The stock market has been on a roll again this year. It has moved up on a seemingly undeterred ascent all year, aside from a bit of a hiccup it suffered in January. Whatever has been thrown at these markets, they always seem to shrug it off as people come in and buy any short-lived dips. One sector that has not really participated in the party has been the defense sector. Names like Northrop Grumman Corporation (NYSE:NOC) have just moved sideways, while the S&P 500 has kept climbing. Is this trend about to change?
You are probably thinking to yourself "why would this guy look at this under performing sector?" The markets can go on pretending for so long, but at some point they will have come to terms with geo-political events. Since the beginning of the year there has been tensions brewing with Russia and the U.S. While Obama has tried to handle such situations with diplomacy, that will only work for so long, before the US has to take military action (hopefully not). With the unfortunate tragedy of Malaysian Airlines flight MH17 being shot down. One has to wonder if this is the catalyst that will force the U.S. government to act militarily.
This event is tragic in nature and there has been loss of human life. However, the world will still go on and markets will move. That is why I have focused on the defense sector and Northrop Grumman Corporation (NYSE:NOC), as these companies in this sector could see a boost in share price if tensions escalate further. Technically speaking, you could say this name has been basing all year and is building energy to push higher. If the U.S. does use military action, that could be the spark that moves Northrop Grumman Corporation (NYSE:NOC) shares higher.