Large-cap tech stocks have been all the rage the past year. Anything that helped people live a better life indoors — like cloud and software stocks — exploded!
But tech isn’t the only game in town…
Out of the 11 S&P 500 sectors, Information Technology is now in seventh place. And it looks like there’s increased divergence between Consumer Discretionary and Technology, which typically trade in step with each other.
As a note for those of you wondering, divergence is when an indicator and the price of an asset are moving in opposite directions. Divergence alerts investors and traders that the current price trend could be slowing down, or even lead to a change in direction altogether.
They’re usually right next to each other, so this tells me a major sector rotation is in place. And we might see more downside in large-cap tech, and potential upside in sectors like Consumer Staples, basic Materials and Financials.
That’s just the bottom line, folks.
But don’t forget, our sector rotation strategy always keeps tabs on the 11 S&P sectors. We isolate the strongest sectors from the weakest. And right now, there’s a major focus on Consumer Staples and basic Materials.
So in today’s video, I thought I’d give you my best sector rotation strategy and show you the two stocks I’m targeting in those sectors. Mostly because that’s how to pick the low-hanging fruit — by targeting sectors ripe for picking.
The first name my sector rotation strategy is targeting is Berry Global Group Inc. (NYSE: BERY).
It’s a Fortune 500 company that makes packing materials including plastic packaging, non-woven specialty materials, adhesives, drinking cups and bottles… I think you get the message.
And its stock is up 90-plus percent the past 12 months!
With the rotation into basic Materials and manufacturing, I expect BERY to trade much higher in the coming months. I have a price target of about $75 per share over the next quarter if liquidity continues to move out of large-cap tech stocks, and into Materials and industrial groups.
But there’s one more stock my sector rotation strategy is targeting…
If you’ve been keeping up with my videos, then this second stock shouldn’t be any surprise. We’ve talked about it plenty of times before, so check out the video below to learn more about the stocks I’m targeting and my sector rotation strategy.
And as always, don’t forget to subscribe to my YouTube channel if you haven’t already so you can be notified as soon as I post my next video!