If you were reading my posts from all of last week, I got slapped in the face by trading the market short with leveraged, inverse ETFs. This week I’m taking a different approach, and instead of anticipating market movements, I have decided to wait for the patterns that were formed during the month of March to develop and choose a direction. Come Monday morning at 9:30am, I will be full cash and waiting to see what the tone of the market will be for this upcoming week. Because of this, I’m going back to my Basic Materials/Energy Sector strategy, filling the watch list with plenty of tickers from these two sectors:
- UXG
- BHI
- MRO
- ACI
- PCX
- ARLP
- ABX
- STLD
- X
- ENER
- JPM
- XTO
- NAL
- TNA
- UYM
- SLX
- ERX
- DXO
- URE
- UYG
- XLU
As well as Energy and Basic Material names, I have also included JPM, NAL, UYG, and URE into the mix for my Financial and Real Estate picks, TNA to encompass the Small Caps 3x Bull, and my sleeper pick of the week, XLU, the Spyder Utilities Sector ETF. The Utilities sector has been beaten pretty badly during this recession, but has gotten some positive recognition from the current $SPX rally. Still down 28.13% YTD, I like XLU on a possible pattern breakout if the $SPX can generate enough steam for another 5% run.
Below are three (3) charts of tickers from the weekly watch list that have some interesting pattern setups. Enjoy:
.jpg)
ACI 30 Day, 60 Minute
.jpg)
DXO 20 Day, 30 Minute
.jpg)
UXG 60 Day, 60 Minute
During tomorrow’s trading session, keep these market questions in mind:
- Is the overall market volume accumulating or distributing?
- Is the $UVOL to $DVOL ratio higher than 8 to 1 or vice versa?
- Has the VIX held any major support/resistance levels on a(n) intraday/weekly/monthly/yearly level?
- What sector is dominating? What sector sucks?
- Where is my money allocated and why is my money allocated there?
- Have their been any ticker breakouts/breakdowns on my watch list? The MJTT watch list?
These questions should allow you to trade effectively tomorrow. Do not forget VIX 38; it’s an important VIX support that is a serious force to be reckoned with. Also, my $SPX target is 850 due to the Monthly trend line that I have drawn out in the chart below. This declining trend line is supported by the increasing trend line that was created when the current bear market rally began. A breakout above this 6-Month wedge pattern would be an astronomical feat to accomplish and would lead to the next $SPX resistance level of 877:
.jpg)
$SPX 6-Month, Daily
Another blurb before I depart for the night: keep an eye on TNA, UYM, UYG, and NAL for possible breakouts. These tickers from the weekly watch list will be declared IFF the market shows a considerable amount of volume accumulation and a market momentum strength that is led by the financial sector.
Good luck tomorrow!
ZM
