Market Outlook
It has been a tricky market over the last two months. Index's have sat near all time highs, while most sectors entered into corrections and most names have been taken to the woodshed. Even with all of this confusion doing less, continues to be more in this current market conditions.
There have been pockets of strength and we have found a swing trade or a few to keep us engaged with the market but periods like this are often a reminding reality of how throughout a given trading year, most of the time, its sitting and waiting for the periods when the market wants to wake back up.
The S&P has shown us clear weakness the last two weeks but the fearful selling has not even begun yet. Near tops, just like when a roller coaster reaches its crest of its climb before the steep fall, often slows down just enough to build anticipation for the scream inducing fall that is coming.
Now I don't feel the market is gearing up for some Tariff War or COVID type of fall, but a pull back should come as no shock and a correction in the scheme of things would set the market up nicely for a true break to new all time highs.
One of the main reason that this roller coaster seems to be at its peak but the ride itself doesn't feel like the tallest ride in the world, where it feels more like the ride at your local carnival. Is due to the fact that major sectors have already taken a beating since there respective short term highs.
VFH: −5.10%
VAW: −8.54%
VCR: −8.71%
VGT: −8.79%
VNQ: −8.95%
VOX: −9.84%
VPU: −10.72%
VIS: −13.09%
VAW: −8.54%
VCR: −8.71%
VGT: −8.79%
VNQ: −8.95%
VOX: −9.84%
VPU: −10.72%
VIS: −13.09%
Most of these sectors have already pulled into correction territory and have started to find some buyers as we can see bases starting to form in some of them. As we can see as Financials have bounced into a stage 1 base after there recent pull back.
So for the market as they begin the drop lower and the sectors have that next push lower, it continues to be much easier to sit in cash and wait for the time when the wind is behind us. Instead of trying to fight the rocky waters as they currently are.
Now if for some reasons the market decides to snap back next week and catch us off guard there are still a few names forming text book bull flags and blue sky breakouts such as DVN, FANG, MSFT, STNG and TTE. Among this short list of names on the radar for the week ahead if Mr Market pulls a rabbit out of his hat, TTE is my main focus.
Where the next attempt at 94 will be the 6th attempt at the all time high level and a tight pivot low near by to limit the downside in the only sector currently hitting new all time highs.
All things point to a tight risk set up in a strong name in a strong sector that has no overhead resistance once it clears 94.
From Bennett
Founder Big Picture Trading
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Cyclical - sectors that are more sensitive overall market conditions.
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Defensive - sectors that tend to outperforming during sub par market conditions.
DVN
FANG
ICLR
MEDP
MPC
MSFT
STNG
TTE
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