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Our indicators are giving bearish readings this week, a downgrade from last week’s neutral-to-bearish readings. I expected them to be closer to neutral this week considering that the S&P 500 hasn’t really dropped that much from its recent highs. However, a lot of stocks have been getting hit really hard.
While my indicators are bearish, from a technical perspective, I think we’re just seeing a pullback within a bull market that will likely resume its uptrend eventually. However, I’d still be very defensive right now, as the picture is now looking much more tenuous.
The bond market looks as though it is starting to crack, possibly in anticipation for an increase in rates. Due to the huge amount of debt across the world, including student loan, housing, auto and many other forms of debt, the situation has really gotten out of hand on all fronts. This is probably the reason that bonds are getting hit, as any increase in interest rates is going to be detrimental to the bond market.
Today, I’m recommending a bearish trade on GGP Inc (NYSE:GGP). The stock is a dividend payer, and when rates are going up, investors are going to be less interested in those. Plus, the company is a real estate investment trust (REIT) focusing on shopping malls — and, of course, right now the retail stocks are really in an ice age, basically.
Buy to open the GGP Jul 21.74 Puts (GGP170721P00021740) at $0.95 or lower.
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