By: Tom Gentile
on November 10th, 2023
Here we are in November, and I know the prevailing event that may be dominating everyone’s thoughts is either Thanksgiving or how soon is too soon to put up one’s Christmas Tree.
There is one other holiday that is very important or should be to all Americans, though it isn’t an official National Holiday, and that is Veteran’s Day. It takes place this Saturday, November 11, 2023.
Veteran’s Day is a public holiday established to honor US veterans and victims of all wars.
Before I get into education, investment ideas and charting let me first and foremost than each and everyone who has served or is currently serving in our US military. My team and I want to thank you all for the commitment and sacrifice each of you and your families have or are making to protect the freedoms of our great nation.
We are Living in Some Unsettling Times
We, and by we I am speaking of the United States, may not be directly involved in a war with another country, but there are wars going on right now, globally.
The Russia/Ukraine war has been going on for almost two years. February 24, 2022, is the reported Russia attack on Ukraine.
The most recent and second notable war going on is the one in the Middle East between Israel and Hamas. Hamas first launched an attack on Israel October 07, 2023.
In both cases there wasn’t truly a substantive bullish move in the stock markets. There is a belief that wars, as brutal as they can be, tend to be bullish for the markets.
There does tend to be a spike in oil stocks and with Russia Ukraine I partially attribute the spike or pop in the ETF USO at that time could be the seasonally bullish pattern for that sector from mid-Feb to mid-July.
Oil and energy stocks (USO) popped a bit higher on the news of the Hamas attack on Israel a month ago and shortly thereafter was up about 8-points only to have sold off by now.
The wars haven’t necessarily driven up the oil and energy sector nor have they turned out to result in a bullish market. One can blame the highest bond yield in years, potential recession and the Fed fighting off inflation as the overhanging concern.
But while all that is going on the purpose of this article is to look into stocks of companies related to stocks that exist to provide an effective defense of this country. Defense Stocks.
I always tend to see events and experience in my life and relate them to the markets. Veteran’s Day apparently is no different.
I know there are companies that exist that specialize in defending our country. These are classified as Defense stocks. Whether it be Aerospace and Defense, aircraft, ships, vehicles, weaponry, electronic systems, and Cyber Security.
Here is an example of 7 companies ticker symbols you all can look up if you wish to delve deeper into their fundamentals and charts.
RTX NOC LHX BWXT LDOS LMT RKLB
This article isn’t being written because these stocks are anticipated to pop higher due to Veteran’s Day.
It is being written because the holiday has me thinking of what companies that specialize in the defense of our country are doing from an investment or trading perspective and if there is an investment or trading opportunity in any of them.
There are more defense companies than the 7 tickers listed above. There isn’t anything more special about those 7 than others if you might be thinking that because they are included in this article.
Ways to Analyze
One way to find investment ideas is to analyze stocks at or near their 52-week high. The thinking is stocks are at or near their highs for a reason (good reasons) and strength may beget more strength.
Out of the 7 listed BWX Technologies Inc (BWXT) is at 92% of their 52-week high.
Take a look at the chart below and if you decide to look in to the options and you and your broker approve of a stock like this for your portfolio that is a choice, or one can consider options trade ideas.
Here is the char ton BWXT with its 10-day Simple Moving Average (SMA) on it.
If one wants to consider a bullish options trade for BWXT there is a straight long call where one can see what option in its chain has the lowest percent to double.
Here is a result when I run a search for lowest % to double – Calls in my tools, www.tomsoptiontools.com.
Please not these are NOT recommendations.
Other bullish option strategies to consider are Call Debit Spread, Put Credit Spread, Butterfly Spread, etc.
Play the Haystack NOT the Needle
You all have likely hear and or used the phrase find the needle in the haystack.
That would be taking a bunch of different ticker symbols whether they be from a specific sector or not and then trying to find the ONE stock that you deem the best opportunity.
One approach my team and I like to use is the reverse of that phrase and that is trying to find the haystack and see if it can be invested in, or it has options to trade.
The haystack as I am referring to it is the ETF. An ETF (Exchange Trade Fund) is a basket of stocks that represent a sector of the markets where one can possible trade options on it or just invest in units of the ETF itself and try and profit. This takes the pressure off trying to find the one out of the many that may do well or outperform the others.
If one is wondering IF there is an ETF for Defense Stock, fear not, there is.
The Direxion Daily Aerospace and Defense Bull 3X (DFEN)
DFEN seeks daily investment results, before fees and expenses, of 300% of the performance of the Dow Jones U.S. Select Aerospace & Defense Index.
Below is the Year-to-Date Candle Chart for DFEN.
As with any security this is not a recommendation. It is simply an ETF I was inspired to search up as I reflect on Veteran’s day and all those who have and are serving.
— Tom Gentile
C1P: Chief 1-Percenter
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