Find Non-Energy Stocks That Are Breaking Out – Less Risky For Day Trading

Posted 9:30 AM ET - I will not be publishing market comments Friday. This same game plan will work and I am not expecting a big reaction. Yesterday the market shot higher on a better-than-expected ADP report. A good jobs number above 200,000 is expected tomorrow. Oil jumped after OPEC agreed to cut production and the rally was on. An hour after the open we learned that oil inventories had a bigger than expected drawdown. Global economic conditions are improving so there is a fundamental side to the rally in energy as well. Unfortunately, the market dropped after the initial move. Money simply rotated out of technology and into energy/basic materials. This is not a particularly good sign since new money is not coming into the market. China's official PMI came in better than expected and Europe was decent as well. Inflation has been creeping higher in China and they have quietly been tightening money supply during the last month. There is no doubt that the Fed will hike in two weeks. Their rhetoric will be more important than the rate hike since traders try to gauge the timeline for the next move. Interest rates are bubbling up and the market will shoulder the move as long as economic activity improves. Oil is moving higher again today and energy stocks will move higher. I will sort through these stocks and find a couple of great charts, but I would rather buy stocks that are not energy-related. If the move in oil falters, I won't be exposed. I would rather trade other companies that have their own fundamental story rather than follow a commodity driven move that is more difficult to predict. The market has been choppy so I will wait before taking positions today. If the market probes for support I will wait for a bottom to form before getting long. If the market rallies, I want to gauge the strength. If the market is able to take out the first hour high I will trade from the long side with confidence and I will use that first hour high as my market stop. If a tight range sets in, I will trim my size and my activity knowing that I won’t have a tailwind. Look for choppy trading and continued rotation. . .

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