This Stock Group Is Worth Watching as Iran Relief Drives Historically Promising Pattern
This group is a good example of why I'm raising cash while staying extremely bullish.
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Day Trader
There may be disagreements over the specifics of any ceasefire with Iran, and plenty of bumps lie ahead, but one thing is clear: progress is being made, and the market likes it.
The indices failed to build on the big upside gaps created at the open but held steady through most of the session with limited sell-the-news pressure on Wednesday. At the bell, breadth was strong with 70% of stocks in positive territory. The major indices gained just over 2.5% across the board, with the Magnificent Seven lagging slightly.
A Follow-Through Day, Mostly
Volume left something to be desired, but technically, this qualifies as a follow-through day that confirms the turn from Tuesday of last week. More technical and less news-driven action would have been preferable. But price action is price action, and Wednesday's was positive.
Why I'm Raising Cash and Staying Bullish
I was a net seller on Wednesday and raised cash to around 40%. I am still extremely optimistic about the opportunities ahead. The Iran negotiations will be bumpy, and setbacks are coming, but the direction is right.
The drop in oil price may be the most tangible signal of how the market is pricing the likelihood of a deal. Oil is still elevated and closed near its highs, but there is genuine hope that the worst is behind us.
Where Real Opportunities Are
My game plan is simple. Stay focused on individual stock picking and ignore the index noise. There are plenty of stocks with no connection to Iran or oil that are getting pushed around and offering interesting entry points.
One group worth watching is the SPDR S&P Biotech ETF (XBI) , which broke out on Wednesday and closed near its range lows. That pattern is historically promising for the group.
I am going to be aggressive, putting money to work as I find stocks with solid fundamentals and good charts. The momentum ahead looks much better than what is behind us.
Have a good evening. I'll see you tomorrow.
Related: As Iran Conflict Weights on Markets, the Korean Defense Sector Is Thriving
At the time of publication, DePorre had no positions in any securities mentioned.
