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View from Toronto: Tax Plan Could Spur Tech, Financials, Healthcare

12/21/2017 10:38 am EST

Focus: STRATEGIES

Ziad Jasani

Managing Director and Partner, Independent Investor Institute

With the tax-reform vote a “yes,” we are likely to see the S&P 500 above 2,700 in three key sectors that comprise 55% of the S&P market cap. More on global markets in two videos from Ziad Jasani of the Independent Investor Institute.

video 1

Watch my video analytics session going into the  U.S. House vote on taxes recorded Tuesday, Dec. 19:

video 2

chart 1

U.S. Equity Markets this week

Price behavior remains bullish, but stretched to an extreme in the short-term (RSI, MACD).

The charts tell us to be wary this week, for either a consolidation pattern to emerge or a swing-high formation to play out, taking the S&P 500 (SPX) back down to the 2,600 area.

In this case, the sectors most vulnerable to the downside are Financials (XLF, KBE), Energy (XLE), Discretionaries (XLY) and Industrials (XLI).

However, charts cannot tell us what will happen next, just what we are set up for. Events unlock or shut down the gates.

With the tax-reform vote a “yes,” we are likely to see the S&P 500 above 2,700 with the following sectors leading the way: Technology (XLK, IYW, QQQ), Healthcare (XLV, XBI, XPH) and Financials (XLF, KBE) – roughly 55% of the S&P 500 market capitalization.

We recommend being very close to your short-term and longer-term holdings this week. Together we’ll spot the opportunities to buy-into on a yes vote.

View the Independent Investor Institute trading ideas and strategies videos here.

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