Why Buy the XLY? (w/ Katie Stockton) | Stock Trade Ideas - YouTube

Welcome to trade ideas. I'm Jake Merle sitting down Katie Stockton a fairlead strategies Katie

Great w back on the show good to be back. So today we're gonna be talking about the stock market

We've just broken out two new all-time highs. The SMP is trading above 3000

So do you think it's a good idea to be going long here given this recent breakout?

I think you still can until there's major signs of upside exhaustion, and we really don't have those yet

If anything there's a short-term overbought condition, but those tend to be managed really well when we do get the breakout set

We're getting on the individual stock level. So that's an important thing to note breakouts tend to

Exacerbate the positive momentum behind the market and that's indeed what we have with the S&P 500

Is there a specific sector you're most interested or your most bullish on right now?

I would say really always technology is a primary sector for me having exhibited leadership over the long term

But I'm really also very interested right now in consumer discretionary

It's been another long-term leader, but it has a fresh breakout in relative terms that I think is compelling

So as you mentioned on either absolute or relative chart you see that breakout

But are there any other technicals that's in confirming your thesis, right?

So in something like the consumer discretionary spider

Which is Excel y that broke out in absolute terms as you mentioned and you can derive a measured move price target of about

138 139 I think that ETF is currently around 124

So that's pretty compelling as a long-term upside gage with that breakout

Supported by positive momentum and I say that across time frame so short intermediate long term

the MACD Zoar moving average Convergence divergence

Indicators are all positive

So that's very compelling and we did see a nice successful test of support at the rising

200-day moving average with that relief rally in June

So I think it's fairly compelling so it has moved pretty far in a really short amount of time

What are the odds it just consolidates from here rather than heading higher?

It could consolidate I would place the odds somewhat low with the momentum still there behind not only

Discretionary but the broader market the overbought condition is not too concerning yet because it's not that widespread

You think it was more so really with where we've been and yet there. I still think there's upside with those targets

So Amazon actually makes up 23 and a half percent of the ETF

If you've Home Depot just over 10 percent if you have McDonald's at 7 percent

And then you have Starbucks and fuel their names around 5 percent

I think it's you know, 5 stocks make up 50% of the ETF

Are you looking at those charts of the individual holdings as well? Of course, I think the bottom up work is really important

so always to look at the individual stocks that comprise these ETFs or these benchmarks and as you could imagine

Amazon and its other peers in that top five or even top 10 generally are very favorable charts long-term uptrend

long-term upside momentum based on that MACD indicator again

And the moving averages are generally pointing higher and that's my preferred set up in a strong tape. It's a trending market

So we generally want to have positions long exposure in

Outperforming stocks and also stocks that are in long-term uptrend in absolute terms

So that would qualify really for all those stocks you mentioned

So what key levels would you be looking at for xly in terms of actually putting on a trade?

For support now that 200-day is a bit far below to use as a gauge of risk or a stop-loss

So instead we'll use the breakout point of about 121 and with that upside gage based on the measured move around 138. 139

I think that creates a very compelling risk reward and over what time horizon you expect this to play out

Long-term and my version of long-term is about six months plus and what would you say is the biggest risk to this trade?

Really the market if the market losses that breadth and the momentum, of course that would trickle down into the leading sectors first

so that would be the biggest risk and

Yet sentiment is still very conducive to upside follow through we have that moment and we have the breakout so I don't see any signs

Of that at this time, and so I know you're an expert in technical analysis

But are you looking at anything from a fundamental perspective?

That could impact your trade

I leave that to the other experts the fundamental experts and you know

I do believe that earnings drive stock price trends so that's very important to have a fundamental foundation for your trades

But of course an ETF gives you a little diversity you can have position in the underlying constituents and there and get a little bit

Less risk to that. Okay D. We'll see how it plays out in the months to come. Thanks so much for joining us

Of course, so katie is bullish on the stock market specifically

She likes buying the consumer discretionary

ETF ticker symbol xly at current levels with the stop-loss after two daily closes below

121 and a target price of 139 over the next six months

That was Katie Stockton of fairlead strategies. And for real vision. I'm Jake Merl

You

You