Are You Trading the Right Sectors?
With semiconductor stocks weak and financials extended it’s become a stock pickers market. Buying the right stocks from industry groups that are on the move may last for days or weeks. Catching these stocks as they break out of bases or bounce off support works when sector rotation produces fewer candidates. Presently, XLK is weak and XLF, XLI and XLY are extended from support.
Summary
New and Used Autos
An analysis of the industry group gives us five candidates. LAD and KAR are extended, whereas RUSHB, GPI and KMX have room to run higher, should this group continue to perform.
Karmax (KMX) came to our attention last night. Bullish flow into this stock placed it on our “unusual volume” scan. Price action has pushed into the Kirby with an overhead resistance level clearly defined at 74.00, our first target.
Stochastic has room to run and MACD crossed on Monday.
Additional stocks that were started recently are short-term swings. Those were posted in the trading room last night. No worries though as we will discuss them LIVE today during the morning session. Breakouts on DF, SHAK, SBUX, ETSY look promising. This week’s watchlist produced ESNT, FND, and MNST. All three of these IBD50 stocks broke higher from the opening bell.
Thoughts on the Markets
December is fairly predictable, despite the all-time highs. SPX is noted in green, with verticals representing the weeks. We are currently seeing some weakness at the peak. We will likely see lower lows and lower highs on short-term charts, with a turn in the bullish direction sometime in the next week. The red line is the average performance 1928 – 2017.
Keep your spirits up. Technology stocks are close to a cycle low, so we will be looking for setups in these beaten down winners. Keep in mind, nothing goes straight up or straight down. Back and fill is to be expected, even considering the SPX stellar performance to date, (+17.89%) YTD, in addition to the Nasdaq performance NDX +(27.89%) YTD. Also, consider the worse drawdown this year barely managed (-3.00%).
Hang in there, the year isn’t over yet.
Happy Tuesday,
Vinny
