"This entire report will be reformatted and available in a PDF file upon completion for all subscribing students.
The 2010 Industry and Sector Report is a guideline for TechniTrader Students for selecting sectors and stocks to watch in 2010 for long term retirement accounts, short term trading both uptrending and downtrending, and for a solid overall view of what to expect for stocks and financial markets in general.
This report is designed as an aid in finding stocks to trade and invest in for 2010.
As of the date this report was written, the markets have shifted to a sideways wide trading range market condition. Trading Ranges are less common market conditions than any of the other 5. These conditions tend to occur when there is extreme uncertainty, splintered sentiment, and fractured confidence. The fact that the financial markets are even more closely tied together than they were a decade ago, aggravates the condition even further. The financial markets are now so interwoven with derivatives that it becomes nearly impossible to separate out the various foreign and financial markets and what happens in one tends to spread and impact others. An example is the gold rush boom in commodities spreading to ETFs and gold stocks even though these stocks do not have good fundamentals. Pure speculation in one market creates speculation in another OR an unexpected decline.
Trading Range Market Conditions are more challenging to trade than a platform market because the highs and lows of the sideways range are basically either peaks and valleys or rounding sideways action that lacks a defined low and defined high for the sideways pattern. The range can be substantial from 10 -50 or more points for indexes. Trading Range Market Conditions tend to lack a strong group of industries, tend to occur after extreme deviations to known cycles, especially long term cycles, and are more an individual stock performance market.
However with careful, thoughtful trading plans and a set of solid rules and parameters even the novice can do very well in these markets. Candlestick patterns become even more important as indicators may lag more in a trading range market. Selling short is also going to be more frequent than in other market conditions.
The overall markets collapsed in a deep vertical V bottom in 2008 and bounced back nearly as quickly as a reaction to an extreme oversold condition. However this ascent as been on lower than average volume and lacks large fund investor involvement. Therefore a correction phase should be anticipated and you should be well prepared for deeper moves down for weaker industries and vulnerable sectors.
The overall condition of the global economy is sluggish with a slow recovery outlook. Although most of the nations of the world have pledged to contribute stimulus money to their economies, the outlook remains a trading range pattern.
In order to have a strong bull market 2 ingredients are necessary:
New technologies that are disruptive and displace older technologies, spurring economic growth and prosperity through corporate profits and a growing labor market.
An influx of new money into the stock market.
At this time neither of these ingredients is present. So we can anticipate a market that will move sideways until a new influx of money and new technology come to market. Trading ranges can last a few months to several years.
There are plenty of new technologies in the works right now and there is ample new money in developing areas of the world. It is simply that the two are not in sync at this moment.
For 2010, the goal will be to find either stocks that continue to develop platforms as their companies steadily grow and prosper despite the global recession, or to find stocks that have sufficiently wide trading range patterns for good swing and velocity trading, AND to find growth stocks for long term retirement investing.
Note: I did not have the Energy Industry Chart with the other main Industry charts last week so here it is.
The Energy Industry sold off deeply primarily due to oil speculation collapsing in 2008. There was a huge glut of oil held in oil tankers and other areas that had been bought up by speculators. This glut has not been totally depleted but remains in storage. The Energy industry faces difficult challenges in 2010. The global recession will slow demand while other nations such as China work to find their own source of petroleum and Canada’s sand oil and other sources could create more supply than demand. Disharmony among producing nations could backfire for oil. However, at this time oil appears to be stable and shifting sideways at a resistance level from 2005.
Sectors:
Given the conditions present, I am going to analyze each and every sector from every industry. So this report will be more extensive and much longer. I hope to have it completed soon but our relocation to new offices has taken up more of my time than I expected. Thanks for your patience.
Chemicals Industry Sectors: this industry in general rebounded well but lacks upside volume for many sectors and for the industry in general. Chemicals are tied to the commodity markets and to real estate and had a moderate boom created by moderate speculation.
Major Chemicals did well in 2009 as global demand continued for general chemicals. This was prompted by an increase in demand for chemicals in the new technology areas of energy, environment, and medicines. Outlook for 2010 is a much slower pace with a trading range pattern for many of these stocks.
Synthetics Chemicals are used in a variety of new technologies. Outlook for 2010 is for a trading range pattern after a short term correction phase. This move up has been less vertical and it has more room than the major diversified chemicals to move up further. Synthetic chemicals need to have new technologies move to the market acceptance phase to have good growth.
Agricultural Chemicals are currently in a wide trading range that is developing nicely. This pattern is likely to continue most of 2010. Farming problems globally may increase demand later in the year due to shifts in climate..." Martha Stokes, C.M.T.
Member of Market Technicians Association
Senior Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
Martha Stokes, C.M.T. (c) copyright 2009 all rights reserved.
Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader®, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader® and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader® is not a broker or an investment advisor it is strictly an educational service.
]]>
