One way to pick stocks is to look at the sectoral indexes to check how bullish or bearish the indexes are, or whether their charts show any bullish patterns and potential. This would be in line with sectoral rotational play. Once the potential sectoral indexes are located, we can then zero down to stocks within that sector and narrow down to some trading candidates.
With this in mind, here is a chart of the XEJ index which show a nice bullish pattern in the form of a possible ideal crab patternlooking forward into the future. As you can see, we have completed the left side of the crab pattern, and I've marked the yet to be completed and potential right side of the crab with the possible targets if this ideal crab pattern eventuates over the longer term.
Knowing this potential bullish play for the XEJ, zeroing down to some energy stocks with good fundamentals, or even some speculative ones with prospective exploratory ventures or soon-to-be-producing fields may carry some promise when trading longer term, as we continue to monitor the index.
Just an idea that we can work on for trading, esp. if intending to pick up some nice energy stocks during a time of pullback when prices are low, or when the pattern outbreak higher, confirming the bullish potential, as the case might be, depending on your trading profile or style.
