Monday proved to be a great day for the bulls with green across the board, not just in the tech sector. While financials lagged a bit, it still did participate in the rally a bit. The most positive development was both the S&P 500 and Nasdaq reaching milestones of above 4300 and above 15,000, respectively.
Investors should be cautious, however, there is economic data set to come out this week that usually will have some effect on the market, as well as a FOMC meeting takin place on Wednesday. This are big hurdles that the market must overcome, but if the data and meeting goes well, that could be just what the markets need for another leg to this rally.
Since the markets are flying high right now, there are a couple areas we can find high probability trades in, like energy or healthcare. As money is poured into sector such as tech and consumer cyclical, the money has to come from somewhere.
Energy Select Sector SPDR ETF (XLE)
The energy sector relies heavily on the price of oil. If the price were to fall, it takes many stocks with it. Right now, oil is sitting at just under $70 per barrel. If the price can push up more, it would be a good risk to reward ratio to take a reject.
The rational behind this trade is…
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