Market Outlook
After one of the strongest April's in over 75 years, the market hit new all time highs 3 out of the last 5 trading days. Closing out the week at new all time highs yet again. As strong as these performance has been and as much as we would hope it would continue into May. It most likely will, but at slower pace then what we saw last month.
The average annual returns from the market as a whole tends to fall in the 8-10% range and we got a yearly return from the market in April. So anything extra is a bonus and one that we should patiently accept.
We can also see the slowing down from the vertical climb to a more sustainable path to higher price action. When markets are at new all time highs and you zoom out, it feels as if the market is on the verge of collapsing but if you look back at any other prior high it often felt the same in that moment as well.
Now the key thing we want to see from the market is to turn that 700 area of prior resistance into support. If the market can do that without falling back into the sub 700 range. Look way further up over the next year of where the market could really go. Lets take a look at CAT to see a visual example of what I am trying to articulate.
CAT has been on an insane run and up over 100% from the last major blue sky breakout back in 2025.
1. CAT breaks out to new all time highs after having already gone on a 300% run in the previous years. It felt and looked expensive at that time.
2. After the initial breakout, that $400 resistance level successfully turned into support and sub $400 was never tested again.
3. Buyers knew the psychology new floor for the name was $400 and an insane rally continues. Where each new high felt like the top, yet with time, it continues to climb higher.
Now this is one name, not an entire market of stocks, but if 700 can successfully stay and hold north of that area for the next few months, then this rally could just be getting started.
The stats back this up where over the last 25 times where the market had a strong positive result in April, the market was on average 10% higher over the rest of the year. Which would send the market towards the 770 area by year end.
Now it is easy to look north at higher targets given the quick flip the market has had over the past few weeks, even just look at the Semi sector.
The Semi sector had the textbook blue sky breakout, it too, turned the prior resistance level into support. Never broke below that area and continues to go on insane runs with each new rally being even more crazy as the last.
The sector as a whole increased by more than 40% in the past month. An entire sector climbing like a momentum name. So there is euphoria out there but that is why we need to know our game plans for the market and for the names we are buying. Getting in is easy, knowing when to get out needs to be repeatable.
For the market, the longer we stay above 700 continues to increase the odds that we see 800 in the S&P before we ever see 600.
For Semi names, the easy run already happened and if you are in, continue to raise those stops to hang on for as long as possible. But when sectors have runs like this, even like we saw with Energy, the love is there as long as the trend is higher. Once the price action changes so does the love for the sector. That is where rising those stops helps you exit before the relationship sours.
There are still sectors such as Biotechs, Consumer Discretionary and Industrials that are setting up to take the baton from Semi's when there rally starts to lose steam. But for now, there is no signs of slowing other then extreme euphoria in that sector.
From Bennett
Founder Big Picture Trading
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Macro Rotation Outlook
SPY
Dow Jones
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Mid Caps
Small Caps
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Sector Rotation
Sensitive - sectors that have moderate correlations to overall market conditions.
Tech
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Telecom
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Materials
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REIT
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Consumer Staples
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Bio Tech
Utilities
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Big Picture Set Up's
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