My analysis of the 9 US sectors, as well as European and Asian ETF’s revealed that most of the market activity is taking place overseas. Some of the European markets - Britain, France and Germany in particular - are up almost 10% YTD. Asian markets - Japan, Hong Kong and mainland China specifically - are up almost 15%. In the US, foreign institutions are actively participating in the Energy ($XLE) and Materials ($XLB) sectors.How About Market Health?
The current market outlook according to IBD® is “Market in Correction”. These are not the ideal conditions for entering into any stock position. These are the times when it makes more sense to raise cash in your trading account. If you have a stock that is not performing according to your trade plan, you must stay disciplined and close out the position. It's best to stay in cash until market conditions improve. Most importantly, have a stock ready on your watch list and craft a detailed trade plan that you can pull the trigger on when market health improves.
I have just one stock and one ETF that have made it on to my list this week:
$REGN (Stock)
$USO (ETF)
I am taking a very low risk approach as we head into some of the worst performing months of the year. I prefer to see $SPY punch through a major ceiling of 213 and $QQQ punching through 109.42 It's best if these resistance lines are punched through in high volume for at least 2 days in a row. That will provide me with a confirmation and a comfort level that institutions are solidly with the market.
Happy trading!
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