It’s a new year, and new trends are starting to form. There’s also a significant amount of chop going on in the markets, and we’re looking at a lot of uncertainty. But amid the noise, there are still signals and trading opportunities that are becoming clear!
The first move in the market for the new year seemed to be a move back into higher momentum names, with tech taking charge. So, let’s look at the chart of QQQ for broad tech and SMH for semi-conductors:
As we can see, a possible return to tech leadership was starting to show, and SMH tested the highs of the last 3 months, but with the ISM and job openings numbers on Tuesday, this sector of the market reversed course. Market chop returned to the forefront, and perhaps what we really need is a solid piece of information from non-farm payrolls on Friday to get some clarity on broad economic fundamentals. With that, we may form a more reliable trend, and without that, we may see market liquidation.
So, the market continues to look for leadership and to a certain extent, safety in some of the previously less-loved sectors. One of the key elements for me when the market is not in a broad bull trend is to look for the names that can outperform anyway, and the best way for me to filter those signals is to use Artificial Intelligence. And I don’t mean that I’m going into AI-based stocks, but rather utilizing complex computations to identify possible bullish stocks among the noise of the markets.
Using AI, I can filter through the market to find opportunities that may have otherwise gone unnoticed. And one such opportunity looks attractive to me today, with Citigroup (C):
Citigroup’s stock was immune to the pullback in the market on Tuesday. Instead, it’s breaking out to new highs. With little resistance above and defined risk to the downside, Citigroup looks to be a great potential setup with positive expected value for the bullish investor or trader! Combining that with options analytics to leverage my trade while further defining my risk, I can construct a high positive expected value trade with greater odds of success than trying to flip a coin on what the market may do next, and that’s a recipe for success over the long-term.
If you want to learn more about utilizing AI for predicting dynamic markets and the incredible opportunities that can be captured utilizing state-of-the-art technological advancements in trade recognition, send me an e-mail and I’ll be sure to get you all the information you need!
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
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