After spending most of the month of July slowly working their way higher, I am afraid that portfolios have all taken a sudden turn for the worse over the past few days, thanks to a variety of factors on both the economic and geopolitical fronts. Meanwhile, AES Corp. (AES) is a solid part of our utilities line-up, writes Nate Pile, editor of The Little River Investment Guide.
Not surprisingly, this weakness in the overall market has impacted most of the stocks in the account that is used to track the performance of the ideas I share. In fact, when you look through the charts of all of my recommended stocks, you’ll notice that our utility stocks are pretty much the only ones that are still tracing out what I believe can be considered “obviously bullish” chart patterns.
Most of the rest are shifting from what used to qualify as “fairly bullish” uptrends to patterns that range from “somewhat concerning” (many of the regional bank stocks and REITs, for example) to “pretty clearly in a downtrend.”
Of course, there are always ups and downs along the way as the market ebbs and flows. But I believe it is always worth noting when a large number of stocks all start heading in the same direction at the same time, especially if the price action is taking place across a number of sectors. Consequently, I am more bearish on the overall market this month than I was last month based on just the charts alone.
As for AES, it is a global power generation and utility company that is based in Virginia. But unlike some of the other utilities being recommended that are more regional, it has at least a small footprint in virtually every part of the world (parts of South and Central America, Europe, Asia, etc.)
Recommended Action: Buy AES.
