“Formal education will make you a living; self-education will make you a fortune.” ~ Jim Rohn
Welcome to today’s edition of Wall Street Connected.
One sector has been leading the recent stock market rally, and it’s not technology or financials.
When the COVID-19 pandemic of 2020 struck, certain industries and sectors were damaged worse than others.
In fact, the biotechnology sector managed to trade in the green on days which the Dow Jones Industrial Average declined by 1,000 points or more.
But many sectors were beaten down as demand for their services simply evaporated due to travel restrictions, stay-at-home mandates, and general safety precautions which individuals around the world began to assume.
One of those sectors is currently ranking #11 on top ETF searches by financial professionals last week.
The eleventh highest ranking sector on top ETF searches by financial professionals monitors the price action of energy equities, which have been outperforming the Dow Jones Industrial and Nasdaq for nearly two months.
The most popular ETF which tracks the price action of energy equities is the Energy Select Sector SPDR Fund (XLE).
This ETF has increased by 50% in price-per-share since November 2, 2020.
Many experienced traders and investors believe that due to the damaging impacts the COVID-19 pandemic had on energy equities, they became heavily shorted, meaning traders and investors were betting on a continued decline of the sector.
But when bullish demand sparks for a sector which is heavily shorted, those who are short need to quickly cover their positions in order to preserve their capital, and bulls take full control.
This is also known as a “short squeeze” by experienced traders and investors, and this tactic is used on a regular basis by experienced traders and investors to take advantage of bullish moves which have the potential to outperform the Dow Jones Industrial, S&P 500, or the Nasdaq.
XLE, the ETF which tracks the price action of energy equities has been doing exactly this, making for multiple profitable bullish opportunities within the energy sector since November 2, 2020.
Here are some highlights from FA searches last week…
|RANK||TOP INDUSTRY (EQUITIES) BY FAs (Total Traffic) – This Past Week||TOP INDUSTRY (EQUITIES) BY FAs (Surging Traffic) – This Past Week||TOP SECTORS/CATEGORIES (ETFs) BY FAs (Total Traffic) – This Past Week||TOP SECTORS/CATEGORIES (ETFs) BY FAs (Surging Traffic) – This Past Week|
|1||Biotechnology||Household appliances, misc||Equity – Large Cap Growth Equities||Bond – Mortgage Backed Securities|
|2||Drug Manufacturers – Specialty & Generic||Travel Services||Equity – Leveraged Equities||Equity – Inverse Equities|
|3||Travel Services||Groceries, general line||Equity – Technology Equities||Equity – Mid Cap Blend Equities|
|4||Auto Manufacturers||General industrial machinery||Equity – All Cap Equities||Real Estate – Global Real Estate|
|5||Software – Application||Commercial Printing||Equity – Alternative Energy Equities||Equity – Consumer Staples Equities|
|6||Internet Content & Information||Diversified Industrials||Commodity – Precious Metals||Equity – Building & Construction|
|7||Diagnostics & Research||Measuring and controlling devices, misc||Equity – Health & Biotech Equities||Bond – Emerging Markets Bonds|
|8||Semiconductors||Ordnance & Accessories, (No Vehicles/Guided Missiles)||Equity – Small Cap Growth Equities||Commodity – Agricultural Commodities|
|9||Electrical Equipment & Parts||Transportation Services||Volatility – Leveraged Volatility||Bond – Inverse Bonds|
|10||Internet Retail||Motors and generators||Equity – Materials||Equity – Foreign Small & Mid Cap Equities|
|11||Specialty Retail||Drugs, proprietaries, and sundries||Equity – Energy Equities||Equity – Global Equities|
|12||Credit Services||Oil & Gas Drilling||Equity – Small Cap Blend Equities||Commodity – Oil & Gas|
|13||Medical Devices||Surgical and medical instruments||Equity – Large Cap Blend Equities||Equity – Water Equities|
|14||Software – Infrastructure||Other Precious Metals & Mining||Equity – Consumer Discretionary Equities||Equity – China Equities|
|15||Specialty Chemicals||Beverages – Brewers||Equity – Asia Pacific Equities||Bond – Preferred Stock/Convertible Bonds|
|16||Oil & Gas E&P||Publishing||Equity – Global Equities||Equity – Large Cap Value Equities|
|17||Conglomerates||Bank holding companies||Equity – Financials Equities||Preferred Stock – Preferred Stock/Convertible Bonds|
|18||Aerospace & Defense||Textile Mill Products||Bond – Government Bonds||Multi-Asset – Preferred Stock/Convertible Bonds|
|19||Utilities – Regulated Electric||Computer integrated systems design||Equity – Industrials Equities||Bond – Leveraged Bonds|
|20||Consumer Electronics||Recreational Vehicles||Commodity – Oil & Gas||Alternatives – Long-Short|
What We’re Reading:
- Retail sales, industrial production, NY Fed manufacturing survey, and producer price index for December.
What We’re Watching:
One unique electric vehicle stock has been a standout in the auto manufacturing industry lately.
It’s not Tesla, Nio or Idex.
Ahead of a new week in the stock market, you may want to learn more about it.
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