Swim With The Tide
Michael Brooks
wrote this article for Duke Heberlein, who is on vacation.
Whether you trade intraday or off daily charts, it is always a good idea to
buy stocks in the strongest sectors and short stocks in the weakest sectors.
Following the posts in the “Live From TradersWire” can help alert you
to sectors that are strong on the day. Sticking to strong sectors (for buys)
will help add juice to any pattern. Take a look at a post from this
morning:
10:48:02
One of the strong sectors on the day is the Morgan
Stanley Healthcare Payor Index
(
$HMO.X |
Quote |
Chart |
News |
PowerRating). Some of the stocks
that are helping the index trade higher are: Mid Atlantic Medical
(
MME |
Quote |
Chart |
News |
PowerRating),
TrigonHealth
(
TGH |
Quote |
Chart |
News |
PowerRating) and United Healthcare
(
UHG |
Quote |
Chart |
News |
PowerRating).
Trigon had the odds tilted nicely in our favor for a long
trade:
A strong move in the morning on good volume, then an orderly pullback to the 20-period
MA on decreasing volume. A very nice setup by itself but adding in the
bigger picture of a strong sector greatly enhances the possibility of a
successful trade.
Keeping the sector in mind before entering trades will help
to increase your winning percentage. So, next time you are getting
ready to enter a trade, remember to check the strength of the sector in order to
insure you are swimming with the tide and not against it.