
Posted in
Education
By: Tom Gentile
on April 29th, 2022
If one looks at the performance of the Dow Jones Industrial Average on a day like yesterday they would think Wow! The markets are on fire and things are going really well!
But for those of us that have been paying attention to the markets and this is a large part of our livelihood you know better.
Days like yesterday are indicative of what happens in bearish market conditions. The markets can rally strong for a day and the get wiped out in subsequent days to the downside.
Until we see a series of higher highs in the charts things are still deemed soft.
It doesn’t mean we can’t find opportunity with a bullish pattern that has performed well over the past 10 year over the same relative period of trading days in those past years.
I highlighted UNH last week, and this week I am going to show you a way to participate in a sector rather than trying to pick that one particular stock in a sector. I call it trading the haystack and not the needle.


Trading a Sector over Just One Stock like AMZN
A benefit to trading a sector like an Index or an ETF that tracks an index OR trading an ETF that is comprised of a percentage weighting of a batch of stocks in the same industry as oil, retail or what I have shown here – Health Care, is that you are participating in a grouping of stock versus just the one.
We are in earnings season and when a stock like Amazon.com, Inc. (AMZN) reports a less than stellar earnings and revenue number and the stock gets hit hard, that affects ones portfolio negatively and that stock percentage drop can be exceptionally large.
The sector it is in will likely get hit and drop as well, but on a percentage basis maybe not as much, because other stocks in that ETF may be faring well enough to offset that terrible number from the one stock.
It is true and parents you know, if you have more than one child when one gets the measles they all are at risk of getting the measles. I am not saying the ETF or index is safe. I am saying it may not take as much of a hit as the one stock.
Index funds and ETF’s are a way to be diversified and not be at risk of suffering too great a loss versus the stand-alone risk of a single stock outside of the index or ETF is.
App: Toms Option Tools
Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.
Other times I will have other charts may work to amplify my educational points.
Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.
Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.
Disclaimers
Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.
No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
Disclaimer of Warranties and Liabilities Tom Gentile and TomsTradingRoom, LLC including employees, consultants, and editors (“Publisher”) cannot and do not warrant the completeness or accuracy of the content found in our areas, or its usefulness for any particular purpose.
Tom Gentile and TomsTradingRoom, LLC also make no promises that our content or the service itself will be delivered to you uninterrupted, timely, secure, or error-free. Under no circumstances will Tom Gentile and TomsTradingRoom, LLC be liable for direct, indirect, incidental, or any other type of damages resulting from your use or downloading of any content on our site.
This includes, but is in no way limited to, loss or injury caused in whole or in part by our negligence or by anything beyond our control in creating or delivering any portion of Tom Gentile and TomsTradingRoom, LLC.
You are agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that Tom Gentile and TomsTradingRoom, LLC will not be liable for any I, investment decision made, or action taken by you, or others based upon reliance on news, information, or any other material published by Tom Gentile and TomsTradingRoom, LLC.
Tom Gentile and TomsTradingRoom, LLC relies on various sources of information that we believe to be accurate and reliable. However, we make no claims or representations as to the accuracy, completeness, or truth of any material contained on our site.
Tom Gentile and TomsTradingRoom, LLC are educational portals, providing content for educational and informational purposes only. Neither Tom Gentile nor TomsTradingRoom, LLC are a broker/dealer. Investors need a broker to trade stocks and options and must meet certain requirements. All securities, futures, and investments data and ideas are offered to self-directed investors. All prices in USD unless noted otherwise.
A full disclaimer can be found here: http://www.tomgentile.com/legal_disclaimers.html.