There are two approaches to trades:
Trading isn’t easy. But trading WITH the market or a sector, whether it’s rising or falling, and not fighting the current, is certainly less difficult.
Below are Sector Performance charts summarizing last week (chart 1), followed by the past month (chart 2). Viewing sector performance through these two lenses helps us find trend-following, high probability setups:
Normally we separately comment on the shorter time span (Chart 1: 1-week/5 trading days) and the longer (Chart 2: rolling month/4-5 weeks), since they usually have different things to say. But not today:
In BOTH the past week AND the rolling month:
The healthcare sector (represented by the XLV ETF) and utilities (XLU) were the strongest sectors
The energy sector (XLE) was by far the weakest sector
This uniformity presents a confluence and paints a clear, unconflicting picture concerning shorter- and longer-term relative strength and weakness
The particular sectors at the top also raise some caution. There are typically three sectors exhibiting relative strength when the market starts getting cautious and there’s reduced risk appetite: (1) utilities, (2) consumer staples and (3) healthcare. All three sectors represent necessities for people to live their lives. They tend to be less cyclical, less price-elastic, and where consumers continue to spend after cutting back on other things. When there’s a desire to reduce market risk there’s often a rotation to these sectors. As a result, we should be wary and on the lookout for signs of this.
But for now, we’ll listen to the charts and follow the trend. Our plan this week is:
Look to the XLU and XLV and their underlying stocks for small-to-moderate pullbacks to get long when price bounces from demand zones and the bigger picture strength in these sectors continues.
On the short side, we will look to energy (XLE) and its underlying stocks. We’ll seek corrective rallies in order to short from a supply zone above.
Look for our preliminary list of potential trade candidates Tuesday and two high quality setups Wednesday before the market opens!
Please whitelist PTL’s email to make sure you see your free trades!!
After all, a tool is only as good as your ability to use it.
I have handed you some valuable information
Now let me show you how to use it.
You see, information is good… but ACTION is better.
After working with thousands of experienced traders and want-to-be traders, in all kinds of market conditions, over the past seven years, I have found that the best way I can help you get immediate and tangible results is with our Show Me The Money Call.
It’s where you hop on a live, 17 minute Zoom call with me where I will share my screen and take you through our exact process to determine and execute a winning trade right there on the live call, including the precise exit points of the trade.
No more guessing on your own whether something will work or not….
We do all the heavy lifting and provide you with the exact steps you’ll need to make so you can start seeing results immediately.
You can choose to make this trade yourself, or make it in a simulated trading account, or just sit back and enjoy watching how we come out ahead of the game, day in, day out, week in, week out, year in, year out…
Book your Show Me The Money Call Here
See you there,