LOCATION, LOCATION, LOCATION … Just as in real estate, the name of the game in the stock market is “location”. Especially in times of relative indecision (like now), the market has a way of offering us clear-cut trends to profit from.

It’s no secret that one of the problems bothering the market is the continuing rise in oil prices. Rising energy prices keeps the Fed focused on inflation and makes it more difficult for it to lower interest rates inorder to kick-start a weakening housing sector. At such times, it’s a good idea to take whatever the market gives you. The strongest market sector today, and since the start of the year, has been energy.

Schlumberger (SLB) closed over 70 for the first time since last May. That’s a bullish breakout. Its relative strength ratio (top of chart) has broken an eight-month down trend line (black arrow). Most of the up trending stocks in this market are found in the energy patch. That’s a good place to have some money located.

StockCharts.com

Everyone should have an Energy related watchlist. Take some time this weekend to do some homework and make one. If you have questions on how to do it contact your coach.