Tuesday, May 04, 2010

Sector Moves - The Wind At Your Back.

A Sector breakout is one of the many opportunities in the market that offer high probability setups. Sector moves weigh heavily on underlying stock moves and therefore looking at sectors and subsectors on a regular basis should be a regular part of traders’ homework. A well rounded trader knows that both top-down and bottom-up approach are necessary to find good probability setups in the markets for day, swing, trend, and longer-term hold time-frames.  This is the wind at your back that raises the probability of success in your trading.

Many sectors have been showing strength since last week, one of which is the retail sector.  The XRTs weekly candle closed very strong and above breakout levels. Furthermore the sector has been basing for the last five months carving a solid base to spring from in either direction (pure TA). This is a trigger to delve into the stocks comprising this sector to confirm the strength. Last week’s blog highlights some of the findings from broken down-trends to overall strength and the opportunity of violent moves that ensue.
Now the XRT has had four weeks in a row of buying pressure and is due for some consolidation in the names that had big moves, but keep this sector on your radar for weeks and months to come as long as the uptrend is intact.

This is just one way to find stocks that are worth trading with high probability and less risk.  “May the wind be ever at your back” with these sector moves.

Peace and profits to all,

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