Top 2 Defensive Stocks That May Keep You Up At Night In March

As March 2025 unfolds, the U.S. stock market is flashing warning signs. Trade war fears sparked by tariff threats, cooling investor optimism, and a sharp pullback in high-flying tech names like the Magnificent Seven are putting portfolios under pressure. With economic uncertainty looming and recession whispers growing louder, portfolios are under pressure. For investors tired of riding the market’s rollercoaster, especially in individual high-growth tech stocks, chasing the next hot stock offers little comfort. Instead, dependable havens like consumer staples, gold, and dividend ETFs beckon, offering stability, income, and a buffer against the potential storm. In times like these, a defensive playbook isn’t just prudent; it’s essential. So, let’s examine three ways investors can add an extra layer of defense to their portfolios.

The first three months of 2025 have been marked by higher-than-expected market volatility, with investors navigating a surge in uncertainty. As of March 17, the CBOE Volatility Index (VIX) – often called Wall Street's "fear index" – hovered around 22, after hitting a 2025 peak of 27.9 a week earlier. The VIX is calculated based on S&P 500 index options prices, reflecting the expected volatility over the next 30 days. A sharp rise in the VIX this early in the year is noteworthy, as it suggests investors are pricing in significant near-term risks. At the same time, the S&P 500 has officially entered correction territory, having fallen 10% from a recent closing high.

Several macro factors have contributed to the market rout and spike in volatility. Notably, President Donald Trump's repeated threats of tariffs on key trading partners like Canada, Mexico, and the European Union have kept markets on edge, with investors struggling to price in erratic policy shifts. Additionally, there are growing concerns over competition risks disrupting U.S. artificial intelligence (AI) efforts, particularly from Chinese startups, which could impact the AI investment boom. "Rising interest rates and policy uncertainty have created challenges for investors, as central banks navigate the balance between curbing inflation and supporting economic growth," says Jeff Schwarte, chief equity strategist at Simplify. "Stock market concentration – with a handful of mega-cap technology stocks driving index performance – has also contributed to volatility, as any weakness in these companies leads to outsized market swings."

Despite the uncertainty, there's no need to panic-sell. Market timing rarely works well, and instead of going to cash, investors can stay invested while reducing risk by using various defensive-minded exchange-traded funds (ETFs). "To mitigate risks in this unpredictable environment, investors should consider diversifying with alternative investments such as hedged equity strategies and managed futures, which can provide stability and reduce reliance on traditional equity exposure," Schwarte explains.

However, not all defensive stocks are created equal. As of March 20, 2025, two stocks in the consumer staples sector could be flashing a real warning to investors who value momentum as a key criterion in their trading decisions. The RSI is a momentum indicator, which compares a stock’s strength on days when prices go up to its strength on days when prices go down. When compared to a stock’s price action, it can give traders a better sense of how a stock may perform in the short term. An asset is typically considered overbought when the RSI is above 70, according to Benzinga Pro. Here's the latest list of major overbought players in this sector.

Compania Cervecerias Unidas, S.A. (CCU) is one of the stocks that could be flashing a warning sign. The company's stock gained around 18% over the past month and has a 52-week high of $15.40. However, its RSI value of 80.7 indicates that it is overbought. This means that the stock may be due for a correction, especially in a volatile market. CCU's price action shows that shares gained 2% to close at $15.39 on Wednesday, but this momentum may not be sustainable.

Celsius Holdings Inc (CELH) is another stock that could be flashing a warning sign. The company's stock gained around 25% over the past month and has a 52-week high of $98.85. However, its RSI value of 71.8 also indicates that it is overbought. CELH's price action shows that shares gained 5% to close at $31.90 on Wednesday, but this momentum may not be sustainable either. The recent appointment of Eric Hanson as President and COO may have boosted investor confidence, but the high RSI value suggests that the stock may be due for a correction.

In conclusion, while defensive stocks like CCU and CELH may initially benefit from increased investor demand for safer havens, their overbought status, as indicated by their high RSI values, suggests that they may be due for a correction in the near future. Investors should carefully consider these factors and potentially diversify their portfolios with defensive-minded exchange-traded funds (ETFs) to mitigate risks.