Mid-October Corrections Isn't the Future for 2019 -- Tech Is.

2018-11-07 | Jack Roberts

Decisions, decisions. So, what shall you do in this red-hot volatile market? For options traders, I hope that sitting on your hands remains an option, but there are still opportunities out there! In 2019, I’ll be looking for stocks that are inherently valuable to America’s GDP. I’ll be looking to take advantage of America’s retail backbone. When I think of value I can’t help but think of Home Depot (HD), Dollar Tree (DLTR), Dollar General (DG), Starbucks (SBUX), and my new favorite Walmart (WMT).

So far, in late 2018 we’ve witnessed a relatively heavy distribution out of tech, and I’m sitting here screaming the money is returning to value stocks, you know, where Americans really spend money other than at Amazon. Walmart has attempted a much needed pivot — in my eyes, it’ll succeed as they jump to compete with Amazon streaming and subscription services, so I’d say be ready to see some robust growth in Walmart moving forward. Again, we’ve seen companies like Starbucks pivot as well, new management, slight increases in product pricing, and still has held on to its base consumer with not much interruption. This goes to say, Starbucks just proved a whole lot of shorts wrong with their recent earnings today up 10%.

I’m calling mid-October corrections the biggest fake out of 2018. This move in the market’s got a lot of people emotional, the bears reared their ugly head, but I believe that’s all they did. A continuation to see more upside in my opinion will continue to take place in 2019 (all the way into April). I bring up April of next year only because this is my cut-off date for having such a bullish sentiment. At some point prices can’t continue such a steep incline and thus, will have to purge. I’ll be the first to tell you I don’t think we can continue to see the top for much longer. So I’m giving myself time to observe volatility. I’m watching my position sizing and making sure that my risk/reward doesn’t get too out of hand. I’d say that if you’re not a conservative trader now would be a good time to lighten up your load. Dollar General and Dollar Tree still have much needed value and I continue to be bullish.

Tech had a massive 2017 and 2018 and while AMD, NVIDIA, and Intel compete for market share, I can’t help but think that these trends continue as well. With gaming stocks moving into downloadable gaming and subscription-based purchases, chips and processors will have to continue to improve. Hence, why I’m so bullish on semiconductors. Gaming is growing steadily and coming out of the shadows as a main industry. The Dallas Cowboys stadium is going to be showcasing a major gaming tournament (for crying out loud) in 2019 so it’ll be interesting to see what effect that has on the overall digital gaming galaxy. With all this said, processing speeds and video data processing will be of utmost importance. I’ll continue to follow these underlyings moving forward — but to reiterate, I remain bullish through the holiday season but am weary of another pullback in 2019. I estimate that AMD continues to take market share from Intel, and Nvidia continues to be a steady market leader as it’s still preferred as a high-end chip developer with excellent quality. For now, it remains the battle of these big 3 names in which I look forward to following into and after this holiday season.