Worried About The Markets? Pick Up A Pack Of Smokes

QE3 is on. QE3 is off. Europe is solved. Europe is not solved. It's enough to make anyone drink and smoke, and picking up some tobacco stocks right now could prove to be profitable as money has to flow somewhere, and it will flow where it's treated best: the 2 pack a day habit. Smoking has been entrenched in this nation's culture for forever. The country was essentially founded on tobacco, and tobacco is one of the South's chief exports, despite everyone and their brother knowing the harmful effects of smoking. Smoking has taken on a whole new meaning of cool, with the resurgence of programs like AMC Networks

'Mad Men'. Most of the characters on the show smoke and are glamorizing the act of smoking. Speaker of the House John Boehner (R-OH) has a two a day pack habit, and has even been referred to as Congress' Don Draper for the amount of smoking he does. President Obama has been trying to kick the habit for years. No one is sure whether he really kicked the habit or not, but nonetheless, it does add credence to it. As worries continue to persist over the debt ceiling, a credit downgrade to the U.S.' Aaa rating, sovereign debt issues and other economic problems, tobacco stocks have held up fairly well. Names like Altria

, Philip Morris International

, Lorillard

, Reynolds American, Inc.

have been holding up well, and they are all near 52 week highs, give or take a few points. Most of the group is up today, despite the NASDAQ dropping over 1% and the "QE3" rally from earlier this morning being wiped out. Altria's Philip Morris USA and Lorillard's Newport brands are the two biggest names in regular cigarettes, as well as menthol cigarettes. There were worries recently that Lorillard's Newport brand would see a serious drop off in revenues due to the FDA, but those fears were relieved somewhat when the FDA did not come down as harsh as some on Wall Street were expecting. The tobacco stocks all have healthy yields, with Altria and Reynolds both yielding 5.7%. Lorillard yields 4.8%, and shares have risen nearly 40% this year, as investors piled into the name. Lorillard actually became a momentum stock for a while, which is extremely rare for an industry that has been around for hundreds of years. Let's face it. We're not in the best of times, and people need escapes every now and then. Tobacco is the perfect escape, if only for a little bit. It looks as if the debt ceiling issues will come down to the wire, and if something does not happen, who knows what could happen in terms of the financial markets. It is enough to make anyone want to smoke not just one pack, but two or three packs a day. So how to play this?

Traders who believe that economic worries are likely to persist might want to consider the following trades:

Traders who believe that a economic worries are likely to decline and higher growth is likely in the second half may consider alternate positions: