MKM's Jon Krinsky: Buy Low Volatility Stocks, Sell High Beta Stocks

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After the worst opening week for the S&P 500 in history, MKM Partners analyst Jonathan Krinsky now believes that traders should be ditching high-volatility stocks in favor of safer, low-beta names. The S&P 500 dropped nearly 6.0 percent in the first week of 2016 trading, its largest weekly decline since 2011.

According to Krinsky, the market is likely now oversold in the short-term, as the S&P 500 currently has less than 4.0 percent of its components above their 10-day simple moving average.

“This should set up a bounce early this week, but with the primary trend shifting from neutral to bearish in our view, we are more interested in selling into strength than buying weakness,” he explains.
 

Related Link: Gross: Everyone Will Need Xanax Over Next Few Decades
 

Among the bullish low-volatility stocks that Krinsky names in the report are Kellogg Company K, The Coca-Cola Co KO and AT&T Inc. T.

MKM’s bearish high-volatility names include Affiliated Managers Group, Inc. AMG, Helmerich & Payne, Inc HP and United Rentals, Inc. URI.

Disclosure: the author holds no position in the stocks mentioned.

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