A Recovery No One Expected

“Formal education will make you a living; self-education will make you a fortune.” ~ Jim Rohn

Dear Trader,

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.

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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.

TrackStarIQ Data

Here are some highlights from FA searches last week…

RANKTOP INDUSTRY (EQUITIES) BY FAs (Total Traffic) – This Past WeekTOP INDUSTRY (EQUITIES) BY FAs (Surging Traffic) – This Past Week TOP SECTORS/CATEGORIES (ETFs) BY FAs (Total Traffic) – This Past WeekTOP SECTORS/CATEGORIES (ETFs) BY FAs (Surging Traffic) – This Past Week
1BiotechnologyHousehold appliances, miscEquity – Large Cap Growth EquitiesBond – Mortgage Backed Securities
2Drug Manufacturers – Specialty & GenericTravel ServicesEquity – Leveraged EquitiesEquity – Inverse Equities
3Travel ServicesGroceries, general lineEquity – Technology EquitiesEquity – Mid Cap Blend Equities
4Auto ManufacturersGeneral industrial machineryEquity – All Cap EquitiesReal Estate – Global Real Estate
5Software – ApplicationCommercial PrintingEquity – Alternative Energy EquitiesEquity – Consumer Staples Equities
6Internet Content & InformationDiversified IndustrialsCommodity – Precious MetalsEquity – Building & Construction
7Diagnostics & ResearchMeasuring and controlling devices, miscEquity – Health & Biotech EquitiesBond – Emerging Markets Bonds
8SemiconductorsOrdnance & Accessories, (No Vehicles/Guided Missiles)Equity – Small Cap Growth EquitiesCommodity – Agricultural Commodities
9Electrical Equipment & PartsTransportation ServicesVolatility – Leveraged VolatilityBond – Inverse Bonds
10Internet RetailMotors and generatorsEquity – MaterialsEquity – Foreign Small & Mid Cap Equities
11Specialty RetailDrugs, proprietaries, and sundriesEquity – Energy EquitiesEquity – Global Equities
12Credit ServicesOil & Gas DrillingEquity – Small Cap Blend EquitiesCommodity – Oil & Gas
13Medical DevicesSurgical and medical instrumentsEquity – Large Cap Blend EquitiesEquity – Water Equities
14Software – InfrastructureOther Precious Metals & MiningEquity – Consumer Discretionary EquitiesEquity – China Equities
15Specialty ChemicalsBeverages – BrewersEquity – Asia Pacific EquitiesBond – Preferred Stock/Convertible Bonds
16Oil & Gas E&PPublishingEquity – Global EquitiesEquity – Large Cap Value Equities
17ConglomeratesBank holding companiesEquity – Financials EquitiesPreferred Stock – Preferred Stock/Convertible Bonds
18Aerospace & DefenseTextile Mill ProductsBond – Government BondsMulti-Asset – Preferred Stock/Convertible Bonds
19Utilities – Regulated ElectricComputer integrated systems designEquity – Industrials EquitiesBond – Leveraged Bonds
20Consumer ElectronicsRecreational VehiclesCommodity – Oil & GasAlternatives – Long-Short

What We’re Reading:

  1. Retail sales, industrial production, NY Fed manufacturing survey, and producer price index for December.
  1. Business group slams new Ontario retail rule.
  1. Lemonade shares heading back to $100, Citron Research says

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.

Details are inside this brief video…

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