There’s a lot of confusion and concern about follow through in the broader averages…
Specifically where are we with the S&P?
I addressed the recent sell-off in my last update, but now begs several questions. Are we going to take out that double top? Are we going to see brand new highs again? Is there enough resiliency in this market to really commit to the Nasdaq Futures and any of the heavily weighted stocks and sectors within it (same question for the Dow, Russell, etc.)?
A lot to talk about, Gang.
So when there’s this much confusion in the broader averages, and I’m not at the overbought or oversold edge for the averages, here’s what to do…
STEP ONE: The Stock Futures Trader
Remind yourself, if you’re a Futures trader who trades indexes, you’re actually a stock trader.
Inside every MQ is… the contract. Like Microsoft, Amazon, Apple, Facebook, Tech, Communications, Consumer Discretionary, the list goes on.
So with that in mind you can start looking at some of the more resilient players.
Where to start?
XLP. It’s one of the more resilient sectors. Plus, it’s one of the places I find some really decent, resilient players, especially in an environment of uncertainty.
Now pausing for a second, if you’re in the Futures Room, you know we’ve been bullish for the better part of coming up on a year on different long bond, short yield ETFs. I’ve also mentioned this in other updates before, and they’ve been doing great.
STEP TWO: Identifying Outperformers Within a Sector
But if you go farther past, down the list, you’ll find the Consumer Staples (XLP). So like I’ve said, we look for outperformers within XLP.
Below I’ve made a quick video walking you through looking for outperformers within XLP, and how I identify those outperformers. *hint hint* it’s made super simple by my GRaB Candles, Gang.
What are GRaB Candles?
A totally free, proprietary indicator of mine.
You can download your company for ThinkorSwim or TradeStation directly on the right side of this page, but back to the video below…
STEP THREE: Proctor and Gamble, Walmart, and Underperformers
Now I’m going to give you two names to keep an eye on in, not only the next few days, but also the next few weeks.
If we continue to get pullbacks and names like Proctor and Gamble (PG), I’d highly recommend buying those pullbacks into the wave. You’ll see in the video above the blue to green transitions have been great, which helps back the technical setup. The other name? Walmart. While it’s not as strong as PG, it’s certainly one of the stronger names.
So when there’s a lot of confusion in the border averages, go look for where the clarity commitment lie, and then look for the opportunities there.
Which works both ways, Gang.
Opportunity isn’t on just one side of the market.
If PG and Walmart are overperformers, then with this same approach there should be underperformers, correct?
Take a look at both Philip Morris International (PM) and Altria (MO).
Well aside from the technicals behind it, which have shown us some really nice downtrends lately. We got news recently that they’re not going to be seeking a merger. So really this news just adds an exclamation point, Gang.
The important thing to take away from this update (aside from the trade setups) is to remember that there are NO boundaries as to what you’re able to trade. It doesn’t matter what you’re most comfortable trading, there are a ton of opportunities out there…
If you know where to look.