Lockheed Martin (LMT) and Northrop Grumman are two stocks that are setting up very well as we get ready to turn the calendar to June. Defensive stocks are a logical group to look at considering the continued tensions between Ukraine and Russia. Even if there is some sort of peace agreement between Ukraine and Russia (something we are all hoping and praying for), it is very likely that the United States and its’ allies are now in a new cold war with Russia. As more countries continue to increase their defense spending, it is logical that companies like NOC and LMT are likely to see strong earnings and sales growth in the coming months.
Northrop Grumman has shown impressive relative strength over the last five months as it has held above its’ 200-day moving average and 65-day ema while both the Nasdaq and S&P 500 have had severe sell offs. Lockheed Martin has also held above its’ 200-day moving average and has had only two closes below its’ 65-day ema in 2022.
While LMT and NOC are both setting up well from a fundamental and technical setup, it is important to note that the general market conditions are still not ideal. It is very possible that we may see another wave lower in the coming months, or a choppy environment as the market sorts out inflation, interest rates, and the war in Ukraine. Thus, if I choose to purchase one of these stocks, I will have a stop loss in place to limit my risk. LUNA (Terra), ARKK, and countless other stocks have shown the dangers present to a trader who refuses to manage his or her risk.
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