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Attendees of this week’s Elliott Wave Webinar will be aware that during session one, we placed a huge emphasis on stock selection.
This may begin to sound like a broken record to many, but an analysis of the bigger picture can do wonders for the consistency of any trade, regardless of the time of year the market traded or even market conditions. December is more often known as a bullish month for the markets. In fact, of the last ten years, presuming the current month of December continues its trend higher, there have only been two occasions where the month of December has been a negative period for the ASX200. This is far from any reason to be long the ASX 200 index as accurate analysis requires a sector and stock specific knowledge of technical and fundamental aspects driving market action.
2010 has been a time where sector specific selection is imperative as the world staggers out of Global Financial meltdown and demand again begins to appear from certain corners of the globe. The ASX200 is clearly tracking sideways although basic technical analysis of a daily pattern still shows a clear trend to the upside. This in-decision can be further seen as just why a detailed sector analysis is so important.
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Sector and stock selection is imperative and Elliott Wave and ProfitSource gives us a very clear indication of where we can expect that outperformance to come from. The month of December has so far proven fruitful for the ASX 200, although more specifically the Materials sector. The technicals indicate it is highly likely that January will see this outperformance continue.
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A weekly chart shows that the sector may be entering the mature stages of this most recent rally, however there is obviously still money to be taken at these levels. Those stocks set to outperform under current conditions remain those least susceptible to short term volatility and a business position leveraged to continued outperformance based on leverage to demand and the fundamental aspects that have seen the market move higher thus far.
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Pre-computed scans are an excellent way to filter whole markets to just those trades which meet Elliott Wave criteria. By conducting analysis of specific sectors and their performance, one can very clearly see which areas to be overweight going into 2010.
Of course, diversification is essential, 2010 has been an excellent year for traders and investors alike. Now is the time to ensure your portfolio is positioned for performance in 2011.
Stay ahead of the game,
Lachlan McPherson
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