Defend Yourself From A Market Correction With This Sector
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This rally appears to be getting a little stretched here, so as prudent traders who are, first and foremost, capital preservation. So the question then becomes, if the market rally is losing steam, where can we look to make a trade?
First, there is the old trading saying that cash is a position. Meaning, you don’t have to be trading constantly, day in and day out. In fact, that is a great way to burn through your portoflio balance. Trust me, I have seen it many times throughout my decades-long coaching career.
However, if a setup presents itself, we need to act if we want to become successful traders. Execution is still another major part of this business.
Utilities Select Sector SPDR ETF (XLU)
So, if the idea is to look for A+ setups, we must always be on the look out and when trading sectors, we need to be able to spot trends in certain areas of the market. If the market does continue to lose steam there are two sectors we can look to.
One would be the sector we have talked about in the not so recent past, gold. The other would be one we haven’t touched on in a while, however, one that is usually a bright spot in a weak market.
Utilities is typically viewed at as a defensive sector. When prices of stocks in the tech industry or wherever else are falling because investors are fleeing in search of a safe place to hide, gold and utilities are typically near the top of the list.
When the economy slows, people still need to pay for their utilities. This sector is one of those sectors that is essential to everyday life, so naturally, investors view this sector as more resilient in times of uncertainty. Keep an eye on this sector for a “safe-haven” to any market pullbacks that might take place.
Be sure to watch the video below for more!
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