This is truly a perfect storm. Energy (XLE) is breaking out relative to the S&P 500 ($SPX). Oil services ($OSX) broke out of a symmetrical triangle on a long-term weekly chart. The $OSX is breaking out on a relative basis vs. both the $SPX and the XLE. Currently, I don't really see any better area in the market to trade than oil services.
Within the $OSX, check out Halliburton (HAL), one of the many oil services components with improving technicals:
So where else can we turn? The market's overbought and chasing anything should be considered dangerous. Well, technology has been the most disappointing sector the past few months as Apple's (AAPL) struggles have been well documented and have compounded the difficulties for the NASDAQ 100 ($NDX). But let's not forget it was AAPL's strength that catapulted the $NDX on a relative basis prior to this latest period of disappointment. Could the $NDX be ready to jump back into the fray? Check this chart out and you be the judge:
Since 2006, this relative chart has been trending higher. With every relative breakout, the previous relative support held during periods of tech weakness. According to the chart above, we're going to find out a lot about the long-term relative strength of the $NDX. Personally, I believe the group is now primed to outperform once again. But I wouldn't rush into the first component that you come across. In fact, on Friday, I listed 24 component stocks of the $NDX printing long-term negative divergences on their daily charts for the benefit of our members. I would avoid them. While that doesn't guarantee selloffs, it certainly increases the risk of holding or (gasp!) buying these stocks. The good news is that there were 32 stocks in the $NDX that looked very solid to me technically.
On Monday, I'm featuring one of these $NDX component stocks in the midst of a VERY bullish ascending triangle pattern. I expect it to lead to outsized gains, especially on a high volume breakout. If interested, you can sign up for our FREE weekly newsletter (simply provide your e-mail address) and I'll be happy to send you my annotated chart. CLICK HERE for more details.