We continue to see a tale of two (or three or four) markets. The S&P notched a .7% gain last week but depending on what sector you looked at; the results differed materially. Investors are still throwing food stocks in the garbage bin but have whetted their appetite for retail stocks.

It’s critical to monitor investor sentiment on industry sectors when making stock picks.

While it would be lovely only to need to be correct on the fundamentals of a stock, I’ve learned the hard way that being in a sector with bearish sentiment can swamp any positive news from your stock. I suffered this with Solaredge (NSDQ: SEDG) last year and in Smart Sand (NSDQ: SND) this year, both stocks in unloved industries.

Part of this phenomenon is that some institutional money managers choose their sector weightings before they pick individual stocks. If portfolio managers are adding or reducing exposure in a sector, the whole group will move together. While it’s possible to find winning stocks in a losing group, it’s a better bet to have the wind of positive sentiment behind your back.

Consumer food companies continued to make investors queasy. Amazon’s imminent closure of its Whole Food’s purchase (closed as of today, August 28), continues to hammer food stocks. Subscribers may recall I made several bearish bets on this group last spring via recommending put purchases on many food stocks.

The stocks of the winning trades, Spectrum Brands (NYSE: SPB), Campbell’s (NYSE: CPB) and Kroger (NYSE: KR), are all down an average of 18% from the put strike prices. Subscribers could have made a bundle more than the respective 42%, 64% and 110% gains if I had initiated new put positions once those were closed out. Of the losing trades, Post Brands (NYSE: POST) and McCormick (NYSE: MKC) are hovering near our old strike prices, and two are still trading above the strikes.

I continually assess winning and losing trades to learn how I can present more profitable trade ideas to you. With option trades, the timing is incredibly difficult. I am leaning towards rolling some options trades into further out expiration dates to capture the most gain. In any case, I don’t see the sentiment improving anytime soon on food stocks so look for more options trades shortly.

The upswing in sentiment towards retail stocks is exciting. Green shoots are starting to show in the group. As opposed to a few months ago when retail stocks sold off sharply on earnings releases, last week we saw several stocks jump on earnings. DSW Inc. (NYSE: DSW), Abercrombie (NYSE: ANF), Express (NYSE: EXPR) and Williams Sonoma (NYSE: WSM) all moved higher after reporting solid numbers.

I added retail stock Gap (NYSE: GPS) to the portfolio in late May and just added Steven Madden (NSDQ: SHOO) last week. Both companies are seeing increasing revenue and earnings due to better demand for their products. I don’t want the portfolio to be weighted too heavily in one industry but like the line up of cheap stocks with improving estimates for many in this group.

Around the portfolio:
Carbonite (NSDQ: CARB) announced a strategic referral deal with Code42. Code 42, a competitor in the enterprise space, has selected Carbonite to service its consumer customers. Code42 will honor all subscriptions for existing consumer customers, and CrashPlan for Home will end after October 22, 2018, at which date the product will no longer be available for customers’ use. “Throughout the transition period, Carbonite will offer an exclusive discount to CrashPlan for Home customers. Both companies are committed to working together to ensure that all customers have the best possible experience,” Carbonite said.

Integrated Device (NSDQ: IDTI) was mentioned positively by analyst Tony Stoss at Craig-Hallum. He says that Integrated Device has a positive read through from Broadcom’s (AVGO) results. He notes that Broadcom said that its enterprise segment generated strong growth due to the release of Intel’s (INTC) Purley chip. Stoss expects Integrated Device to also benefit from this catalyst, and he keeps a Buy rating on the stock.

Vulcan Materials (NYSE: VMC) announced that it reached a definitive agreement to acquire Polaris Materials, an aggregates and logistics company serving key California markets. Polaris is a publically traded stock on the Toronto stock exchange. Its business includes five distribution yard outlets in the San Francisco Bay Area and Long Beach, California.

This geographic footprint is particularly important as the company recently pointed out building planned for the Los Angeles in anticipation of the 2028 Summer Olympics. “We are very pleased to have reached agreement to acquire Polaris Materials, which is expected to further enhance our ability to serve major California markets,” said Vulcan’s Chairman and CEO Tom Hill. “With this acquisition, we are continuing to build on our industry-leading position in the state of California.

The acquisition provides Vulcan with better distribution on the West coast. This is particularly important considering California’s recent passage of SB1, which will provide $52 billion for transportation infrastructure projects over the next ten years and the passage of local ballot measures that add more than $1 billion annually for infrastructure projects.