Major indices open mixed, skepticism grows of coronavirus weakening

Stephen Guilfoyle of Sarge 986 LLC joins Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Jared Blikre to discuss the latest market action.

Video Transcript

ALEXIS CHRISTOFOROUS: I want to welcome Stephen Guilfoyle of Sarge 986 with us now. And, Sarge, good to see you, as always.

Just we haven't talked in a while. The last time we spoke was before this outbreak. Just your thoughts on how the market has been behaving, and when might we be able to call a bottom?

STEPHEN GUILFOYLE: All right, now obviously we can't call it a bottom just yet because we haven't had confirmation from trading volumes. We look for that as traders. Usually when we see a bottom that might be a bottom, we look out three or four days. We try to see growing volume at higher prices as stock indices try to take off. Yesterday we had those higher prices, but volume abated as we got towards the higher levels.

So we kind of knew that we didn't have a sure thing going. And today as you can see, as the coronavirus numbers get worse-- and that's really what we look at right now-- it's going to be probably a risk-off Friday. We might get some algorithmic help from the House of Representatives, but I don't know if that will be enough. That's probably priced in.

BRIAN SOZZI: Sarge, Brian here. I know you're actively trading this market. You have 20, 25 screens open probably right now. Hit us with some stock picks. What do you like?

STEPHEN GUILFOYLE: OK. Actually, I've just addressed this with my readers, so it's a good question, OK? Right now I've moved to a virus play, which has been one of my plays. I mean, that sounds awful, but it's a virus-related play, which it includes Gilead Sciences, Moderna, Amazon, Costco, Teladoc-- which has been a godsend for me-- and Clorox, all right?

We also have a work-remote-- which is what we're all doing-- a work-remote group, which is-- which is Zoom-- which is a great stock. I got to get back into it. If I get a discount today, I'll be back in because I took profits-- Microsoft, Adobe, Salesforce, ServiceNow-- which got away from me yesterday, so I still need to get that one on the book-- Nvidia, Advanced Micro Devices-- because we see the-- we saw what Micron told us about the data center and about PC and notebook sales in this environment, so that's why I'm in those two. And you're going to need some security, and you're going to need the ability to conduct transaction over the line-- online I should say. So I'm looking at Zscaler and DocuSign.

ALEXIS CHRISTOFOROUS: Hey, Sarge, I love all these plays that you're able to give us. Zoom, though, been on an absolute tear. It's up now already-- we're a few minutes into the trading day-- up another 5%, trading at about $148 a share. Isn't it too late to get into Zoom now? Isn't it a little too expensive?

STEPHEN GUILFOYLE: Well, I'm not buying it here, but what I did was take my profits thinking I was smart, and now it's trading above where I sold it. So I do have to get back in. I was hoping I'd get a discount at some point. I'm going to have to wait for the day that the algorithms turn again Zoom because we see how that is. I mean, if you look at any daily chart of this stock, there are opportunities. You just have to recognize them.

So it is part of my group-- my work from-- my work-remote group, and it's an important one. But I'm not in it myself right this minute.

ALEXIS CHRISTOFOROUS: OK.

BRIAN SOZZI: Sarge, any interest in the cruise lines? These stocks have come on hard this week. I get it, but their outlook the rest of this year is absolutely abysmal.

STEPHEN GUILFOYLE: Yeah. No, how I look at these kinds of names-- will I fly again? I will certainly fly again. Will I take a cruise again? I'm not sure about that. You know, I mean, anything crops up, and--

BRIAN SOZZI: You don't strike as a crusier anyway, Sarge.

STEPHEN GUILFOYLE: Yeah, but you know, that's how I look-- if I think like that, maybe somebody else thinks like that. And if you--

ALEXIS CHRISTOFOROUS: Well, Sarge, have you ever taken a cruise? I think that's the question. Have you ever taken one?

STEPHEN GUILFOYLE: I have. I'm not-- I mean, it's not my favorite thing to do on vacation, but I have taken a cruise. I like them more than my wife does, which would be the main reason why I don't go on that many of them. But I would be less willing to go on a cruise if, in the back of my head, there's the chance that I think I might get stuck on that boat for six weeks.

