Where Main Street Meets Wall Street

Which Sectors Are Setting Up In This Stock Market Correction?


In the current stock market correction, tech and growth stocks like Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL) and Google parent Alphabet (GOOGL) have fallen below key moving averages like the 10-week line. Such technical weakness in leading names is troubling, but other sectors, such as banking, are faring better.


Recent action in the Innovator IBD Breakout Opportunities ETF (BOUT) reflects those trends. Banking and oil and gas stocks currently dominate the BOUT ETF, which is rebalanced weekly.

Tesla (TSLA) is one of the few tech and growth stocks currently on the IBD Breakout Stocks Index. Meanwhile, EOG Resources (EOG), Matador Resources (MTDR), Whiting Petroleum (WLL) and Denbury (DEN) represent just a few of the oil and gas stocks on the index.

On the financial front, KeyCorp (KEY), U.S. Bancorp (USB), Citizens Financial (CFG) and Truist Financial (TFC) join many fellow banking stocks on the list.

Louisiana-Pacific (LPX), Atkore (ATKR) and Builders FirstSource (BLDR) represent the building sector, while Boyd Gaming (BYD) and Churchill Downs (CHDN) make showings from the leisure sector.

Which Stocks Are On The IBD Breakout Stocks Index As The Market Corrects?

Stocks Showing Strength In Stock Market Correction

Because the overall trend is against you, it’s best to avoid make new buys during a stock market correction. But it’s during downtrends that leading growth stocks and companies showing the telltale CAN SLIM traits set up chart patterns that could lead to fresh breakouts when the market rebounds.

So now is a good time to build your watchlist and be on the lookout for a follow-through day to emerge and launch a new stock market rally. Following a simple three-step routine helps you do that. You’ll spot any changes in the stock market trend with The Big Picture and Market Pulse. You can find stocks to watch with IBD Stock Lists, and evaluate your potential stock picks with charts and ratings in Stock Checkup.

Among other financial plays, bank stocks building new chart patterns and nearing buy points include U.S. Bancorp, KeyCorp and Citizens Financial.

Oil and natural gas stocks have also been drilling for new buy zones. Matador stock is now slightly extended, while EOG stock and Denbury are setting up. Whiting Petroleum is in the top of its buy range after pulling back Tuesday.

In terms of leisure plays, Churchill Downs stock is extended as Boyd Gaming places its bets on a 71.10 buy point in a cup-shape pattern. Building sector stocks Atkore, Builders FirstSource and Louisiana-Pacific are all testing their 10-week lines as they try to move higher.

IBD Breakout Opportunities ETF

The IBD Breakout Opportunities ETF from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund allows you to essentially invest in the entire index in addition to or rather than buying the individual stocks. Learn more here about the ETF and Innovator funds.

Follow Matthew Galgani on Twitter at @IBD_MGalgani.


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