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[video] Dicker: Trading the Shutdown

Stocks in this article: AA BA AET

NEW YORK ( TheStreet) -- I was talking to Stephanie Link, co-portfolio director of Action Alerts Plus, about the government shutdown and how to trade the stock market during its hopefully short duration.

Now that major government generated data points like the jobs report on Friday are not going to be reported, I wondered how Stephanie was going to position the AAP portfolio.

Stephanie's first thought was that cash was a reasonable answer, preferring to sell assets and keep trading at a minimum while the shutdown was in effect.

But if it lasts for a more significant amount of time, Stephanie thought earnings would again take center stage as the most important data point to trade against.

With a lack of fundamental information available, I thought that technical analyses of stocks would yield the likely winners and losers. With a possible loss of 1.5% of GDP growth in the event of a longer-term government stoppage, the bias of the stock market will be to the downside. It makes sense to look for technically bearish set-ups and trade mostly from the short side.

The most government-dependent sectors, like health care and aerospace, would be the most likely to develop some of these profitable selling opportunities.

I talk more about trading the shutdown with Stephanie in the video above.

At the time of publication neither the author nor Action Alerts PLUS had positions in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 25 years of oil trading experience. He is a licensed commodities trade adviser.

 

Dan is currently President of MercBloc LLC, a wealth management firm and is the author of "Oil's Endless Bid," published in March of 2011 by John Wiley and Sons.

 

Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts on CNBC, Bloomberg US and UK and CNNfn.

 

Dan obtained a bachelor of arts degree from the State University of New York at Stony Brook in 1982.

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