The market continues to show firmness, particularly from the tech sector.  However, there are sectors showing minimal gains, and others showing weakness.  So, with tech continuing to lead, what’s next for the market and what sectors am I focused on now?

Before I get into a new idea, I want to check in on my idea from last week:

AAPL took off.  Tech leadership, particularly from semiconductors gave an early signal.  And with close proximity to the 200-Day Moving Average for a low-risk entry point, AAPL gave a great setup for the bull.  With earnings coming up, though, my conviction on the bull-side for AAPL is lower now, and that’s why I’m looking for the next trade idea.  The key with trading is to always be nimble and always be evaluating new opportunities.

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For me, it may be time to move away from Tech, since QQQ has been getting into overbought territory:

With an RSI over 70, I’m less confident in the continued momentum in the short-term.  While I’m not looking for a bearish move, I’m less confident in the next directional move for the coming days.  Rather, we could simply see a period where sideways price action allows for time to catch up to price.

That said, a new move may be just getting started.  And the main trigger for me is from oil prices, seen here from the ETF USO:

USO is very close to triggering a potential bullish move.  If it can get above the 200-Day Moving Average, that could be a signal for a new bull trend for oil prices.  And if so, that could get OIH started:

OIH often trades along with oil prices, as an ETF comprised of oil service companies.  And there’s a lot of upside here if oil prices are expected to continue to firm on a trending move.

So, I’ll be looking to add individual equities from the oil sector to my watch list this week if I see a sign from USO.  It’s just one of many potential sectors for bullish behavior, and of course I’ll be looking throughout the broad market for the most bullish names.  That’s because if I can leverage a new bullish move with options, and I can define my risk in the process, then I have a recipe for long-term success with my trading ideas.

As always, go to to review how I traditionally apply technical signals, volatility analysis, and probability analysis to my options trades.  And please, if you have any questions, never hesitate to reach out.

Keith Harwood