The US Stock Market Indexes are all hitting new highs. This shouldn't be a surprise to anyone who reads the work we put out.
Isn't it nice when we just let the data dictate our actions?
Good music and clean charts. It works.
So today we're going to focus on a new sector that I think is just getting started: Industrials. Take a look at the fresh breakout from its 2018-2019 consolidation:
Click on charts to zoom in
See how this one is resolving? Consolidations tend to resolve themselves in the direction of the underlying trend. This one here is apparently no different.
Let's go back to 2014-2016 and play my favorite game: "Not a Head & Shoulders Top". These are incredibly rare patterns simply for the fact that markets trend and the likelihood for a trend to continue in its current direction is much greater than for it to just completely reverse. This is common sense for those of us who have done the homework. But because they gave this "pattern" a funny name that is easy to remember, people think they're doing technical analysis by labeling every higher high the head of a head and shoulders top. (Hint: They're not)
As market participants (not just technicians) we're trying to identify trends. So by looking for reversal patterns, you're doing the opposite of what we're trying to do here in the first place.
Notice how the "reversal pattern" didn't reverse the trend (in 2015-2016), but the continuation pattern the past 2 years did resolve itself in the direction of the underlying trend. These resolutions are very common, so to spend your days looking for different outcomes is insanity:
If Industrials are above $81 in $XLI, we want to be very aggressive buyers and bet on this being a new leadership sector in America. I think they have another 13-14% of upside short-term.
Now let's look at some trades to take advantage of this new trend:
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