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Market Update

Last week, the Dow and the Russell 2000 made a come back and outperform the Nasdaq and the S&P 500. Could that signal another round of sector rotation back from tech to value?

The sector rotation has started since Sep 2020 from growth to value and only become obvious in Feb 2021 where there are a lot of the selloff in the tech & growth stocks. Around 3 weeks ago, we have witnessed rotation back from value to growth where I covered 3 Bottomed Out Growth Stocks with Huge Upside in the video (Click to read and watch) and lots of value stocks were sold off hard while the growth stocks exploded to the upside.

The ever-changing sector rotation has certainly stirred up the market environment and dynamics and traders generally find it challenging.

Changing of Market Environment

The challenging part is that the up-trend is generally short-lived and there are a lot of trading ranges formed even after breaking out from a nice accumulation structure. Breakout trading strategy generally encounters a lot of failure.

If you are looking for buy on simple pullback in the Phase E mark up phase (e.g. up trend), you are likely trapped within a range too.

If you are expect riding the whole big chunk of uptrend instead of 1 simple up swing, you might encounter breakeven trade or even hit a stop loss because there is no smooth and sustainable uptrend while the sector rotation is still on-going.

Adjustment of Trading Tactics

In this case, it is wise for us as a trader to adjust the trading tactics. Instead of preparing to ride multiple up waves, we might want to consider to ride only a swing with a trailing stop.

Instead of trading momentum breakout, a spring trade (buy on support, sell on resistance) might offer better win rate.

Instead of trading only small and mid cap stocks, we might want to consider the big cap or mega-cap stocks depending on their respective relative strength and vice versa.

We shouldn't limit ourselves too much and need to be flexible with the trading tactics if we would like to thrive in this challenging market environment. Else, stop trading could also be another smart option since we are not forced to trade and holding cash is just fine (unlike some of the institutional funds).

Check out the stocks to watch this week below with potential setup ahead. 

US: 3 Top Small Cap Oil Stocks Under $10 Set to Soar — OIS, KOS, NEX Plus Q&A EP2: TSLA, BABA, US indices

Despite the recent sector rotation from value to growth stocks, these 3 small cap oil stocks — $Oil States International Inc(OIS)$ , $Kosmos Energy(KOS)$ , $NexTier Oilfield Solutions Inc.(NEX)$ still outperform and set to rally up to higher target price. At the end of the video, I will also answer questions from readers in my Telegram Group on TSLA, BABA and the 4 major US indices. Watch the video below:

• 0:30 OIS (Oil States International, Inc)
• 4:42 KOS (Kosmos Energy Ltd.)
• 7:43​​​​ NEX (NexTier Oilfield Solutions Inc)
• 10:36 Q&A
• 11:20 TSLA (Tesla, Inc)
• 13:30 BABA (Alibaba Group Holdings Ltd): I’m interested to invest in Alibaba. I would like ask: 1) Alibaba is both listed in both USA and HK. Which one do u recommend? 2) What’s the recommended entry point?
• 20:40 Indices — S&P 500, Dow Jones, Nasdaq 100, Russell 2000: all have gone up a lot. Will a strong pull back expected soon?