Recent trading saw a sustained move out of the market’s deeper cyclical pockets into defensive sectors. A number of factors were cited for this rotation, including renewed apprehension regarding the eurozone debt crisis and the unrelenting global growth fears. The Wall Street Journal even said that some money managers who profited from this year’s rally are considering going to the sidelines for the remainder of the year due to dampened risk/reward ratio.
Investors also fear October because the market crashed in this very month in 1929 and 1987. However, the reality is that stocks have done extremely well in it overall. It is the third-best performing month behind November and April over the past 20 years and I expect continuous bullish opportunities in the near term.
Plus, Q4 has historically been the best of the year, with the Dow gaining more than 5.3% during the past 20 years with positive returns 80% of the time. As such, I’ve remained very active in my Trader’s Advantage buy list. A few names on my radar this week include:
Visa (NYSE:V), the big transaction processor, is a perennial favorite and tends to do well at this time of year. I would love to have a chance to buy around $132.
BOFI Holdings (NASDAQ:BOFI) is an Internet-based bank that provides financing for single- and multi-family residential properties and small- to medium-sized business without a branch network. Shares are up sharply this year, and have just taken a bit of a breather in the past month. I expect it to get moving again soon.
HollyFrontier (NYSE:HFC) is one of many gasoline refiners that has performed very well this year, as expectations for a more robust economy have intersected with a dwindling number of companies able to refine crude oil and natural gas liquids into usable fuels. HFC is a specialist in the sort of sour crude that is produced by oil sands and shales. I’m looking for an opportunity to recommend it soon.
Jon Markman operates the investment firm Markman Capital Insights. He also writes a daily swing trading newsletter, Trader’s Advantage. As of this writing, he did not own a position in any of the aforementioned securities.