The Financial Services, Energy, IT, and Consumer Goods sectors remain the leaders, while smaller sectors like Pharma and Media continue to lag the broader market. Our chart of the week is sticking with that theme by looking at the Nifty Metals and Nifty Infrastructure indexes, which collectively represent roughly 9% of the Nifty 500. Although these sectors have been consolidating near all-time highs for most of this year, recent developments suggest they may be vulnerable to further downside.

From the desk of Tom Bruni @BruniCharting

If you've been reading our content over these last few weeks, you've likely noticed we've been performing a lot of deep dives on the sectors we want to be involved in on the long side like Solar, Energy (premium), Retail, and Software (premium). Healthcare in general has been a laggard and the Medical Device space continues to lead, but now we're seeing Biotechnology start to break out as well. In this post we're focused on the equal-weighted Biotech ETF $XBI, as the cap-weighted $IBB is lagging significantly and remains weak. This out-performance by the equal-weight sector ETF signifies a broad-based rally is underway, so we're looking for the best names in the sector to take advantage of this theme.

The team here at All Star Charts is very bullish on the Oil & Gas Exploration & Production sector as discussed here (premium). Before we get into how we're going to play it, here's a little background to give color for our optimism for the opportunity we see, from our kid off the bench Tom Bruni:

From the desk of Tom Bruni @BruniCharting

It's been a rainy week here in New York, however, the Solar sector ETF $TAN was a bright spot as it broke out of a 2.5-year base. As a result, we've done a deep dive into the sector to identify several names that look to be offering asymmetric reward/risk opportunities on the long side.

This is such a treat for me. I get to go to India to talk about Technical Analysis with hundreds of really smart and eager to learn investors from all over the country. The biggest investor conference of the year starts on May 24th and I will be the first presentation of the event. The 7th annual Traders Carnival will be Asia's largest 3 day residential conference and I could not be more excited to participate.

I was lucky enough to visit India for the first time this January. I was blown away by the experience. We had about 200 people at an event at Bloomberg in Mumbai where I was the keynote speaker. The enthusiasm for Technical Analysis was amazing. I've never seen anything like it.

This is such a treat for me. I get to go to India to talk about Technical Analysis with hundreds of really smart and eager to learn investors from all over the country. The biggest investor conference of the year starts on May 24th and I will be the first presentation of the event. The 7th annual Traders Carnival will be Asia's largest 3 day residential conference and I could not be more excited to participate.

I was lucky enough to visit India for the first time this January. I was blown away by the experience. We had about 200 people at an event at Bloomberg in Mumbai where I was the keynote speaker. The enthusiasm for Technical Analysis was amazing. I've never seen anything like it.

Excuse the pun, it was too easy.

Everybody loves a deal. And that couldn't be more obvious after looking at a monthly chart of Costco $COST going back to the financial crisis that bottomed out in 2009. Shoppers clearly have been filling Costco parking lots and their carts, as the monthly chart has been a beautiful uptrend with very little volatility.

From the desk of Tom Bruni

I know you're probably tired of hearing this intro over and over again, but to start this post I want to reaffirm that at Allstarcharts we remain in the camp that stocks in the U.S. and globally are headed higher. Normally we focus on the sectors that are leading and making new all-time highs, however, the Oil & Gas Exploration & Production ETF $XOP is breaking out of a multi-year consolidation, signaling a new intermediate or long-term uptrend is beginning. As a result, we want to see which names in this space present the best reward/risk scenarios to take advantage of this thesis.

As Technicians we like to use the phrase “the bigger the base, the higher in space” when talking about breakouts from consolidations. Long periods of indecisive price action build a lot of potential energy that is then released once a stock breaks out of its range. This applies to any asset class on any timeframe because the psychology behind the pattern is exactly the same. We've written about bases before and they're common in our work, so click here if you're interested in learning more about this pattern.

As Technicians we like to use the phrase “the bigger the base, the higher in space” when talking about breakouts from consolidations. Long periods of indecisive price action build a lot of potential energy that is then released once a stock breaks out of its range. This applies to any asset class on any timeframe because the psychology behind the pattern is exactly the same. The weight of the evidence continues to suggest we want to be long equities, so I’ve taken a look through the Nifty Smallcap 250 and identified some of the best bases that are either breaking out or look poised to over the intermediate-term.

Last summer I wrote a pretty controversial post about the fact that everyone just assumed retailers were all going bankrupt and buying their stocks was foolish. My argument at the time was the exact opposite: I felt that to not be buying retail stocks was irresponsible. Here is that post titled, "Is This Really The End Of Retail As We Know It?". There many stocks at the time that presented us with well defined risk with rewards exponentially greater than any risk we were taking. That worked out very well for us.

At this point, we're still hearing this short retail narrative from stock market bears digging for anything they can think of to not admit they were very wrong. You see, that's the difference between people who make money and those who don't: the ability to change your mind. Remember, we're not here to be right, we're here to make money. Check your ego at the door or this market is going to rip your face off, as it has done to many retail bears.

One of the great things I've experienced while getting All Star Options off the ground with JC has been putting pen to paper to really codify for myself how I view options trading. It's one thing to have a nebulous sort of idea of how I approach certain options strategies and when and how I might employ them, but it's quite another to sit down and really break down how each strategy should work, how it fails, my plans for taking profits and/or cutting losses and opportunities for position adjustments.

Instead of hoarding all this brainstorming for myself, we've decided to add it to the Education section of Allstarcharts.com so that you, too, can have easy reference points for thinking through your own trades.