Market Outlook
"When the Fed eases twice, the market starts believing it's serious"
What a week that was, with all that went on, the trend is still intact as the market hit three new ATHs. The market has been on a slow and steady climb toward the psychological level of 700 in the S&P. The Fed gave us back-to-back rate cuts, which is an extremely bullish outlook for the market. If you don't remember why, you can find the
Back to Back lesson here.
But even with this positive news, it was a sell-the-news event as the market bid itself up into the announcement since it came as no surprise. We also had a big week related to earnings with hundreds of names reporting, yet the big focus was on the FAANG names.
META sold off nearly 10% and broke macro support as a result, but most of it was from a big billion-dollar one-time expense. With that gap and crap lower, avoid META for a while.
Apple closed at new all-time highs going into the report and gapped up a few points higher before selling off after the report. If earnings can't push it higher, expect that to be the short-term high for quite some time.
Amazon sold off going into the report and had the knee-jerk reaction higher, but also with the gap-and-crap sell-off. We should expect 250 to start to become the next key breakout level.
Netflix gapped down after earnings and announced a 10-for-1 split on November 17th; the stock got bid up on this news, which is the biggest sell signal in the short term. A stock split does nothing but increase the share float and make an expensive stock “appear” cheaper. All this does is bring in dumb money. After November 17th, expect to see NFLX fade lower. TSLA and AAPL both lost nearly 20–30% after they split. When stocks split, run for the hills in the short term.
Rounding up the group, GOOG(L) gapped up to new all-time highs after closing at all-time highs. This is a great reminder of why we focus on names breaking all-time highs. It feels expensive in the moment, yet the rewards tend to come pretty quickly.
With some of these gap-ups in Amazon and GOOG(L), it helped prop the market up a bit toward the end of the week, but there is still quite a bit of underlying weakness across a handful of sectors.
Yes, Tech has been very strong, Biotechs as well, and Semis are in their own league. But sectors like Financials, Consumer Staples, and Materials have all been very weak.
Big picture, the indexes look great as some of the FAANG leaders hold the index up, but there is some weakness out there. All we have to do is keep it simple. We know the overall positive outlook months out that will come from the rate cuts and just need to continue focusing on the strongest charts out there.
To all of you who have been posting top ideas in the chat, keep it up and for those who are a tad shy, there’s no need. Just post your top idea and let’s see what you’re looking at. There is a strong correlation between the number of ideas shared and comma days that follow for those traders.
For myself, I’ve put my cash to work in the REIT sector for the week ahead as most of my favorite swing ideas still need time to really develop more.
After the REIT sector pulled into support and held up, I was able to get a decent amount of size on $1 risk. Charts like TSLA still look great as it continues to flag out in a big 70-point range that should send it to $540 once it can clear $470 on volume and there are many others that I will go over during Chart Talk tomorrow.
Let your top setup come to you and be patient, it’s much easier to catch and hold onto one big winner than chase around a bunch of B or C setups.
From Bennett
To read this entire newsletter, get access to our alerts & all the additional benefits of being a Big Picture member click the link below to start your trial today!
_____________________________
_____________________________
Macro Rotation Outlook
