If you’re scratching your head wondering why the indexes keep going up but the stocks you own aren’t making any progress or are even going down, you’re not alone. This is why the Stage Analysis three step process to finding high potential trades is so important. In order to outperform the market you need the following type of market environment:
- Major stock indexes in uptrends and making new highs
- Leading sectors in the market in uptrends and making new highs
- Leading stocks in leading sectors making explosive moves higher on big volume
Right now we are lacking #2 and #3 which is why the current market feels heavy even though the overall market is inching its way higher.
The Stage Analysis Screener is a tool you can use to understand how healthy or unhealthy the market is at any given time. Right now the problems with the current market can be seen here:
- On the indexes page a heavy majority of Foreign and Emerging markets are in Stage 3 and 4
- On the indexes page some key U.S. sectors like the Financials (XLF) are in Stage 3
- On the watchlist page there is a low amount of stocks breaking out on volume
- On the health page more sectors are weakening than strengthening
Things can certainly change at any time, but until more stocks starting moving higher on volume then its better to remain defensive. Which means raise cash, trade less, and wait for better opportunities.
Check out my Stage Analysis Screening Tool at: http://screener.nextbigtrade.com
Check out my trading videos on Youtube
Twitter: @nextbigtrade
The original article and much more can be found at: https://www.nextbigtrade.com
The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.