CNBC Stock Blog
- Avis on the Road to Strong Growth: Analyst
- LinkedIn’s Growth Is Already Priced In: Analyst
- The Real Reason Behind Bank of America’s Rally
- 5 Hedge Funds’ Top Stocks Soar After 2011 Rout
- Bulls Check In to Community Health
- Bank of America’s Worst-Case Scenario Gets More Real
- Mulling Buffett's Stock Advice? Get in With REITs: Fund Managers
- So Now You Can’t Give Microsoft Away?
ABOUT THE CNBC STOCK BLOG
RSS FEED
CNBC EXPLAINS
Stock Picker: How to Avoid the September Slump
Text Size 
CNBC.com Writer
Jeffrey Hirsch, editor at Stock Traders Almanac, and David Lutz, managing director at Stifel Nicolaus, shared their insights on whether the rally will continue into September, a historically bad month for the markets—and how investors should prepare their portfolios.
“September is when we start getting the third-quarter profit warnings coming out in mass, which is going to raise a lot of fears about any kind of recovery or visibility going into 2010,” Lutz told CNBC.
“And on that visibility, Wall Street hates uncertainty.”
In addition, Lutz said Congress comes back into session in the first week of September and will deal with health care and energy legislation, which may cause more market uncertainty.
More Market Insights:
- Art Cashin: Why I Sold Stocks Yesterday
- No Double-Dip Recession Coming: Market Pro
- Rally in US Is 'Real', China 'Immense Bubble': Strategists
“Buy food stocks,” recommended Lutz. In particular, he likes General Mills [GIS
Loading...
()
].
“This group historically outperforms the S&P by over 300 basis points from September to year-end. Especially in years when it’s underperformed coming into September. Food stocks have underperformed the S&P’s move since the beginning of the year pretty drastically.”
Lutz also suggested investors look into the Federal Government IT sector.
“Their fiscal year ends on September 30, so there’s going to be a lot of activity going into that date,” he said. “The group is usually a defensive play anyway if we get some kind of pullback. We think you should be buying Saic [SAI
Loading...
()
].”
In the meantime, Hirsch said to brace for a pullback in September and told investors to watch the so-called triple witching.
Investor Intelligence:
- Focus on 'Consistent' Companies for Profit: Strategist
- Market Tips: Bullish on Miners, Financials
- Property Taxes Too High? Get Help
“All the big rallies after September have come after a decline,” he said.
“We’ve had a good summer, so I can see us easily selling back a little bit and I would watch for the second part of September—the week after triple witching has been treacherous over the years.”
Hirsch said it is best to wait for a pullback and all of October’s economic activities to kick in before entering the markets.
______________________________
Disclosure:
No immediate information was available for Hirsch or Lutz.
______________________________
CNBC Slideshows:
______________________________
______________________________
General Mills Competes With:
Kellogg [K
Loading...
()
]
Ralcorp [RAH
Loading...
()
]
Kraft Foods [KFT
Loading...
()
]
______________________________
Data is a real-time snapshot *Data is delayed at least 15 minutes
