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What theme is emerging from this market carnage?

With the market practically crashing again I wondered if there were any industries hiding stocks with strength.

Poking around in the Industry Inspector at our sister site TradingStockAlerts.com actually did yield a little theme in an unexpected area.

I sorted the list of industries according to percentage of stocks above their 50-day moving average. At the top of the list was the Consumer Services/Automotive Aftermarket industry which contains only one stock: Monro Muffler and Brake (MNRO).

Re-sorting to look for industries with stocks showing bullish MACD and up near the top was the Consumer Services/Motor Vehicles industry. Among the three stocks in this segment is Midas, Inc. (MDS), otherwise known as Midas Muffler.

These stocks seem barely affected by the recent downturn but the simple reason is strong earnings. Both companies rolled up increases in sequential revenues and earnings. On a year-over-year basis, Midas disappointed a bit on revenue but shined on earnings while Monro did well in both revenue and earnings.

The theme that may be emerging here is that consumers, impacted by falling markets, disarray in Washington and Europe and a stagnant job market, are getting increasingly skittish and are restricting their expenditures. Rather than risking getting financially extended in an uncertain economy by taking on an auto loan, many are fixing their current car. Truth be told, this is looking increasingly like the more prudent move.

This kind of caution about making large purchases due to fears of a potential recession can be a self-fulfilling prophecy. For investors, however, it does suggest that certain companies that help consumers extend the life of big-ticket items, or other companies that offer rock-bottom prices for consumers forced into frugality, will be the beneficiaries of this situation.

What industries or sectors do you think might fit this theme?

Disclosure: no positions in any stocks mentioned in this article

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