Strong Sectors for a Saturday Review
These are the areas of the market that look interesting and ready to rise.
This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.
If you are an investor, this week was a great week for markets.
If you traded for upside when Powell got on the mic, you probably had one of your better trading weeks maybe of all time!
And if you missed out but are reading this newsletter you know not to worry about the trades you didn’t catch. Instead, think of the opportunities ahead.
Speaking of which, I am excited to get my focus back on this newsletter.
Some of you may have noticed that I’ve spent the past six months figuring out the best way to share my knowledge, thoughts on the market, and trade ideas.
After testing a few options, I have come full circle to the two things I enjoy the most. Trading and writing about trading. That is why I love this newsletter!
And so I’m enhancing a few things…
A Trader’s Education will still be free to all but for those supporting with $8 monthly subscriptions ($80 for the year) I want to give you more and that will come via trade ideas and portfolio access.
The trade ideas I will be providing will be detailed, with profit targets, stop loss levels, and thoughts behind each trade.
My focus is primarily on swing trades, spanning days to weeks to a few months in duration.
For being a top tier subscriber, you will get no less than four trade ideas per month (usually more), or 48 trades per year! Plus, access to my portfolio.
All subscribers (free and paid) will get the Sunday Trading prep podcast and now I am adding audio from my Tuesday and Wednesday evening Spaces about building wealth.
All of this amounts to daily newsletters for every subscriber to A Trader’s Education. We all win!
In tomorrow’s post I will get into trading strategies I like for the current market and for the first time, paid subscribers will start receiving my trade ideas and access to my portfolio.
I hope you like this change!
Now to this week’s Saturday post about sector strength.
I like to take a look at how sectors are performing to find momentum both to the upside and down.
This is something you can do to narrow down your watchlist and trade ideas for the coming weeks.
There was definitely action after Powell took a dovish tone and now we have a number of sectors breaking out, which you love to see.
First up let’s take a look at the Dow Jones Industrial Average ETF, DIA.
DIA
Everyone is talking about small caps, we will get there too. But nobody is talking about this ETF which is also known as the Diamond.
Top holdings include UNH, MSFT, GS, HD, MCD, AMGN, CAT, V, CRM, and BA.
This weekly chart shows the breakout that is taking place.
It would not be suprising to see a pull back after such a strong week and if we get one I would watch for $365 to hold up as support.
Everything looks strong here and DIA is my top holding for my ETF portfolio.
IWM
Shifting to the small caps, because there is no need to keep you waiting, IWM did break strongly above its anchored VWAP from the October highs.
That said, $197 looks like it will be tough resistance and is the level I’m watching.
If small caps continue to run and IWM can break through $200 we could see a massive rally across the board to start 2024. That is a big if but worth keeping an eye on.
I also like small cap tech and added PSCT to gain exposure to the space. This ETF got my interest with both tech and small caps looking strong.
XLRE
Check out XLRE, the Real Estate SPDR ETF. This weekly chart is also looking primed for a breakout.
Closing above the $39 resistance level, the next obstacle is to rise above the anchored VWAP from the end of 2021.
I added a small sizing to my ETF portfolio and if AVWAP breaks I will bring it to a fully weighted position.
With rates set to hold and possibly drop, REITs and their solid yields are starting to look attractive, and I want to be out ahead of the demand.
I also think this is very much a stock picker’s sector.
XLK
Classic cup and handle breakout for the technology sector.
I am more of an admirer here than a chaser. If you own it, enjoy the run because it looks like it could keep going. I also like XLC because of the big tech names META and GOOGL that make up a good percentage of the ETF.
OIH
Don’t write off the energy sector just yet. Every time is starts to sell off we seem to get a rebound and that could be happening again.
The weekly candles for OIH bounced nicely off of the trendline.
Does it continue higher from here? I like the odds that it does.
Two names in the energy space that I like are ET and VNOM, both have been holding up nicely and trending higher.
XLF
Financials have room to run before hitting the top of the channel they’ve been trading in since May 2022.
While XLF represents the big banks, I like to look at other names in the sector.
In particular, I have been looking at BX and RKT. Potential trade ideas are in work for both.
No doubt another great week and many sectors are looking strong. Thank you again to Powell and his comments that pushed markets higher.
Tomorrow, look out for the weekly podcast from The Trading Triangle as well as trade ideas for those subscribers that have leveled up!
-Nate