3 Sectors That Should Be on Your HFT Strategies Watch List

With The S&P flirting with new all time highs, and the Dow Jones 15% above its Oct 2007 high, traders and investors alike may be asking themselves: “what’s the main cause?”  Is it an overall recovery? or is it sector limited?.   Well, the answer is almost always both.  Its rare to have all the sectors expanding and bubbling at the same time.  Instead, when one bubble collapses, another begins to expand.  Depending how many people are in the bubble (for example, the majority of people were in the housing bubble in some way) determines how great an effect the expansion or burst has on the economy.

Although there has been a big push and pull from alternative energy and their products (Tesla anyone?), one of the largest contributors to the recovery of the market has been the medical sector, specifically, biomedical and biotech pharma.

A quick look at the biomedical monthly shows that although this sector is at 52 week highs, it is still far from its all time highs in early 2004.  In fact, it last 2 previous highs were barely 50% of its all time high.  Here at 62.93, we can see that we are 2/3rds of the way to a new all time high (still a long way to go, but looking good).

biomedical sector chart for Jan 2014

On the other hand, the medical drug side of things is about 80% of the way to its all time highs with the previous two highs being 1/3rd, and 2/3rds repectivly.

MEBI Medical drugs 01-21-14

One sector that often does well after a recovery is education.  When the economy improves, both new business and new employment opportunities are created.  Not only are there new skills to be learned, but often, the demand for certain skills continues to fall, others continue to rise.  This means that even the employed are often required to learn new skills, creating a bull market for businesses in the business of education and accreditation.

Below we see an educational index:

School Educational Sector Index Chart

You’ll notice, that unlike the biomedical and pharma charts, the previous two highs are much closer to those on the S&P and Dow.  If we see a new high on the S&P, it only makes sense that the companies that make up this index should see a boon in profits.

Here is a chart of 2 of the leaders we are looking at in the educational sector:

Tal Education Group.  Stock Symbol (XRS)

Tal Education Jan 20th

Tal Education Group (XRS) is above its all time high of 17.80 in 2010, and well on its way up a steep uptrend.  We generally do not take stock that move like this, but the upward momentum and increase in volume has our curiosity peaked.  We will be looking for a pull back, and possibly new highs a lower volume (meaning that the stock is harder to buy).  It may be tough to get it under $20, but if you are not greedy and look at this as a 5-10 year investment stock that you trade in and out of, it could be a valuable addition to one of your high frequency trading strategies.

GP Strategies Corp – Stock Symbol (GPX)

GPX Stock Chart Jan 2014

 

GP Strategies Corp (NYSE: GPX formerly General Physics Corporation) is a global performance improvement provider of sales and technical training, E-learning solutions, management consulting and engineering services headquartered in Columbia, Maryland.

You’ll notice that there were higher highs from the upward trendline which have now resulted in an upward move in trajectory.  This upward pressure, should breakthrough the triangle without any problem, at which point a new trendline will begin.   We will be watching this one closely hoping it stay nice, safe an predictable.

 

Remember at high frequency trading profit, we don’t give advice as to long, short, calls or puts.  We simply point out where you may find opportunity in the market.  Do your due diligence and check your risk reward ratio first, and then pull the trigger.

 

 

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