Weekly Stock Sector Analysis – 21/10/13

There won’t be a video this week because it feels too much like more of the same! We remain long equities and long a number of commodity ETFs. If hard pressed to pick a specific sector to trade it would be Technology.

Stock sector analysis shows wide participation

Looking at the individual stock sectors we can see how strong the market is because many sectors are making new highs at the same time. The bullish participation is broad. Another reason for being so bullish is that we closed so strongly on Friday. If you have read the Market Wizards series you’ll know that top traders see a bullish close on a Friday as very significant because it shows that traders were willing to hold over the weekend.

Taking a look at the Technology, Energy, Industrials, Consumer Services and Telecom ETFs we see this is exactly what happened.

A picture showing strong sectors

As you can see, technology in particular is very strong but in all honesty you could look for strong stocks from any of the sectors we’ve mentioned and you’d have a good chance at finding a winner or two. The important thing is that you are involved in this market.

Markets will forever rise and fall more than any rational person thinks is conceivably possible

It is all too tempting to think you’ve missed the rally when it seems to have been going for so long but you must put things in perspective. Take a look at the following charts of the SPY.

spy wish

spy legs

Never forget that the right edge of a chart always looks too high during a bull market, the trick is to imagine what the right edge of the chart will look like by the time it becomes the left edge of the chart!

Now, I’m not saying that if you buy this market at $174.00 that you will be looking back in a year’s time congratulating yourself because the market is at $200.00. I have no idea where the market will be….that’s what stop-losses are for!

What I am saying is that if the market is at $200.00 and you didn’t buy it at $174.00…. you’re going to really regret it, so get involved!

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