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Short-Term “Buy-The-Dip” Stock Picks
Sectors that initially drop on tariff threats, but tend to recover quickly once the threat is softened. These include consumer discretionary (XLY), technology (XLK), financials (XLF), and energy (XLE).
The Trend is Your Friend Until It Ends
Additionally Morgan Stanley has highlighted a group of 16 stocks that appear relatively insulated due to pricing power or diversified supply chains.
Ulta Beauty ULTA, Albertsons ACT, Dexcom DXCM, BJ’s Wholesale BJ, Kroger KR, Dollar General DG, Nutanix NTNX, Keysight KEYS, Five9 FIVN, Vail Resorts MTN, Planet Fitness PLNT, Lifetime Group LTH, International Business Machines IBM , United Rentals URI, Tapestry TPR, Levi Straus LEVI.
Caveats and Evolving Risks
However the TACO Trade’s reliability may be fading. Recent aggressive tariffs even on unexpected countries, have seen muted market rebounds, suggesting investor complacency may embolden further policy follow through.
For example on August 1 2025 Trump enacted a new wave of tariffs of 10% to 41% across countries like India Taiwan South Africa and Canada, triggering broader market declines markets no longer fully expecting a retreat.
Now Trump said that he will implement a 100% tariff on semiconductors manufactured overseas unless the companies have committed to build in the US.
Potential short-term winners if tariffs back down.
Cyclical sectors: XLY, XLK, XLF, XLE ETFs and associated individual stocks in these ETF holdings.
Tariff-resilient names: Levi Strauss, IBM, Kroger, Dollar General, Ulta Beauty, etc.
Longer-Term Caution
The recent breakdown of the TACO pattern suggests that buying every dip may be riskier now.
Valuations are high again currently and complacency may backfire if tariffs stick causing deeper corrections.
Market Strategy Suggestions
Short‑Term Dip Plays: Cyclical ETFs and tariff resilient stocks with fast rebounds possible but volatile, and look for volatility to pick up now.
Long‑Term Positioning: Value and or international stocks are safer if U.S. policy becomes more rigid.
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