On the surface, many of the headlines echo a similar theme; the NASDAQ, Dow, and S&P 500 are trading at multiple year highs. On the surface, talk of new highs has a calming effect on investors – pro and amateur alike. However, savvy traders must not allow the infection of euphoria to lull them to sleep.
Now is the time when doing your homework and due-diligence can pay off big! While many are surfing the prevailing wave, ETF Stocks is measuring the sector/industry undercurrents to determine where and when the next monster pipeline will emerge.
According to our technical sector analysis, the tide might be shifting. Many of the sectors and industries that swelled as the market charged higher appear to be peaking. ETF Stocks sees a growing list of backwards question marks (?) on the sector/industry charts – just like waves breaking at the top and rolling over.
The opposite is true for recent underperforming sectors/industries. Plenty have hit bottom and backwards Js are showing up on the charts – building like an oncoming wave on the horizon.
The remaining are flattening out and acting indecisively. It sure looks to us as if money is swapping out of leaders and into laggards.
Stocks can zig and zag during times of sector rotation. First, intuitions must sell positions to raise funds to buy new ideas. When the changeover is complete, the groundwork is in place for Wall Street to move stocks higher.
If Wall Street’s algorithms are swapping sectors, ETF Stocks would suggest focusing on the emerging lists.
EMERGING BULL: industries with positive technical analysis traits that are in the early stages, indicating possible above average returns in the near-term:
Oil Equipment & Services
Oil/Gas Exploration & Production
MATURE BULL: industries that have outperformed and their charts suggest the above average returns could continue:
Durable Household Goods
MATURE BEAR: industries that have under-performed and based on their current chart patterns and could continue to lag:
EMERGING BEAR: industries that have fresh negative technical analysis set ups and could have subpar performance in the weeks ahead: