A Focus on Key Sectors

Apr 20, 2008: 1:53 PM CST

In the previous post, I specifically mentioned the Technology sectors as being one of the worst performers year-to-date, and the Industrial sector as being one of the best. Let’s take a look at those in a little more detail to see if we can gather a few clues:

The Technology Sector, supported by similar patterns and excellent performance by Apple (AAPL), Google (GOOG), and others, appears to be on its way to complete a ’rounded bottom’ or perhaps ‘saucer bottom’ and the likely pathway could lead to higher prices yet to come.

Notice the near-symmetrical rounded shape of the price action combined with a positive momentum divergence that has been developing since the beginning of the year. The key reversal day of January 22nd helped quite a bit as well.

Longer term, the picture is similar to the major US Indexes:

Also, I mentioned the Industrial Materials Sector as surprising me to have the best performance year-to-date. Let’s look:

The Industrial Materials (XLB) has made new highs, in part thanks to strength from commodities and world-wide demand. Nevertheless, volume is declining on the recent march to new highs which serves as a temporary non-confirmation.

The daily chart shows a classic bull flag completing its measured move:

Keep an eye on these sectors to see where strong (and weak) stocks within them might trade to give you fresh, potentially unseen opportunities for profit.

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