Cheat Sheets Premium - Strongest Sub-Sectors and Stocks Offering Opportunities if the Market Rebounds
As of the close on Tuesday August 6th, every US Stock Index ETF is Very Bearish, with Tailwind % Scores below 40%. Tuesday’s rally was sold down in the final hour of trading, so as I write this just after the market close and barring any kind of emergency Fed interventions, my expectation is for more market downside once oversold conditions are cleared. The odds are in favor of institutions selling into strength until we see some Very Bullish momentum into the closing bell.
In our look at US stock indexes below, we include bonds (TLT), gold (GLD), the dollar (UUP), and global stocks (ACWI) as a means of comparison. The first three tend to be less correlated with with stock indexes, while the ACWI tends to get full blown COVID when the US market simply sneezes. Despite today’s rally, no index finished the day with strong momentum. With the exception of Gold (which had a bad day anyway) and dollar, buying pressure is weak
Are there any pockets of strength? Let’s look at subsector ETFs.
Yup. Telecom, REITS, Healthcare Services, Regional Banks and Pharma seem to be faring better that the broad market. Since we focused on Healthcare Services last week, let’s see if we can find strong stocks in some of the other parts of the market that are keeping their head above water during this period of volatility.
Keep this in mind: if the total market is headed lower, even the best performing industry group ETFs and component stocks can have a rough patch. I like to use this data to nibble at stocks I intend to acquire at lower prices when market conditions are like this. It’s more of an investing strategy. A little now, a little more later if the market continues to head lower. But for trading, StockCheatSheet.com’s bullish intermediate trend following system works better in rising markets.
