I hope you all had a relaxing Labor Day weekend because the markets were hit full force yesterday.
Over the past few days, the long-awaited - or should I say long-dreaded - U.S. tariffs on Chinese imports came into official effect. And the markets responded...
All three major indexes opened in the red. And the sharp dive continued as the day went on.
But while the trade war has been investors' main focus as of late, it's not the only thing to pay attention to...
When looking at market moves, you can't use tunnel vision. There's more going on than meets the eye.
In fact, as the broader market drops, these three industries are climbing...
How Hurricane Dorian Is Moving the Market
When you look at the headlines plastering the financial news networks post Labor Day, you're seeing more than just the U.S.-China trade war.
The manufacturing index for August also came in yesterday morning, and, well, it wasn't great. At 49.1, the Institute of Supply Management posted its lowest level since January 2016. For the first time in three years, the U.S. manufacturing sector shrank.
On top of that, we have Brexit looming closer and closer, its weight on global markets growing heavier every day that goes by without a deal.
And then there's Hurricane Dorian.
As the terrible storm moved through the Bahamas, my thoughts and prayers went out to all Bahamian citizens. This powerful category five hurricane was a monster, cutting a swath of destruction through the Bahamas and bearing down on the U.S. coastline as I write this. It's projected to move north, avoiding a direct hit on the United States. I am hopeful that this will happen.
Hurricanes are a part of life in Florida and the Gulf states, where most hurricanes make landfall. In fact, hurricanes touch down in the United States an average of 1.7 times per year. One-third of those are major hurricanes. They can bring down a ton of destruction and loss of lives. The average hurricane inflicts $21.5 billion in property damage.
So, on average, $36.6 billion moves into U.S. companies each year during hurricane season - May through November. As a result, hurricanes also impact stock prices, and we're seeing that in the market amidst the overall dive - specifically in the following three industries...
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- Building companies
Building stocks are an obvious grower. Buildings must be repaired and sometimes even rebuilt after a hurricane, and during the week before and four weeks after a hurricane, building supply companies like Home Depot Inc. (NYSE: HD) usually rise.
Historically, the best performer in this space is Masco Corp. (NYSE: MAS), manufacturer and distributor of building and home improvement products. It's proven to outperform the S&P 500 by 9.6% after a hurricane has made landfall.
- Auto companies
Cars damaged during a hurricane often need to be replaced as well. Carmax Inc. (NYSE: KMX) is the largest used car dealer in the United States and outperforms the S&P 500 by 12% around a hurricane.
- Oil Companies
Oil companies tend to outperform the S&P 500 the week before and four weeks after a major hurricane as well.
If you've ever been in a multi-hour gas line in Florida as a hurricane approaches, you know part of the reason for the rise in oil stocks... higher demand. Additionally, hurricanes, particularly those in the Gulf of Mexico, can disrupt supply. Hess Corp. (NYSE: HES) outperforms the S&P 500 to the tune of 14.7% around a hurricane. Marathon Oil Corp. (NYSE: MRO) outperforms the S&P 500 by 14.2%.
We know that the market is always moving. But it's not just earnings reports and tariff reports that we need to pay attention to...
When it comes to the market, you can't look at it through a telescope. There's more than meets the eye - and we're seeing that now with Hurricane Dorian.
Stay safe, everyone.
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The post Three Rising Industries Amidst the Market's Nosedive appeared first on Power Profit Trades.
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About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.