Hello again everyone! I hope you had a great February and are settling into another new month. As we get underway here in March there are several items to stay ahead of.
First, be on the lookout for what the Federal Reserve decides to do with interest rates. A decrease in the Federal Funds Rate could provide another burst of bullishness in an otherwise exhausted bull. An interest rate increase, however unlikely, may bring about a significant decline. Stay tuned…
Second, and not as pressing as interest rates, is that March hasn’t been the best performing month for equities in recent memory. Every year is of course different but I’ll probably stay on the sidelines and temper any investment activities until I see what the month looks like. That said, trading will continue as usual but possibly with a more bearish bias.
Finally, don’t be fooled this month. It wouldn’t surprise me to see a decent spike in equities as a potential “fake out” before a decline ensues. Of course, who really knows, the bullish trend could just continue its “march” higher. I know, I’m not clever.
For today’s post, I want to take a look at 2 bearish stocks for 2024. If for no other reason than to just say, “hey, look out!”
Not Loving the Slots?
While the casino industry has rebounded, I suppose, from the pandemic I just don’t like the business in our post-pandemic economy. People are struggling with all of the most basic necessities; food, water, shelter, clothing, utilities, etc. and in that light, I’m not comfortable betting bullish on the industry just yet.
However, that point could also be the sole reason someone would be optimistic. People can’t afford anything so they might as well try their luck on the slots or enjoy another vacation. Honestly, no one knows for sure but betting bullish here on luxury just seems like a long shot.
1 of 2 Bearish Stocks for 2024 – Wynn Resorts (WYNN)
With that, the first stock I’m eyeing for a bearish move is $WYNN. Historically, March isn’t the best month for the stock and with a bearish under tone to the industry and the overall market I’m expecting to see this one fall.
From the chart above you’ll notice that WYNN is in a longer term downtrend. As is evidenced by the lower sloping channel lines and the failure of price to eclipse any longer term highs. The ThinkorSwim fundamental tab highlights the stock as a “hold” candidate across 3 of the 4 ratings with the last being an outright “buy” rating.
Fundamentally the company appears to be in much better condition than it has been these last few years. That could be what investors were waiting to see and now could be an ideal time to consider becoming bullish. However, I’m not so sure. I’m an old gambler that really enjoys the casino, but even I can’t bring myself to risk losing the money.
For an opposing view, here is an article from BestStocks.com, “Wynn Resorts Ltd Sees Golden Cross and Positive Outlook”.
In any case, I’m bearish on this one for the month and for the rest of 2024. I guess we’ll see how it plays out.
Is the Plane on Fire?
Airlines just can’t seem to catch a break. It seems like every month their is another major negative news headline from the airline industry. Whether the plane itself is falling apart or the flight attendants are wrestling another unruly passenger off the plane, it all just stinks.
If you’re in the bullish camp for airlines please reach out in the comments to let me know what you’re seeing to suggest that position. From my perspective, prices are exorbitant, fees are out of control, and unless I win the lottery soon I won’t be affording any unnecessary trips any time soon. Further, work-from-home has a long list of advocates, so I don’t see any sudden influx of business travelers either. Maybe I’m just wrong.
2 of 2 Bearish Stocks for 2024 – Southwest Airlines (LUV)
For my second stock that I’m bearish on this year I’ve turned to Southwest Airlines (LUV). As mentioned above, the prospects for bullishness just don’t add up to me.
From the chart above you’ll notice the downtrend has been ongoing since the year following the pandemic. Admittedly, I’m not sure how they managed such a strong rally the year after the pandemic.
ThinkorSwim has Southwest Airlines as a “hold” for 3 out of 4 of their investment predictions and the last is an outright “buy” rating. That said, they may be on to something since Southwest is generally not included in the negative news headlines. A bright ray of hope for an otherwise pitiful industry.
Fundamentally, the company still isn’t anywhere near it’s pre-pandemic levels. They appear, as I would expect, to be struggling in the modern economy. Although, they have been notching marginal improvements each year and that’s a welcome sign for investors.
Here is an article from Simply Wall St. , “Is Now The Time To Look At Buying Southwest Airlines Co. (NYSE:LUV)?”
Regardless, the risks outweigh the potential rewards, in my opinion, for this ray of sun in the thunderstorm.
Let me know below if you share my thoughts on these two stocks or their industries as a whole. Furthermore, please let me know if you disagree with my assessment. I would welcome the friendly counter-argument in favor of these 2 bearish stocks for 2024.
God bless,
Jeff
