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Some sectors have had an especially good run over the last few weeks. Great for traders. But for mine I don’t think it is time to get on board as I like to see the whole market in concert and my Elliot criteria met. This basically means we are in a new upward trend. And whilst some pressures have eased – such as Greece and the Euro – we are not ‘out of the woods yet.’ In deed far from it.
But let’s look at how one might ‘play’ these hot sectors.
I will show a few charts and then make some summary comments that will apply to all:
Discretionary:
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Energy:
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Health Care:
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Industrials:
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So one thing all these charts have in common is that they are in a five wave impulse move higher. Secondly they are all getting close to a medium term top and when this happens we look for a pullback to zero for the oscillator. Ideally we would then like to see some consolidation and then this would be an ideal set up to play as the next move to a wave five high. A short term move – perhaps 2-3 weeks from the wave four consolidation.
We can see that this pattern has already commenced for Energy.
It is important to watch the oscillator. One thing we don’t want to see is the oscillator going too deep. The maximum of depth from the zero axis is 10%.
This is what we don’t want to see:
Telecommunications:
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The probability of a new wave five is not high as there has been too much profit taking. Too much profit taking in Telstra as retail investors are fed up. Profit taking could continue and we could see this:
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This could take several months to unfold – something I have written about many times in TTN as I think Telstra still has some unhappy times ahead:
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So for the moment I will keep an eye on these sectors and hopefully write shortly about at least one of them performing a classic Elliott move – and a profitable one at that!
Enjoy the ride
Tom Scollon |