Traders have devoured almost every single dip so far this year.
The markets big winners have enjoyed an amazing rally in 2017. But many of these popular stocks look like they need more rest before attempting to fight back toward their highs.
Thats why market rotation has been one of our big trading themes this month. If you want to continue banking short-term gains, its time to reevaluate your positions and jump on the most lucrative trends for the final two trading weeks of the year and beyond.
Luckily, our charts continue to offer plenty of clues as to what stocks and sectors will outperform in the weeks and months ahead.
To help you fight through the noise, were going to dive below the major averages to discover what trades could blast higher during the holiday season and which plays could run into more trouble.
Lets get started
1. Biotech Gets Volatile
The SPDR S&P Biotech ETF (NYSE:XBI) and the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) were each approaching important support levels back in mid-November.
Their recent performance had been less than impressive. The small-cap SPDR S&P Biotech ETF dropped almost 8% below its early October highs. Meanwhile, the iShares Nasdaq Biotechnology ETF fell almost 9% over the same timeframe.
We were hoping for a meaningful bounce from our favorite fast-moving biotech stocks. But instead, all the market gave us was a choppy mess.
XBI has slowly lost ground since the small-cap biotech ETF topped out in early October. Its now more than 8% below its highs and becoming more volatile every day.
To be fair, were not totally writing off this group. These stocks probably just need some time to reset. On a positive note, the large-cap iShares Nasdaq Biotechnology ETF has managed to hold above its 200-day moving average. If these stocks can grab a little momentum here, we could see them return to form in 2018.
2. Semis Search for Support
Semiconductor stocks have been among 2017s strongest market leaders.
But that doesnt mean the sector is immune from market forces. The VanEck Vectors Semiconductor ETF (NYSE:SMH) endured a choppy consolidation period beginning in June that lasted more than three months. But by mid-September, this industry was setting up for a powerful breakout once again as market focus shifted back to the tech sector.
Now its cooling off once again
Semis are getting hit after posting a powerful two-month romp that topped out in late November. Whether we get a bounce like we witnessed back in the summer remains to be seen. Well keep our eyes peeled
3. Palladium Breaks Out
Palladium is ripping higher thanks to its industrial applications. Its used in catalytic converters in cars and trucks, as well as capacitors in consumer electronic equipment.
Most investors arent paying a lick of attention to palladium. But as we showed you last month, this forgotten precious metal is beating the pants off the major averages this year.
Now its breaking out to new highs again.
This is one of the cleanest charts on the market right now. You cant argue with this beautiful uptrend!
Our ETFS Physical Palladium Shares (NYSE:PALL) jumped higher by almost 2% yesterday. Thats just what it needed to begin a new push into 2018
Sincerely,
Greg Guenthner
forThe Daily Reckoning
