I have noticed bearish action in Basic Materials sector. This sector was one of strongest in past months. It looks like huge profit taking in this sector is taking place.
I noticed bearish chart pattern forming on chart of XLB - Basic Materials ETF.
It was wild action on stock markets this week.
But I have to say that I feel that US markets want to pause in declines. I have noticed several signs during this week which point me to this idea.
I noticed that SP500 and Nasdaq are not moving down too much. They are already in area of support levels. Only Dow Jones Industrial as weakest one is still dropping. But area around 10800 - 11000 should work as support area and stop this drop of DJIA.
The strongest is Nasdaq (based on relative strength measurement of my analysis) . You can notice that volume associated with bullish candlesticks is higher then with bearish. I feel it as signal that shorts are being covered.
And therefore I am preparing small longs in technology area in strongest sectors and strongest stocks.
As I mentioned in my newsletter, supports finally hold markets and allowed them to move up.
My long entries in biotechnology stocks mentioned in my newsletter moved well together with announced drop in Energy sector (I am still long DUG and short some Energy names).
Biotechnology sector is only one that is worth watching for long trades. It is strongest one in current market situation. See chart below.
Final notice: we are still in downtrend so I plan to wait a day or two for new short trade setups in weakest sectors.
During my regular stock chart analysis I noticed that Energy sector could be forming important top. There is possible to find something like head and shoulders stock chart pattern. This is bearish sign.
There are also negative bearish candlesticks on weekly chart during last 5 weeks or so.
I think we can expect significant correction in this sector. I prepared ETF stock trade setup with Inverse Ultra Short ETF for Energy sector - DUG - for such case.
I noticed relative strength in Biotechnology sector.
Here is one example of nice bullish stock chart for possible long swing trade strategy.
Pullback can be used for entry of stock trade with good risk:reward ratio.
I mentioned yesterday that there is Ultra Short Crude Oil ETN (like ETF).
There is also Ultra Short Gold ETN :
DB Gold Double Short ETN(Symbol: DZZ)
I will monitor this ETN as I have bearish view to gold based on principles of my stock chart analysis and so I could use these shares to enter ETF short swing strategy trade. I expect that gold is going to drop to 800 USD area.
I have been informed about several new Inverse Short Index shares . There are not ETFs but ETN, product very similar to ETF.
One of them is Crude Oil short strategy share:
PowerShares DB Crude Oil Double Short ETN - Symbol: DTO
I do not think that it is time to short Crude right now, but I will have this stock prepared for possible shorts when current rally in Crude will start to correct down.
I have noticed bullish stock chart pattern on stock chart of Ultra short China ETF - FXP.
It is typical bullish setup for FXP with targets near 100 area in case of breakout of this bullish stock chart pattern.
If you are not using multiple time frames for your stock chart analysis then you can leave important edge for your trading business on the table.
I use multi time frame chart setup for my stock analysis and also stock trading software. I recommend it to you too.
Financials are not very popular during last year. But not all financial stocks are hated. Some of them are attracting investors and very quietly going up.
NYB is one example. Notice that this stock is in healthy uptrend . Bullish stock chart pattern is forming on daily chart - bullflag.
And there is bullish stock chart pattern - cup - on this weekly chart.
