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Many bulls are probably hoping for a new all-time closing high for the S&P today (Friday). But while stocks gapped up at the open, as of 11 am EST they have given back most of their gains and the S&P is only marginally in the green. The all-time closing high is 5,254 from Friday, March 28.

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Next week the focus will be Home Depot (HD) and Walmart (WMT) earnings and the April CPI Report on Wednesday morning. I continue to be long WMT and short HD. As I’ve said many times in previous blogs on this trade, because I expect the economy to contract I want to be long consumer staples and short consumer discretionary. WMT sells staples like groceries, toothpaste, laundry detergent, etc.. while HD sells discretionary home improvement products. While my HD short was starting to get away from me a couple of months ago, the stock has come in quite a bit since. This trade won’t really start working unless the economy does in fact roll over into recession.

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I also continue to like agricultural plays including John Deere (DE) which reports earnings next Thursday morning. At 15x their FY24 net income guidance, it’s hard to see losing much money in DE and there is significant upside IMO.

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