beat the summer slump with these 3 hot sectors from schaeffer's investment research

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Beat the Summer Slump with These 3 Hot Sectors Bryan Sapp Senior Trading Analyst Schaeffer’s Investment Research, Inc. Tuesday, June 19, 2012

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Senior Trading Analyst Bryan Sapp reveals the 3 hottest sectors to beat the summer slump.

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Page 1: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Beat the Summer Slump with These 3 Hot Sectors

Bryan SappSenior Trading AnalystSchaeffer’s Investment Research, Inc.

Tuesday, June 19, 2012

Page 2: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

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http://www.SchaeffersResearch.com

Page 3: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

SENTIMENTMagazine

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Page 4: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Quote by T. Boone Pickens

“My Dad said a fool with a plan can beat a genius with

no plan.”

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Page 5: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

ExpectationalAnalysis®

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Page 6: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Fundamental• Earnings growth

• Dividends

• Earnings revisions

• New products/new management

• Supply/demand

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Page 7: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Technical

• Past price action to determine future price movement– Moving averages

– Gaps– Volume– Relative strength

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Page 8: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Sentiment

• Put/call ratios

• Short interest

• Analyst ratings

• Anecdotal sentiment (magazine covers, media, etc.)

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Page 9: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Think Like a Sentimentician

• “Cheap” can always become cheaper• Look for stocks or ETFs that have low

expectations, therefore avoiding the crowd• Low expectations translate into potential

buying power• Success comes from buying low expectations, not low prices

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Page 10: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Life Cycle of the Stock Market

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Page 11: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

The Wisdom of the Great Sanhedrin

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Page 12: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

“The crowd is most enthusiastic and optimistic when it should be cautious

and prudent; and is most fearful when it should be bold.”

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Humphrey B. Neill Quote

Page 13: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Same Day as the Market Bottom in ‘09

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Page 14: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Probably the Most Famous Contrarian

Magazine Cover

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Page 15: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Quote by Hank Paulson, US Treasury SecretaryAugust 2007

“I don’t see subprime mortgage market troubles imposing a serious problem. I think it’s going to be

largely contained and the global economy is as strong as it has been in decades.”

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Page 16: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

1950 Monaco Grand PrixJuan Manuel Fangio

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Page 17: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Recent Magazine Covers

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Page 18: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

No One Wants To Own Stocks

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Page 19: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Improving Jobs Market Could Lead to Higher Equity Prices

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Page 20: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Improving Jobs Market Could Lead to Higher Equity Prices

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Page 21: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Which Sectors to Play in the Second Half of 2012?

• Bullish Housing• Bullish Restaurants• Bearish Large-Cap Banks

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Page 22: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Bullish Sector –Housing

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Page 23: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Improving Data

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Page 24: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

XHB Very Strong Late Last Year

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Page 25: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Bullish Sector - Housing• Toll Brothers (TOL)

– 9 “Buys,” 6 “Holds,” 1 “Strong Sell”– 11% float sold short (and on the rise)– Recent surge in put buying

• D.R. Horton (DHI)– 14% float sold short– 6 “Buys,” 7 “Holds,” 1 “Strong Sell”– Recent surge in put buying

• SPDR S&P Homebuilders (XHB)

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Page 26: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Housing Looks Good

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Page 27: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Housing Looks Good

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Page 28: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Bullish Sector - Restaurants• Chipotle Mexican Grill (CMG)

– 8 “Buys,” 10 “Holds,” 2 “Sells”– 7% float sold short– Recent surge in put buying– Very strong price action

• Buffalo Wild Wings(BWLD)– 14% float sold short– 7 “Buys,” 7 “Holds,” 2 “Strong Sells”– Recent surge in put buying– Very strong price action

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Page 29: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Restaurants Look Good

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Page 30: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Restaurants Look Good

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Page 31: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Bearish Sector – Large-Cap Banks• JPMorgan Chase (JPM)

– 7 “Buys,” 3 “Holds,” 0 “Sells”– <1% float sold short– Recent surge in call buying– Weak price action

• Citigroup (C)– 14 “Buys,” 4 “Holds,” 3 “Sells”– ~1% of float sold short– Recent surge in call buying– Weak price action

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Page 32: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Bearish Sector –Large-Cap Banks

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Page 33: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

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Daily Chart of Financial Select SPDR (XLF)

Page 34: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Bearish Sector –Large-Cap Banks

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Page 35: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Bearish Sector –Large-Cap Banks

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Page 36: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

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Net Interest Margin (Profitability) for Banks

Page 37: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

More Reasons to be Optimistic –What a Difference 23 Years Makes

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Page 38: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

The Big Short and Margin Call were Huge Hits

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Page 39: Beat the Summer Slump with These 3 Hot Sectors from Schaeffer's Investment Research

Be Sure to Follow Us on Twitter

• @Schaeffers

• @Brysapp

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