What Should I Invest In During A Stagnant Market?

Right now we are seeing a gradual upwards trend in the Market. And you might be wondering, "What should I invest in during a stagnant market?" or a calm market. Today I'm giving a little insight into what type of trade works best during this type of market and a few pre-recession sectors that do well during a pre-recession market.

The Week

Traditionally, this time of year we see a calm Market. Especially with the shorter week over the 4th of July. Trading volume was lighter than this week. The Markets showed small gains day-by-day. No Surprises. Even the Jobs Report on Friday held no surprises. The word of the week – QUIET.

I believe we well see at least another week of a calm Market as we start into earnings. I plan to take advantage of this by sticking to Money Press trades (PUT credit diagonal spreads). It is a trade that does well in a gradual up Market.

When the earnings season takes off, I expect to see more volatility in the Market. It appears most companies are doing well even with the supply chain shortages and the struggles of finding adequate labor. Last month more jobs were added to the economy and the unemployment rate held steady.

I am just beginning to see people tighten their belts as a possible recession becomes more and more apparent. I have a friend who owns the Honda dealership in the town where I live. He mentioned how slow shopping traffic for new cars has been. He said the used car area is what is carrying him right now.

The sectors which are doing the best are Consumer Staples and Healthcare. Both usually do well in a pre-recession Market.

How did I do?

How did I fare this week? Not so great. I had less than a 1% gain. When ever I enter diagonal spreads, the first two weeks of the trade are breakeven for me. The last few weeks of the trade is when the profit usually sets in.

So when you're asking, "What should I invest in during a stagnant market?" You just have to think through what sectors typically perform well during a market that's going gradually up.