MKM's Jon Krinsky: Buy Low Volatility Stocks, Sell High Beta Stocks

After the worst opening week for the S&P 500 in history, MKM Partners analyst Jonathan Krinsky now believes that traders should be ditching high-volatility stocks in favor of safer, low-beta names. The S&P 500 dropped nearly 6.0 percent in the first week of 2016 trading, its largest weekly decline since 2011.

According to Krinsky, the market is likely now oversold in the short-term, as the S&P 500 currently has less than 4.0 percent of its components above their 10-day simple moving average.

“This should set up a bounce early this week, but with the primary trend shifting from neutral to bearish in our view, we are more interested in selling into strength than buying weakness,” he explains.

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Among the bullish low-volatility stocks that Krinsky names in the report are Kellogg Company (NYSE: K), The Coca-Cola Co (NYSE: KO) and AT&T Inc. (NYSE: T).

MKM’s bearish high-volatility names include Affiliated Managers Group, Inc. (NYSE: AMG), Helmerich & Payne, Inc (NYSE: HP) and United Rentals, Inc. (NYSE: URI).

Disclosure: the author holds no position in the stocks mentioned.