It's Not All About Technology Stocks

Growth stocks have been struggling as the 10-year treasury yield ($TNX) continues to climb higher and higher.

The Fed hasn't backed down from its aggressive rate-hiking campaign and technology stocks (XLK), along with stocks in consumer discretionary (XLY) and communication services (XLC) are not offering many uptrending stocks. But that doesn't mean there aren't strong and strengthening stocks out there.

Energy (XLE), financials (XLF), industrials (XLI), and health care (XLV) have all been very strong and have helped to keep the S&P 500 afloat and above its June low. Trading stocks in these four leading sectors makes a lot of sense right now. Champion X (CHX) is an oil equipment & services stock that just beat both revenue and EPS estimates and, as a result, was able to gap higher and clear overhead resistance:

Enter Champion X (CHX):

The volume that accompanied the revenue and earnings beats was the 2nd heaviest of the past year. After gapping higher, CHX continued to ascend, reaching just above the $30 level. I believe that gap open now represents an excellent reward to risk entry on any short-term selling. The 20-day EMA, currently at 25.51, is rising and will soon be at that 27.00 gap support level as well. CHX is now at an 8-9 month relative high, has an excellent AD line, and is part of an industry group that just set a fresh 52-week relative high vs. the S&P 500. Stick with leading stocks in leading sectors until economic conditions change and usher in new leadership, potentially even technology.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.