Each year traders try to navigate their way through the financial market and
turn a profit. But this is difficult.
The stock market provides market participants with several opportunities each.
With all the holidays and climate changes the market as a whole along with
specific sectors typically have seasonal rallies and sell off in price.
As May approaches many of us are starting to figure out how to play the "Sell
in May and Go Away" potential move.
I cannot help think stocks will start to struggle as indexes test new highs
and key resistance levels. The good news is that when money is flowing out
of one investment it typically flows into another which provides us with an
opportunity to make money.
Risk capital has been flowing into stocks recently but with the stock market
over bought on a short term basis traders will start to protect their capital
and move to specific sectors within the market to protect their capital.
Utilities have been underperforming all year and are not being talked about
by anyone. This is a contrarian signal that it will likely become the sector
of choice as fear creeps into the minds of market participants.
The chart below shows price of this sector is trading at the key 200 day moving
average which should provide support. Also the bullish chart pattern is pointing
to higher prices.
It Is The Season For Utilities!
The chart below clearly shows where price is trading today and what is likely
to happen over the next 2-3 weeks as we enter May.
It Is That Time Again - Conclusion:
In short, US equities continue to be in a long term bull market. It is best
to remain net long stocks as the odds of a trend continuing is more likely
than not.
So I feel a great way to get involved in the market here is to get long the
utility sector through the exchange traded fund XLU.
This is just one of many ways to play the market between now and the first
week of May...
