You Might Want To Stick With These Sectors Until The Market Completes Its Correction
Looking to the indices, on Thursday, the Nasdaq opened
slightly stronger but quickly found its high and sold off throughout the
morning. It then drifted and chopped sideways before resuming its sell off late
in the day. This action has it reversing after just tagging its old highs.
The S&P put in similar performance.
Looking to the sectors, areas such as selected drugs and
biotech were hit especially hard. Other groups such as retail and software
weren’t hit as hard, but continue to trade mostly sideways as of late. On the
bright side, the homebuilders actually finished up after trading lower. This
action sets up a pullback from highs.Â
So what do we do? I remain concerned
that the indices have failed to break through (and reversed at) their old highs.
In the sectors, I’m concerned about the Thursday’s broad based selling. And, the
fact that some groups such as biotech may be rolling over. However, so far, the
majority still remain in longer-term uptrends. Therefore, (hopefully) this
selling might just be more evidence of the “rolling correction” action
mentioned recently. All things considered, I think you can still continue to focus on the long
side. However, you might want to stick with those stronger sectors that appear
to have completed their corrections and look poised to resume their uptrends
(e.g. the aforementioned homebuilders) and those issues that can trade contra to
the indices (e.g. major oils).
Looking to potential setups, Centex
(
CTX |
Quote |
Chart |
News |
PowerRating), mentioned
recently and in the strong homebuilders, still looks like it has the potential to
resume its uptrend out of a pullback.
Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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