Dwight (CHD), which has been outperforming and is breaking out to new all-time highs, setting an entry level above $69 and a price target of $83.