ALEXIS CHRISTOFOROUS: What about Boeing, your feelings on Boeing? It had a nice run and was actually the stock that was leading the charge for the Dow over the past three days. I see it's down now about 7%. Boeing was talking about trying to get that 737 Max back up in the air. Amidst all of this chaos with the pandemic, they were talking a few days ago about trying to get that back in the year in late spring. What do you do with a stock like Boeing?

STEPHEN GUILFOYLE: Well, I mean, this is fiscal fuel, I mean, obviously. My favorite name in the defense-and-aerospace industry is Lockheed Martin, which has been riding the coattails of Boeing on this, so I'm quite happy with that. I will fall back on things like missiles and defense technology like Raytheon or even a Kratos when I start reloading on this group.

Boeing for me, we obviously have to make sure that company's fine. They're a large employer. They're important to the feds, and they are important to the airline industry. But that-- there's no demand for that, and there's not going to be good demand for that for quite some time. So even if they get these planes in the air, it is a cost, not a benefit, for at least some time. So from a business point of view, I don't like Boeing, but I do understand why money managers are moving money into Boeing this week.

BRIAN SOZZI: You know, Sarge, the US economy pretty much is shut-- it's shut down. Business activity has ground to a halt, and a lot of pros we've talked to suggest now the US economy is at its most vulnerable-- cyber attacks. Who knows what other type of attacks? I know you're a passionate guy about the country, but do you think the ultimate play here are some of those defense names that you just mentioned?

STEPHEN GUILFOYLE: Well, it's the one thing that has to be preserved above all others because we have to be able to defend ourselves when we are weak. So yes, I think defense is someplace-- I mean, those names are volatile, and they do trade through passive investment as much as anything else, so you're going to have your down days, and you might even have a down week or a down month. But I do think defense has to be-- has to be rescued at all costs by the government.

And, I mean, we see these coronavirus numbers that-- we're seeing them on ships. You know, one positive thing I can tell the good folks who get nervous if the military can stay combat effective-- the military can stay combat effective. The young-- the young people in our military are the least susceptible of all personal types to this illness. Even if they are ill, they are young and they are physically fit. The majority of them will remain combat effective at all times.

ALEXIS CHRISTOFOROUS: I want to get Jared Blikre in here. He has been looking at the charts all morning long. And, Jared, what-- I have to imagine the numbers are pretty staggering when you look at fund outflows right now.

JARED BLIKRE: Yes. We saw record outflows from most bond funds except for US Treasuries. So there's definitely a safe-haven bid there, and also there is a huge influx into cash. So money-market funds are just absorbing much of the liquidity that's left the stock market.

And we see here the Dow is down about 700 points here, 3.9%-- 3.09%. S&P 500 down about 2.8% or so, and then the NASDAQ off 2.6%.

But let's take a look at the Dow heat map, and going to be a lot of red here except for Walmart and Procter & Gamble. Those staples plays doing well. This is just one day.

Let's take a look at the entire week here because we did have three positive days, four for some. And we see Microsoft still holding on to about 10 and a 1/2% here. Apple nearly as high. Visa, same ballpark.

But if you take a look at what's happened since the market peak of February 19-- that's 27 trading days. This is a-- this is a sea of red here. So again, anybody saying that the Dow has exited the bear market, just take a look at this. Hard to argue with that. Alexis.

ALEXIS CHRISTOFOROUS: All right. Hey, Sarge, what about the fact that people are seemingly afraid to handle cash right now because there's the idea that the virus can live on actual paper money for a while? So do you have a play for cashless or payments companies right now, like those digital-payments companies?

STEPHEN GUILFOYLE: My favorite name in the place-- which I'm not long right now, but it is-- when my book is broader-- because my book is as narrow as I ever make it right now. When my book is broader, MasterCard is a regular holding of mine. So that is my favorite digital-payments company.

I do see why people would be worried about that. I mean, when this whole thing started to break down a few weeks ago, I went and got some cash out of the bank. And I'll tell you, myself, I haven't touched it yet. I'm still paying for everything I buy with a credit card. [INAUDIBLE] So I'm trying to avoid that.