Renewed Geopolitical Tensions Weigh on the Market: How We’re Playing It

Equities are trading off on geopolitical tensions following reports that Ukrainian forces carried out their first strike on a border region in Russia using Western-supplied missiles and Russian President Vladimir Putin approved an updated doctrine that lowered the use threshold for nuclear weapons. Under the new doctrine, Russia would consider using such weaponry if it — or its allies — were met “with the use of conventional weapons that created a critical threat to their sovereignty and (or) their territorial integrity.”

This, as well as fresh strikes between Israel and Lebanon, are lifting shares of defense companies, including TheStreet Pro Portfolio holding Lockheed Martin LMT, but weighing on the overall market. Although these recent developments renew the spotlight on these companies while also driving a flight to safety, we continue to favor Lockheed Martin stock as it ramps F-35 production, chews through its record multi-year backlog, and benefits from the need to re-build weapons war chests and rising NATO defense spending levels. We suspect what we are seeing unfold is the latest round of chess between Russia and the West. This seems like another round of testing boundaries and saber rattling, and we’ll be following developments in Washington and with its allies closely.

Yesterday, we discussed key levels we are monitoring for the S&P 500 and the Nasdaq Composite. We also continue to have our radar attuned to our shopping lists of stocks and potential pick-up points we shared with you yesterday. We will continue to balance patience with opportunity and prudence.

More Pro Portfolio:

• We're Closing Out This High-Flying Position With a Triple-Digit Gain
• Weekly Roundup: Powell and Inflation Toss Cold Water on the Post-Election Rally
• Updating Our Table for Panic, Potential Pickup Points

At the time of publication, TheStreet Pro Portfolio was long LMT.