Breakout

Top defensive and offensive trades for a market on edge

Say one thing about this bull market, it’s resilient. A tough start to the year has almost been forgotten, with stocks fighting to push higher. In fact, the Dow Transports (^DJT), a leading indicator of sorts for many in the market, just hit a new all-time high today.

Even with this resilience, veteran stockpicker and friend of Breakout Hugh Johnson of HJ Advisors isn’t taking anything to chance, as he’s seeing some other patterns forming that aren’t completely bullish.

“Look at the performance of the market recently,” he says in the attached clip, “the market’s themselves have become defensive, the best performing sector is utilities, you see large cap outperforming small cap stocks, we see value stocks outperforming growth stocks.”

Whipping out his playbook, here are his top plays to stay defensive, as well as a couple stable offensive trades, for investors to stay on top of this market

Defense: Church & Dwight (CHD) and Unilever (UN)

Johnson says these two stocks are the premier stocks you want to buy when looking for defensive plays. Specifically Johnson likes the management team in place at Church & Dwight, and prefers these names over Colgate and Procter & Gamble.

Offense: United Technologies (UTX) and Union Pacific (UNP)

Johnson can’t get enough of UTX, noting “United Technologies is a late cycle company, performs well in the late cycles, they’re doing everything right at UTX. It’s a well, well managed company.”

“Union Pacific is benefitting from fracking, not really stuck in transporting coal in the east, another good management company, and benefiting from an expanding economy,” he says.

Johnson concludes a goldilocks type of portfolio mix is just right here. “A little defense, and a little offense is where I want to be until I see the markets clarify what our overall strategy should be.”

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