How Traders Could Trade These 2 Trending Sectors

ETF Trade Watch

SPDR S&P Oil & Gas Exploration & Production (XOP)

This energy ETF looks to be forming a better setup than that of the other commonly traded energy ETF, XLE. Thus, allowing us to stick to our trading plan of keeping things simple. XOP appears to be consolidating at the moment, but given the strength of the energy sector throughout 2022 being so strong for so long, it is not outside the realm of possibilities this strength continues into 2023. Keep a close eye on how XOP trends for the next couple days for a possible entry. A breakdown of this consolidation zone will likely pave the way for puts, while a breakthrough the upper level of this range could likely set up a long position.

For those who trade individual stocks, look into the stocks that make up the ETF to determine which stocks present the best trade opportunity. However, remember to keep an eye on the overall market, as well as how the sector is trending to alert you which side of the trade to be on.

Financials Select Sector SPDR (XLF)

Financials also look to be holding some relative strength, so one could look to this sector for a possible trade on the ETF, or at the stocks that make up the holdings. While this setup is nothing that jumps off the screen at us, we can still keep an eye on this area of the market, as the financial sector has also shown some strength over the past several trading periods.

For the full sector breakdown, make sure to watch the video. It could lead to your first big trade of the new year!

As always…

Good Luck!

Christian Tharp