Sector Selector: Looking Down the Edge

Stocks are on the highway to the danger zone, riding in the danger zone. The Dow, NASDAQ, and S&P have swerved off the road and are trading paint and flicking sparks as the indexes grind against their lower guardrails.

And the road the indexes are driving on is like US 93 from Vegas to the Hoover Dam. Peer over the road’s edge, and it is straight down, no chance of surviving. If the NASDAQ, Dow, and S&P bust lower from Monday’s close, stocks could take that fiery tumble down the side of the cliff.

A big volume, down day would be a major, MAJOR, sell signal, and most, if not all of 2012’s gains could be wiped out by the time the selling stops. At the very minimum, the respective 200-day averages might come into focus rather quickly.

With stocks peeking over the edge, it is more important to know which sectors to avoid and which might hold up better than others.

EMERGING BUY: industries with positive technical analysis traits that are in the early stages, indicating possible above average returns in the near-term:

Medical Equipment
Airlines
Food & Drug
Electricity
Fixed Telecom
Insurance
Reinsurance
MultiUtilities
Consumer Goods
Pharmaceuticals
Drug Retail
Real Estate
Soft Drinks
Food Products
Insurance Brokers
Telecom
Gas/Water Utilities

MATURE BUY: industries that have outperformed and their charts suggest the above average returns could continue:

Broadcasting
Biotech
Personal Products
Consumer Services
Property & Casualty
Non-Life Insurance
Media
Retail
General Retailers

MATURE SELL: industries that have under-performed and, based on their current chart patterns, could continue to lag:
Gold Mining
Commercial Vehicles

EMERGING SELL: industries that have fresh negative technical analysis set ups and could have subpar performance in the weeks ahead: