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Trader and investing coach Bob Lang shares some oil-and-gas names that look like potential short candidates, as well as some medical names that could eventually break out to the long side.

Listen to the complete interview here .

Kate Stalter. Today, I’m speaking with Bob Lang of ExplosiveOptions.net. Bob, you were writing on RealMoney.com this morning about waiting for some volume to confirm a move. Now as we’re speaking here on Tuesday, stocks are trading higher, but are well off the previous intraday highs.

It seems that you’re not really convinced by these one-day rallies. They’ve been just as easily followed by huge declines lately—if there’s more big news out of Europe or China. What are you seeing these days in terms of the overall market?

Bob Lang. You know, Kate, what I’d like to see is some conviction. And if the market’s going higher, I want to see some conviction on the buy side. And where we generally see that is in good volume and institutional buying that comes to the floor and brings prices up to a certain level.

We’re currently sitting below some significant moving averages, and that is also another signal that I’m looking for. Once we break through some of those moving averages on some decent volume, where we see some accumulation by the institutions—look, let’s face it—institutions are about 80% of the action in the markets these days.

So what I’m looking for is: Some more institutional participation, where the big banks, hedge funds, mutual funds are participating, putting money to work, and they’re not so afraid or scared of price action to the downside. Then we can see some more price appreciation going up.

Kate Stalter. Right now, as you’re speaking, I’m looking at a chart of the S&P 500, for example, and it is well below its 50-day line, its 20-day line. What kind of moving average support would you be looking for at this point?

Bob Lang. Yeah, those are the sort of moving averages that I’d like to see become support. Now, what you said, we’re below those particular moving averages. By definition, those are now resistance levels, so once we hit those levels and we bounce off of those, and we come back down, it’s become like a ceiling.

If prices cannot get through those levels, we’re going to come right back down and we’re going to sell off. And most likely what’s going to happen is: Rallies such as today are going to be used by players to lighten up, to sell into, and to take money off the table.

Kate Stalter. Let’s talk about some areas where you might be seeing some strength, at least on the watch list side. That’s something obviously that our listeners are interested in. How can they best be prepared for the next rally that does emerge? What are you looking at right now?

Bob Lang. Right, and what I generally like to see is leadership, and I want to see the leaders that are going to take this market to the next level. If it’s higher, then I want to see those leaders reflect themselves in much better price action and much stronger volume, as prices in the indices tend to rise.

So I’m seeing some of these health-care names, software names. Take a look at Cerner (CERN ), take a look at Athena Health (ATHN ). These are some of the names that are exhibiting some decent relative strength into a market that’s kind of going sideways to down. And I want to look for the stocks that continue to not just gather strength, but also take in more capital.

When the markets go sideways, these stocks are actually outperforming, and when the markets start to actually go up, it would have been like Cirrus Logic (CRUS ) today. That’s a name that is actually outperforming the markets and is reaching for new highs. With the markets about 6% to 7% from the April highs, you’d probably be surprised if I told you that there are still new stocks out there making new highs. This is one of them.

Then those two other than I mentioned, Athena, Cerner, are also right near the new highs and already probably poised to break out there as well.

Kate Stalter. Let’s talk about some names that are doing the opposite. The energy sector is an area that’s been under some selling pressure lately. Talk a little bit about what you’re seeing in that market.