A slew of narrative headwinds has slowed investor confidence, whether it's the Fed's 'higher for longer' stance on interest rates, pending concerns over a government shutdown, or the widespread woes for an overextended banking system. There is a chance that we could get a short-term pop just on a mechanical basis alone - a classic 'gamma squeeze' - but overall, the trend is down.
There's a category of stocks that tends to be hit hardest when consumers are tapped out in a down market, firms that specialize in discretionary goods and services. Because consumers don't need these businesses to provide staple items that they need, they're often the first on the chopping block when people tighten their proverbial belts.
But that also opens up a window of opportunity for investors, especially when long-term trends are bullish, and I've been saying for a while now. If consumer confidence surges again, a lot of these companies could take a nice ride higher, especially if you got them at a steep discount.
We have to play it real careful, because we're not in deep, deep correction territory just yet, and as I just said, there's a chance of another short-term pop, as market makers go through their usual dance of trying to push markets higher. There are some speculative plays worth making right now, but what I really want you to keep an eye on are the key support levels that signal ideal buy-in points for some of these household names.
You'll notice I left something out while I was covering consumer discretionary stocks, and that was very much on purpose. I'm talking about AI, and I left it out for a very simple reason. We're approaching the time where there will be nothing 'Discretionary' about AI and it will be embedded in pretty much every facet of our lives, just like the Internet during the 90s.
It's a no-brainer that every investor should get involved in this industry, but the biggest profits won't come from companies like Google or Microsoft. There is a small industry that could potentially grow at the same rate as AI adoption, and investors have a chance to see returns that could blow the doors off of the big names.
I have a full briefing out now with some targets I think have the best potential. The post, The Smart Way to Play Consumer Discretionary Stocks Right Now, appeared first on Total Wealth.
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