How To Play A Repeat Of Last Summer

 |  Includes: AAPL, GOOG, MA, PCLN, VFC
by: Adam Alvarez

To this day there is a major reason why every trader, brokerage firm or financial advisor will encourage investors to look at charts. Whether they be of the short or long term variety, these charts have an uncanny knack for preparing investors for the inevitable. A chart can prepare and warn investors of a company's impending share price movement, at times, better than the company's own financial results. The charts of the major indices also prove pretty decent indicators.

At this point, charts paint a dreary and ugly road ahead for the indexes and the majority of stocks look to be strife with red arrows in the weeks and months ahead. Blame it some more on Europe, jobs or a dangling tax rate that has left a fair share on the sidelines. However, a repeat performance of last summer is in the cards even if the aforementioned headlines prove less brutal than initially feared.

Last summer, the Dow Jones Industrial Average peaked at nearly 12,900 in the beginning of May. By the end of the month the index had been pummeled back to 12,000 before enjoying one final resurrection in June. After hovering around 12,600 until the middle of July, the index then embarked on one of its worst summers ever. By the time the bloodshed concluded in early October, the DOW was under 11,000 and off 2,400 points from its May high.

With practically the identical pattern forming in the markets this time around, including the June rally, the possibility of a serious downturn in markets clearly awaits. Aided by the European Union growing ever closer to dismantling and the potential for an unforgiving tax hike leaving the economy in severe retraction, a cascading ripple effect dooming both traders and average consumers potentially awaits.

For if risk and volatility is simply too much to bear, the only strategy is to exit and exit quickly. All before the next breaking news story comes out of Europe or before the July jobs report adds to the fear the June report created.

However, for those still wiling to give the markets a try and in charge of a portfolio that is willing to endure a high risk environment, below are five stocks to take a look at to possibly make money off the summer swoon.

  1. Apple (NASDAQ:AAPL): Apple may not have recently wowed investors with the next big thing at the Worldwide Developers Conference, but there is no doubting they remain the company the majority of investors would love to have a stake in. Also, after blowing away second quarter earnings and trading $70 off their April highs, the risk of getting in at the peak seems to have faded.
  2. Priceline (NASDAQ:PCLN): Amidst a pullback even stronger than that of Apple, the company's shares are trading at a $125 discount to where they were in April. Being a travel website in the summer also doesn't hurt your bottom line.
  3. Google (NASDAQ:GOOG): Although missing earnings in the fourth quarter of last year and falling after their first quarter report, the company remains one of the most conservative you can be in come earnings season and amidst market weakness. Their solid second quarter beat last July also helped shares stay above water while the broader markets crumbled.
  4. Mastercard (NYSE:MA): Although some may be hesitant jumping into a financial services stock, Mastercard has been a consistent and proven winner over the last few years. Between May and October of last year, shares gained almost $90. If able to hold support at $400, shares may prove to once again have a successful summer.
  5. VF Corp (NYSE:VFC): If one wants to enter the summer as risk averse as possible while also jumping on the back of a potential money maker, VF Corp provides the ideal scenario. Shares gained $30 between May and October of last year and the stock has shown the ability to avoid wild price swings even in the face of its $140 price tag.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.