-->
Investors may want to hold on tight.
Todd Salamone of Schaeffer's Investment Research suggests the stock market's wild ride will intensify this summer and could take the major indexes down with it.
The firm's senior vice president of research cites an unusual scenario that materialized around the June Federal Reserve rate hike that bodes poorly for stocks.
"The interesting thing about this particular rate hike was we measure short-term sentiment. It was very optimistic right ahead of this rate hike, which didn’t make any sense," Salamone said Wednesday on CNBC's "Trading Nation." "It was a paradox because that’s the worst time to be in stocks in the short term."
His thoughts came as the S&P 500 moved back into the red — closing below its 50- and 100-day moving averages. Plus, the Dow is on the verge of posting its second negative quarter in a row for the first time since 2015.
Even though Salamone is cautious on the broader markets, he's positive on retail stocks.
"The sector I do like and would rotate into is the retailers. Those stocks were left for dead — especially some of those department stores," he said. "They’ve come out with earnings this year which have beaten expectations."
The SPDR S&P Retail ETF has struggled — down 3 percent over the past three years. But, it has been regaining footing. The group has rallied 22 percent in the past year, and Salamone contends there's still money to be made.
"There are still a lot of hold and sell ratings relative to the buy ratings," Salamone said. "There’s still a lot of short interest. That short interest, by the way, is in the early innings of being unwound."
Total Votes:
Not a Scientific Survey. Results may not total 100% due to rounding.
Stacey Gilbert is the head of derivative strategy at Susquehanna.
Managing Director, ACG Analytics
Managing Director, Head of Technical Analysis, Evercore ISI
AboutTrading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.
Sara EisenSara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.
In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.
Read more
Connect Tweets by @TradingNation
