Use the Market to Analyze What Sector is Hot before Picking your Stocks!
The SP-500 has had an amazing run since the beginning of September only stopping shortly to consolidate around resistance at 1150. We broke that resistance and it now seems to be support.
[caption id="attachment_939" align="aligncenter" width="300"] SP-500 Holding Support[/caption]
The market has been in a phase 2 uptrend since June/July 2009 but did experience some selling in the summer of 2010. Our analysis back in May/June was that the market probably would test the April high of 1225. We got fooled by the market at the end of June and beginning of July. The market made what we call a bear trap. A bear trap is when the market or a stock takes out support and then quickly moves up above support again. We sold our longs as the market did not seem to have the strength to test the April high. After creating the bear trap we moved sideways refusing to drop. When the market simply does not want to drop there is only one way it can go and that is up. That is what has happened since end of August. The Advance/Decline never broke down indicating that the selling was nothing but a pullback in the uptrend. SP-500 has now broken resistance of 1150 so it seems that our initial analysis of retest of April high was correct. Advance/Decline is also showing a strong uptrend adding evidence of the SP-500 being able to test April High.
After we determined that the SP-500 was still in a bull market phase 2 it was about finding some good long trades. It is important here to make sure that you chose the strong sectors and strong stocks. We found a few interesting sectors and stocks and we scanned the 239 sectors and found some that have broken out into new highs. They are outperforming the market and held up while the market was selling off. These are likely to be best performing sectors and stocks when the market rallies like it did in September.
[caption id="attachment_940" align="aligncenter" width="300"] Silver Sector Analysis[/caption]
[caption id="attachment_941" align="aligncenter" width="300"] SLW Stock Analysis - Silver Sector[/caption]
[caption id="attachment_942" align="aligncenter" width="300"] Technical System Software - Sector Analysis[/caption]
[caption id="attachment_943" align="aligncenter" width="300"] INFY Stock Analysis - Technical System Software[/caption]
SP-500 Holding Support[/caption]
The market has been in a phase 2 uptrend since June/July 2009 but did experience some selling in the summer of 2010. Our analysis back in May/June was that the market probably would test the April high of 1225. We got fooled by the market at the end of June and beginning of July. The market made what we call a bear trap. A bear trap is when the market or a stock takes out support and then quickly moves up above support again. We sold our longs as the market did not seem to have the strength to test the April high. After creating the bear trap we moved sideways refusing to drop. When the market simply does not want to drop there is only one way it can go and that is up. That is what has happened since end of August. The Advance/Decline never broke down indicating that the selling was nothing but a pullback in the uptrend. SP-500 has now broken resistance of 1150 so it seems that our initial analysis of retest of April high was correct. Advance/Decline is also showing a strong uptrend adding evidence of the SP-500 being able to test April High.
After we determined that the SP-500 was still in a bull market phase 2 it was about finding some good long trades. It is important here to make sure that you chose the strong sectors and strong stocks. We found a few interesting sectors and stocks and we scanned the 239 sectors and found some that have broken out into new highs. They are outperforming the market and held up while the market was selling off. These are likely to be best performing sectors and stocks when the market rallies like it did in September.
[caption id="attachment_940" align="aligncenter" width="300"]
Silver Sector Analysis[/caption]
[caption id="attachment_941" align="aligncenter" width="300"]
SLW Stock Analysis - Silver Sector[/caption]
[caption id="attachment_942" align="aligncenter" width="300"]
Technical System Software - Sector Analysis[/caption]
[caption id="attachment_943" align="aligncenter" width="300"]
INFY Stock Analysis - Technical System Software[/caption]