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The Next Wave
Let's imagine for a moment that investing is easy. Let's say that in our various tech research notes (such as Cestrian Tech Select, here) we have done all the work preparing the cohort of growth names to be acquired close enough to the 2022 low such that merely sitting back and contemplating life will be enough to bank large gains in a year or two's time with those names. This will not happen, of course, some crise du jour will intervene on a frequent basis, but just for the sake of the exercise, let's say that the best of them can now be left alone as they climb up through our Markup Zones and onto our Distribution Zones, where the only hard decision to take is whether or not one is selling too soon.
In this thought experiment, what we now need to keep ourselves busy is a cohort of names that are moving down into the trough of despair - be that a Wave 4 like Big Tech and the S&P and the Nasdaq just did, or, better, a Wave 2 like high beta tech just did. We want a clutch of ETFs and single stock names that we can get to know, to study, to watch the behavior, chart them every which way till Tuesday, and then set up the same accumulate / markup / distribute / markdown Wyckoff Cycle stages currently employed in our growth and defense stock analysis.
The start point is sector analysis. So let's look at the major sector ETFs making up the S&P. All we're looking for is, where are those ETFs in their overall cycle. Then we can sit back and have a think about how to play them and their constituent parts, if at all.
By the way. We have a nagging feeling that the Dow might hit its ATH and then roll over faster than the S&P and the Nasdaq, which if true means there will be some Dow stocks offering a bargain-basement accumulation phase before too long. But that's for another day.
Back to those sectors. Let's look at XLB (Materials), XLC (Comm Services), XLE (Energy), XLF (Financials), XLP (Consumer Staples), XLU (Utilities), XLI (Industrials), XLRE (Real Estate), XLV (Healthcare) and for completeness XLK (Tech). The headers are clickable by the way and take you to a full page version of each chart.
For our paying members only, we lay out below our take on each of the above ETFs, with price targets and risk management levels, together with ideas on how to play the ETFs to good effect.
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