UPDATE: Chartology: Beware Safe Haven Stocks
Think you’ve found a safe haven to wait out the financial storm? Some ports might not be so safe, after all.
Oppenheimer chief market strategist Carter Worth tells us that if you’re parked in some consumer staple stocks, you might want to change gears and go elsewhere.
Take a look at this chart:
“History shows that when you get to the last gasp phase of a bad period, holdouts tend to give up the ghost,” Worth tells Dylan Ratigan on CNBC’s Closing Bell. As you can see from the chart here, “that’s exactly what we’re seeing with Wal-Mart.”
Now, think of Wal-Mart not as a retailer but as a consumer staple. It’s a major seller of soap, toothpaste etc.
From a technical perspective, “that phenomenon (of holdouts giving up the ghost) will likely spillover into other marquis consumer staple names including Procter & Gamble , Pepsi , Colgate and Clorox .
All these stocks are at break levels, he says, "and my presumption is that they’re going to break (lower)."
But wait, that's not all. Worth also has some concerns about Exxon as a safe haven play.
He begins by explaining that Exxon is now 5 ½% of the total S&P. That’s a record for a single company. It exceeds the entire utility sector. Worth thinks the next leg is probably down.
“The historical correlation between Exxon and oil has broken down, he says. (In other words Exxon kept going higher despite oil going lower.)
“Also the historical correlation between Exxon and rival BP has broken down. However, the earnings pattern between Exxon and BP remains intact. This disconnect cannot last.”
As a result, Worth says, Exxon is a sell.
To see Worth complete analysis please watch the videos.
Carter Worth on Fast Money.
Carter Worth on Closing Bell for the Fast Money Final Call.
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Trader disclosure: On Jan. 22nd, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (EEM), (F), (FXI); Macke Owns (MCD), (BAC), (C), (TM), (SDS); Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (MSFT), (UNH), (AET); Finerman's Firm Owns (DNA) & (DNA) Call Spread; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (ANF)