Market Outlook
What a different market we are in compared to what it felt like just two weeks ago. The market has snapped back and spent the last week in a tight bull flag as it continues to inch up to retesting the ATHs.
It's not saying much that retesting ATHs is in the cards for the week ahead but we are to be reminded of what Healthcare did last week. As they were the first sector in this snap back to retest ATHs.
They looked amazing as they broke through the retest area as we often see, but after the sugar high wore off, they like most sectors and stocks. Faded back under the retest area. Profit taking was the cause or getting back to even for most.
We are seeing sectors like Telecom follow suit with Healthcare, as they took just broke through the retest area. But should fade back into the range in a few days. Semi's and Bio Tech's are both a percent or two from completing a similar feat of retesting there prior ATHs as well.
Now there are sectors like Consumer Discretionary, Financials and even the Small Caps that look much more developed and much more prepared for an actual breakout to new highs, when there own time comes.
But since the market overall is on easy street right now. I figured we could spend some time talking about risk management and some lessons to remember.
First up, risk management, over the past few weeks, I have tried to be as vocal as I can about keeping risk tight and protecing your downside. For myself, I had 4 trades fail in the last 2 weeks. COST was breakeven, CACI was a half percent loss, MEDP was breakeven and MMM was a 1% loss.
All 4 of these names are still trading at or below where I got in and I'm still glad to have gotten out breakeven.
MEDP looked great until it didn't, yet I sat through none of the pain. MMM as well looked solid the day we got in but then it didn't the following day and it was time to get out.
MMM was forming a textbook bull flag breakout and we were right the first day, but the second day, we should have seen continution higher, but we didn't. Seeing MMM open inside day and down, was the clue to get out. A few held on an extra day and ended up losing around 2%. Now I'm bummed because I only lost 1%, while others lost 2%. The 1% difference seems trival and maybe it is, but I just hate losses, and really hate when others lose more in the same name's I'm in. If you are in the same name as me, say it in the chat, don't be afraid to speak up. If I know your in, I can alert you specifically if I see something that is causing me to find the exit sooner then expected.
If the worst thing that happened this week was some of you lost 2% instead of 1%, the week was a win overall.
So don't beat yourself up, but right now would be a good time to go back and look at your trades that failed recently. See where you got out and ask yourself, could I have lost less in that failed trade? Or post the entries and exits of the trades in the chat and I will go over them with you.
The biggest thing I have learned from doing trade reviews with members over the years, is that they always tend to give the failed trades more room then needed. Where I look to get out as soon as possible. Taking breakeven losses for a majority of my failed trades is the reason, I rarely if ever get that burnt out feeling from trading. I may miss a winner or two, but those don't hurt, its the losses that piss most traders off. Thats why I try my hardest to avoid getting annoyed at my executions. That's why my goal is always to teach you and remind you that lossing as little as possible is the main goal. The winners take care of themselves.
Now shifting gears to names that are setting up for the week ahead, we are seeing some changes. The drain out of high beta names seems to be over. As the Utilities sector broke support and sold off into the close of the week.
While the high beta names like TSLA, TEM and even OKLO started to wake back up. Two weeks ago,TSLA felt like it was going to be a breakeven swing, now its back in the area we want to see it hanging out in, near ATHs.
There are names like CASY setting up for a blue sky breakout through 570, TEM setting up through 80, EBAY basing under 84 or CBRE setting up for a blue sky breakout through 165. But the best chart of them all that I could find is NVDA.
Granted, I am in from $183, but even removing that bias, scanning charts all weekend, anytime NVDA popped up, I'd stop and stare at this 185 resistance area.
Semi's have been strong, as the sector has snapped back strongly and is close to retesting its highs. While NVDA spend the week coiling up in this $5 range between $185 and $180. Really there are two outcomes that will have to come to a head at some point this week. Either NVDA breaks $185 and works it way back to the $210 ATHs or, it breaks $180 to the downside and continues to inch towards testing the 200 day. If I'm wrong I'll lose 1.64% as I currently dont have a way to get it to a breakeven stop yet. But if this name kicks off the week pushing through $185, trust me I will be looking for ways to limit the downside.
As we get into the last month of trading, this tends to be the time to start reviewing and recapping your trading for the year. I have a template that I have used for many years to help with this recap, that you can find here.
Let's finish the year strong and remember to focus on limiting those losses while letting the winners ride.
From Bennett
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Macro Rotation Outlook
SPY
Dow Jones
Nasdaq
Mid Caps
Small Caps
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Sector Rotation
Sensitive - sectors that have moderate correlations to overall market conditions.
Tech
Energy
Industrial
Telecom
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What Big Picture Offers:
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Cyclical - sectors that are more sensitive overall market conditions.
Materials
Consumer Discretionary
Financials
REIT
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What's been on your mind about your trading lately?
Reply to this email with any question or idea you've been thinking about. I'd love to hear it and dive in deeper with you.
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Defensive - sectors that tend to outperforming during sub par market conditions.
Consumer Staples
Healthcare
Bio Tech
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Trips Are Back - Check the Events tab on Discord
Our next trip is coming up in just about 2 months, we wil be heading back to Vermont which at this point is probably our 10th annual trip. If you have yet to come on a trip with us yet, let me know as I have a few spots still open!
Vermont Ski/Snowboarding Trip Jan 22nd to Jan 25th
Utah Ski/Snowboarding Trip Feb 14th to Feb 21st
Italy Motorcycle Racing/Rally June 25th to July 2nd
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