How To Find Profit Opportunities In These Sectors Before July

Every year, May tends to bring a higher level of uncertainty into the markets. Partly because the old adage, "Sell in May and go away" has people thinking they should sell, even when they're leaving money on the table.

They'll either avoid buying stocks entirely or will dump what they have to keep their profits, minimize risk, and avoid any losses – especially this year, as we slowly make our way out of a more than yearlong worldwide pandemic.

This is why most investors have one burning question on their minds right now: How long will the market remain in this state of uncertainty? (And, of course, part two of that question: What do I do to make money now?) Let's break this down. As of now, the market's uncertainty is hinged on two factors: seasonality, and what I've been referring to as a "buyers' strike."

I'm going to show you how to profitably navigate both of these today. With the steps I show you, you can bypass all the uncertainty and easily find those profitable opportunities that are out there. You just have to know where to look for them. Let's get started.

Here's What's Causing This Market Stalemate

First, seasonality. May selling came from the idea that summer trading is lighter during vacation months, so there isn't as much buying and, in turn, not as much money to be made as there was in the winter and spring, so everyone should bail.

While the saying does not necessarily apply to the markets each year (and we know there's always money to be made), it has certainly influenced the market in 2021.

So far this year, the S&P 500 is following seasonality trends to a "T." After getting off to a rough start in January, the market rallied in February, March, and April, which is what we normally see. In mid-April, things started to change.

As earnings season provided some truly impressive results, investors decided it was time to start taking some profits off the table. At the same time – and this is important – we saw buyers disappear as the FOMO, or "fear of missing out," was replaced quickly by the "fear of buying overvalued stocks at all-time highs."

In turn, this situation triggered the buyers' strike that has kept markets in a stalemate. A buyers' strike is essentially a group of buyers who stop buying a stock in an effort to reduce the price. So, what now?

Looking back at the seasonality trends, we should expect the seasonal weakness to continue into June. Over the last 20 years, the S&P 500 has only closed the month of June with profits 58% of the time, making it the second-worst month of the year to be a bull.

Looking forward to July, investors and traders return to the market as earnings season begins to get rolling again. This is when I expect the uncertainty to give way to a more consistent trend as volume returns and volatility declines.

But we do not have to wait until then to make money. Remember what I said about the buyers' strike? Well, some buyers have actually been active in a few sectors that are providing ample opportunities for investors and traders.

Follow the Volume to Profits

First, the retail sector. Retail stocks are fighting their way out of the hole that the pandemic created more than a year ago. We're in the middle of the retail earnings season right now, and things have been great.

Volume among the retail sector is trading about 32% higher than it was two months ago as the real traders have found this to be a target-rich environment. My Night Trader system has been uncovering opportunities in names like American Eagle Outfitters Inc. (AEO), Abercrombie & Fitch Co. (ANF), Dicks Sporting Goods Inc. (DKS), and Sally Beauty Holdings Inc. (SBH). And there are many more to come.

Another sector that's seen an increase in volume is the financial sector. Higher interest rates, economic growth, and an increase in banking activity have rallied the banking stocks into a leadership role in the market.

Last week, the Financial Select Sector SPDR Fund (XLF) ETF (exchange-traded fund) accounted for more than 35% of the volume of major sector ETFs as volume was on the rise on this sector. No buyers' strike here. Finally, the Energy Select Sector SPDR Fund (XLE) is showing the same signs of active buying and selling. Oil prices continue to move higher, adding to the fundamental story for these companies.

Disclaimer: Any performance results described herein are not based on actual trading of securities but are instead based on a hypothetical trading account which entered and exited the suggested ...

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