The Key Sectors to Watch

09/18/2017 2:53 am EST


Jim Farrish

Founder and CIO, Jim's Notes

The markets continued their ways of looking for direction. The gap move on the upside last Monday held throughout the week with the major indexes closing at new highs, observes Jim Farrish, editor of Jim's Notes.

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The key is to remain disciplined within your trading strategy and not let the anxiety of the situation change your overall strategy. Manage your risk and stay focused on the horizon, not the rear-view mirror.

The key word remains patience. Not something many traders like. We started the week with some positive upside move and managed to hold the upside.

There remains plenty of volatility in direction and each week holds something new to consider. We all want to believe we can see forward, but the reality is we can only see today.

Thus, we must do what our strategy tells us to do today, and tomorrow will take care of itself. Hard lessons to learn as our analytical brain wants us to believe we have the solution and can predict the future. Keep your stops in place and your eyes focused on the horizon taking what the market gives.


What are the key sectors to watch? Biotech (IBB) remains a sector of speculation. Nice upside move and nice follow through to add a position. Entry $318. Stop $325 (adjusted). Flag pattern in place from the vertical move higher. 

REITs (IYR) had been lagging in response to interest rate worries related to the Fed promise to hike rates multiple times this year. The sector tested the $76 level of support and bounced back to resistance and tested, and bounced, and has now cleared the $81 resistance.

We continue to focus on managing our risk and collecting our dividend as this all unfolds. This is a growth and dividend holding with a 4.2% dividend currently. Entry at $75.75. Stop $76.25 (adjusted). 

Gold (GLD) Gold remains in a long-term uptrend with a broad trading range in play the last five months. The volatility within the trend is speculation and news driving money. The selling was more of the speculation, just as the current buying is on speculation the dollar and the Fed will remain neutral.

Bounced off support at the $114 level, cleared resistance at the $117.38 mark (entry) and hit the $123 target. Stop $124.20 (adjusted).

Gold miners (GDX) cleared resistance as well at $24.27 and moved higher. Entry $23 hit, Stop $24 (adjusted). The test back to key support put the exit point now at the $24 level. The dollar is key for now.

Crude Oil has become a story of what if’s more than what happened or is happening. Supply remains the overwhelming issue, but the weaker dollar is having some influence near term.

The last two weeks the commodity has managed to fight it’s way back to the $50 level of resistance. Watching how this unfolds at the current levels.

Energy stocks (XLE) have fallen since the December highs as the OPEC deal to cut production has not resulted in any real measurable cut that would impact prices. The double bottom pattern clears $63.22 for entry and stop $$65 (adjusted). Watching how it unfolds to start the week after the test on Friday.

Financials (XLF) showed some upside with a small test on Friday. Semiconductors (SOXX) cleared the next level of resistance and showing positive uptrend again for the sector. Agribusiness (MOO) produced a upside break to confirm the uptrend.

There are more questions than answers for this market and we will continue take it one day at a time. Stay focused and disciplined in all trades or positions. 

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