Here we are, in the second week of the government shutdown, and the markets remain remarkably complacent. The major averages keep leaning on major technical support levels: the Dow Jones Industrial Average is under the 15,000 mark while the S&P 500 has been bouncing on its 50-day moving average.
But as the shutdown continues with no compromise deal between House Republicans and President Barack Obama in sight, we inch closer to the much more serious debt ceiling deadline on Oct. 17. If we hit that, the stakes are immediately raised. We’re not just going to be worried about closed war memorials, but the potential for a debt default, credit rating downgrades and market turmoil on a scale not seen since August 2011 — the last time Republicans and Democrats locked horns over this issue.
In preparation, the sellers are starting to assert themselves, which is creating opportunities on the short side for the first time in months. Here are three stocks to short that I have recommended to my clients: