Market Outlook
The tight range bound market continued last week after the S&P held up at support and turned up later in the week. And by turned up, I mean an eye watering 10 point climb.
With volatility near all time lows combined with the end of summer, there should not be too much of a shock that the market traded in a mere 2% range last week. Given this 20 point flag in the S&P we should expect to see resistance tested this week as its only 1% higher then where we are currently.
Sector wise, Financials still look great overall as they continue to flag out inside there stage 2 breakout stage. Continue to scan names in this sector in the week ahead.
As we know Healthcare and Biotech have been the 2 leading sectors lately but after strong moves higher week after week, profit taking does come around to show its face.
As we have seen since June, the sector has a few weeks up, then a week or two to settle out before the next climb higher. For both leading sectors, these are normal pull backs to set them up for the next leg higher.
Overall we are in a quiet but strong market, with no real big fear out there, some times these times can feel slow and boring but I would take boring or insane gap up and gap downs like we've seen in the past.
For most of us who were in TEVA last week, the trade looked promising but lost some luster on Friday as the sector saw some overall profit taking.
For the newer guys in the chat, this TEVA trade was a great example of what we focus on, which is limiting our downside. We risked $1 a share in TEVA for nearly a week, then saw the break of $38 we were looking for. But we we're too early to the trade and saw the writing on the wall to get out near our entry for a breakeven trade. By the end of day on Friday TEVA closed down 3%, yet anyone who was in it, lost practically nothing.
When you lose nothing in a trade, its very easy to buy it back without any ego of recouping prior losses. The $37 level still looks amazing when it wants to get back up there. We just get to side step all of the "hoping" and "wishing" for those who gave there trades too much room.
We often forget such a simple concept that when we buy a stock, we expect it to trade higher. A crazy theory, I know, but with that simple concept, when we don't get the result we are looking for. Oftentimes, traders will find "other" reasons as to why they should keep it when it isn't trading higher. By keeping our risk tight in ever trade, we don't have the time to find those reasons because we're stopped out before given a chance.
Going into the week ahead my focus are on WAT and XMTR.
WAT's macro setup is as textbook as we could ask for on very right risk in a strong sector. While XMTR is still a bit too wide for my liking but it is still a set up we do not want to miss.
As XMTR continues to flag out, keep an eye on the $100 level for a breakout that is nearly 5 years in the making.
From Bennett
Founder Big Picture Trading
_____________________________
Ready to Take Your Trading to the Next Level?
Dumb Money breaks down the strategies, risk management, and investing secrets that have taken 20 years to turn them into simple, easy-to-follow steps. Learn how to spot better setups, build a game plan, manage risk, and trade with more discipline
P.S. Scroll down to customer reviews and click "write a review"
_____________________________
_____________________________
Thinking of opening a new business or converting to an S Corp? We will open your entity for free.
_____________________________
Cyclical - sectors that are more sensitive overall market conditions.
_____________________________
Defensive - sectors that tend to outperforming during sub par market conditions.
_____________________________
_____________________________
_____________________________
We are offering 5 Members a Years Subscription Free Until 9/30/26!
Yes, an entire year of newsletters, alerts and trading with the group and much more! Once the 5 spots are taken it will be gone forever!
New Member? Click Here For 1 of the 5 Year Free Spots
Terms and Conditions Big Picture Trading (“Company”) is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or urgencies customers should buy or sell for themselves. The independent contractors and employees or affiliates of Company may hold positions in the stocks, or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company’s products (collectively, the “Information”) are provided for informational and educational purposes only and should not be construed as investment advice.
