The Stock Market Trend and Hot Sector ETFs
The key to long-term success is to buy during broad market (S&P 500) corrections once sentiment, cycles and momentum are starting to flash extreme oversold conditions. These show up as green arrows on the trend chart. At that point most sectors and high-beta stocks such as IBM (IBM) , Google (GOOG) etc. should be at key entry points, with most of the downside risk removed already. Remember, three-quarters of stocks follow the broad market so it only makes sense to follow it, too.
What about a runaway stock market? This is when the stock market does not pull back but just keeps grinding its way higher and higher... The only thing you can do is sit in cash, or look for a stock or sector that is having a small pause or pullback and get long with a small position until you get that broad market pullback and major by signal to add more.
Below are a few sectors showing a minor pause/pullback within this bull market.
Mid-Week Trend Conclusion:
Overall, the broad market remains in an uptrend. While I would like to see the S&P 500 pull back and give us another major buy signal as it did in December and February, I don't mind that much if prices keep running higher as it just give us more cushion and potential profits for when the trend does eventually roll over and flip signals. I hope you found this report interesting. It's just scratching the surface of this topic but it's a start.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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