Big Picture - Avoid, Avoid, Avoid

We recieved our 5th week in a row of overall selling pressure from the market. With the close at the weekly low on Friday, the market is just about 9% off all time highs. As we are so close to an overall correction, it seems quite obvious that we should expect to hit the 10% territory in the coming week ahead. 

We have done a great job for the most part side stepping this market correction, each day I still scan the market looking for set ups. But as we all know its hard to find long's when the market is rolling over. For my own trading over the last few weeks its been almost non exsistent. 

Its been baren and down right boring over the last few weeks but its far more profitable to be bored then "trying it" currently. The active account is still in the green this year as cash as been a good performer. 

Now Energy has been the only sector on a tear after finally breaking out after nearly 20 years battling with this resistance level. As long as Energy continues to rally, we should expect to see overall weakness from the market as a whole.

As strong as this secctor has been, its hard to look for entries in names in that space given the run ups they all have already had in this short span of time. 

XOM had a textbook breakout $50 ago, yet there is not much we can do by trying to chase up here. If you are feeling bored from the lack of trading and are investing consistently in the Big Picture model, now would be a great time to check out your % gain in VDE to remind you why we consistenly buy no matter what. 

It does seem almost obvious that we continue to see lower price action from the market as we enter into correction territory. The key thing you want to remember are the gap downs (bigger the better) are the days we want to look for longs, not the gap ups. With that being said, every sector going into next week except Energy is an avoid. This is not the time to try to catch a falling knife because as support starts to break that rubber band of price action needs to stretch farther then you and I can think of before any meaningful snap back. 

Microsoft, one of the strongest names of the past decade, a name that recently broke below its 200 day weekly moving average for the 1st time in nearly 20 years is a reminder as to why we avoid trying to catch falling knifes. Every green line is a new low MSFT formed recently. Each time it broke that low, it formed a new low and with enough time it contined to form new low after new low. Avoiding all those painful drops is far easier on the side lines than trying to avoid the countless landmines in the market right now. This market action is where the "ego" trades come out wanting to prove that are smarter then Mr Market.

Let the ego traders try to prove there smarts as we ride it out in cash. We are already through the hard part which was the past month of watching paint slowly dry on the walls. As the volatility continues to pick up, it should get us closer to the end of this market drop. Overall real buyers tend to step in at key areas such as the start of pull backs (5%), corrections (10%) and bear markets (20%). 

Buyers could not support the pull back and we will see if they can support the correction or if more pain is really in store. 

With 2 weeks left until the IRS deadline, if you have yet to start your tax prepartion and need our help, shoot me a message on Discord. We have already filed more then half of the chat early this year. 

                                                                            

From Bennett

Macro Rotation Outlook

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