Good evening MJTT, and what a start to the new week!
Tonight, I'll be discussing two ETFs I've been watching since the middle of last week - SLX and KOL. These two ETFs are ones that should be watched if the Basic Materials and Energy sectors continue their runs from today's market session.
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Before I begin my topic of conversation for the evening, I'd like to take a minute and talk about something I've gotten down to a science since the beginning of September. Over the past couple of weeks, I've been throwing out a ton of "if" scenarios. Some have paid off, like the Oil/Gold trades in September; some have not, such as my recent Healthcare and Tech picks. A lot of my trades and ideas are speculative and somewhat risky. Since school has started, however, I've developed a knack for minimizing risk and maximizing profit using stops and limits. Because I don't have enough time to sit next to my monitors like I did during summer, learning to utilize stops and limits has really helped me worry less during the day.
Setting stops and limits can be somewhat difficult to a new trader, as most new traders feel compelled to watch the intra-day chart like a hawk after entering a position. Every time their position goes down a cent, they begin to sweat and get filled with emotion, asking questions to themselves like the ones seen below:
- Should I have made that trade?
- Why is it going down?
- Why isn't my trade working?
If you find yourself asking these questions, try to begin integrating stop and limit orders into your strategy to help you relax as a trader. When using these orders, you must also learn how to set reliable and reachable targets that you can foresee the ticker you're trading hit within your timeline.
The above is a preface to tomorrow night's educational post that talks about the strategy of using stop/limit orders and setting appropriate targets. This strategy can help the new and experienced traders alike, so tune in tomorrow to read my take on this unique style of trading.
For now, let's check out the technical aspects of SLX and KOL. When it comes down to these two ETFs, I'll be looking for GLD and OIH to continue their run higher from today. As GLD is closing in on breaking above resistance and OIH holds its ascending trend line, SLX and KOL are two ETFs that normally have a strong correlation to the prices of Gold and Oil.
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SLX 2 Year, Weekly
As seen from the charts above, SLX continues its tightening symmetrical triangle price run, supported by the 5w and 10w SMA. A break above 54.44 and the strong, descending trend line is a necessity for SLX to really break out and run wild - a break to new highs in the price of Gold should push SLX and the price of Steel over the hump as it did during the last price skyrocket in Gold.
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KOL 2 Year, Weekly
When discussing the nature of KOL, the price is (like SLX) still within the confines of its tightening, intermediate-term symmetrical triangle. The two-week bullish flag candle formation is one of my favorite formations on daily and weekly charts - as you can see from the KOL chart above, you'll notice that this formation is currently holding up nicely. Personally, I feel that if the price of Oil can continue higher above 72.50, we'll see other Energy sector industries (Coal included) begin to spur up momentum and run higher as well.
The Basic Materials and Energy sectors are driven by Gold and Oil, respectively. When these two commodities stop pumping, so do the other commodities based around them. Steel and Coal are driven by Gold and Oil, thus watching for slight moves in the prices of Gold and Oil is crucial to the performance of Steel and Coal.
Good luck to everyone tomorrow - remember, it's earnings season, so anything can happen.
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