Just hours after I delivered a trade recommendation to hedge the coronavirus market drop, markets took another 3% to 4% hit. That's how fast shares are moving right now.
There are a lot of unknowns when it comes to what's ahead for the coronavirus market impact. But using my history of trading in the stock market, I've found there is a sector that often leads the market lower in similar circumstances as we have today: the financials.
I've been focusing on this group for the last week. A closer look shows us that there are a couple of companies within the financial sector that have actually not been making new highs, have been trading level since December, and are now starting to lead the rest of the sector down.
These are what I refer to as my "Worst in Breed" stock picks as opposed to my usual "Best in Breed" picks. A "Worst in Breed" pick is a stock leading a hard-hit sector even lower.
The coronavirus is going to have a global impact on the economy, which we'll see play out in the financials. These stocks are intertwined with all the large economies. There will be continued weakness in this sector.
That's why today, I'm going to show you a way to play the entire sector's drop with two trades that are so easy to execute, even my mother could do it.
About the Author
Chris Johnson is a quant - he's obsessed with building and perfecting mathematical models that allow him to predict, with startling accuracy, the direction of the markets, entire sectors, and individual securities. For the last year, he's been researching and building a new system that lets him move swiftly in and out of the hottest stocks in the market for life-changing gains - entirely on his own terms. The results of his newly-minted Night Trader system are nothing short of amazing.
Chris also contributes to Money Morning as the Quant Analysis Specialist.