As we march closer to the end of the year, I’ve been getting some great questions about where to find the best trading opportunities in the market right now.
So in today’s Mailbag edition, we’re going to tackle two of them—and how you can identify more without the pressure of finding “the perfect stock.”
(Spoiler alert: it doesn’t exist).
Now let’s get into it…
Q: Tom, thanks for a great year! What sectors do you see doing well in the final month of 2025?
You’re welcome—and thank YOU for being part of the Patterns & Profits family! Let’s keep this momentum rolling into 2026.
In fact, I’ve got something big in store for you to ring in the new year…
And on December 15, 16, and 17, I’ll be hosting a multi-day outlook for 2026, where I’ll be covering everything from seasonal patterns to contrarian setups… trend trades… earnings strategies… AI enhancements… and more.
Several special guests will be joining me, too. And trust me; you’ll want to see who!
This is an exclusive event for my most dedicated members, so if you’re reading this, that means YOU.
👉 Click here to register now for all three sessions 👈
Q: If I don’t want the pressure of trying to find that one stock that will outperform the rest… Can I still trade? And what should I look at instead?
This is a fantastic question, and it’s one that I’m sure a lot of traders are wondering, too!
Trying to pick that “winning” stock can feel overwhelming. And that pressure can sometimes cause people to freeze up and decide to sit out of the market altogether.
But that doesn’t have to be you.
One of the best ways to trade without stress is to take a sector-first approach. That means focusing on the big picture (the macro view) first, then drilling it down as needed (the micro view).
And a great way to do that is through something we talked about earlier this week: exchange-traded funds (ETFs). These are built to track entire sectors, indexes, or themes—and they can give you targeted exposure WITHOUT needing to pick an individual stock.
For example, if you’re bullish on financials and think a rate cut is coming, you could look at trading options on The Financial Select Sector SPDR Fund (XLF) instead of guessing whether JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC), or Wells Fargo & Company (WFC) will lead.
Q: What is sector analysis, and why does it matter in trading?
When you hear me talking about sector analysis, I’m referring to how we evaluate groups of related stocks (like financials, tech, healthcare, and energy) to understand which parts of the market are strengthening and which ones are lagging.
Here’s how I approach it:
- Start with a top-down view by looking at the Dow, Nasdaq, and S&P 500.
- Then, break it down into sectors: which are leading, which are lagging.
- From there, look at the strongest or weakest stocks within those sectors.
Only after that process do I start building a trade idea.
So, it’s not about throwing darts at the wall—it’s about letting the sector strength (or weakness) lead you to the best setups.
Q: How can one sector impact the rest? And what do you mean by a “family” effect?
Excellent question!
Think of sectors like families. When one stock reports weak earnings and offers a gloomy outlook, it can pull the entire group down, even if the others haven’t reported yet.
That’s because investors often take one company’s bad report as a signal that others in the group might follow.
The same goes the other way… If one company crushes earnings and raises guidance, it can lift the whole sector.
So, by analyzing sectors as a whole, you can anticipate which groups are about to move (up or down) BEFORE the broader market catches on.
Q: I’m still not sure which stock to pick. Can ETFs help simplify things?
Absolutely! That’s one of the reasons I love trading them.
If you’re not sure which stock is going to be the top performer in a sector, you don’t have to choose. That’s where ETFs really shine.
Instead of buying individual names, you can trade an ETF that gives you exposure to the entire group, whether that’s:
- The Technology Select Sector SPDR Fund (XLK) for tech
- The Financial Select Sector SPDR Fund (XLF) for financials
- The Energy Select Sector SPDR Fund (XLE) for energy
- Or any number of others
They give you built-in diversification and let you focus on the sector trend… stress-free.
ETFs combine the flexibility of stock trading with the broader exposure of mutual funds. And when used with the right strategy, they can give you powerful options setups without all the guesswork.
We’ll talk again soon…
Until then, enjoy your weekend!
Tom Gentile
America’s Pattern Trader
