The market keeps on going, and there seems to be little to stop the bullish flow.  But, while the bullish flow continues, we are also seeing rotation within the markets that causes some concern for many, but also a relief point for me.  If everything is going up, it starts to look like capitulation-style buying, but as long as there is rotation, there is an implied search for value.

So, we see value being found, and as a result, we see some stocks start to drift back down, particularly some of the strongest performers since the election.  One such sector is financials, as we see this week starting on the profit-taking side:

XLF is showing an interesting pattern for the week so far, as it closes on session lows, starts higher the next day, then closes on session lows.  Is this concerning for the bull?  Slightly, but not necessarily in a major fashion, yet.  And for me, that’s because we haven’t breached any major support levels and we haven’t seen any real volume on this minor move.  Overall, the pullback may be an indication that people just aren’t that interested, and so there’s some minor random walk behavior.

More interesting seems to be tech, as QQQ has firmed to new highs:

While volume still isn’t particularly high, it’s good to see tech participating in the new highs as it’s been such a strong sector and market leader for years.  The market is still willing to bet on growth, and that’s usually a good thing for the bull.

Now, even with light volume, I need to look for what the best opportunities may be.  And for me, that means I’ll go back to my trusty AI-generated signals and look for a name that is showing potential for the coming days as a potential long entry.  One such name for this week is MO:

Altria has been trending higher with minor pullbacks that get bought.  It’s got an incredible dividend yield that certainly seems to be attracting buyers, and with my AI signals telling me that the time to buy just may be right now, I’m looking at a bullish entry.  Even better, with the defined risk and leverage of options, I can get a truly meaningful return on even a small move in the stock if the bull trend remains intact.

If you want to learn more about this AI-generated trading system, be sure to sign up for my webinar next week!  I’ll be presenting with Vlad Karpel, the brains behind the AI system that has had proven success in predicting these dynamic markets!

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

Keith Harwood

Keith@OptionHotline.com