Market Outlook
"In markets, the hardest thing to do is nothing and often its the most profitable"
Felt like quite the roller coaster last week. We started the week off with new all time highs in sight, then the script was flipped and new lows were on menu for a surprise. Friday was our saving grace as buyers stepped in at 660 to form a new high low that was the key takeaway from last weeks action.
It continues to become more obvious that the easy breakout stage is in the rear view. For now we keep getting hints at the start of a new stage 4 topping pattern. We are seeing the shift in the index's along with most sectors showing the sideways price action that is starting to become a recurring pattern. This topping pattern could easily be a new bull flag, and something that we would hope for. But its too early to say.
We would like to see Friday's pivot low for the index's hold here and start to climb higher and develop this new flag. Just like we saw with the price action in September and October.
As this pattern develops and the wall of worry continues to climb, it is a bit of a mixed bag among the sectors with no real clear leadership at this time. The AI trade in the Semi space has been milked for everything it's had as they started to fade back into there macro channel.
As this pattern develops and the wall of worry continues to climb, it is a bit of a mixed bag among the sectors with no real clear leadership at this time. The AI trade in the Semi space has been milked for everything it's had as they started to fade back into there macro channel.
Tech has shown us it is starting to shift into a topping pattern, along with Consumer Discretionaries and Telecom.
While sectors like Financials and Materials continue to be sectors to steer clearly around and avoid them at all costs. As every pop in these sectors are found with more sellers then buyers.
While there are other sectors that just need some time to pull in. Utilties, Consumer Staples and REITs are in this camp. As Utilties still need to pull in more towards there support areas. Consumer Staples still need to test the 200 day and REITs have a clear level of support with lower highs forming. Setting that sector up for a break of support before there is any real push higher.
The only saving grace right now is the energy sector. But as strong as this sector looks and there are a few setups at the moment. We still have to remember that this resistance area goes back many years.
On the active side of things, going into the week, less continues to be more. We were able to avoid quite a few trades this week that turned out to be duds. Mostly, they were trying to add to winners when it was too obvious. Avoiding trades that are not A+ is the big focus.
We are seeing the high beta names really getting crushed right now and rotation into the mega cap names that have been much safer places to park your funds. That became a very clear sign with the only major index last week putting in new all time highs was the Dow Jones.
We are seeing the high beta names really getting crushed right now and rotation into the mega cap names that have been much safer places to park your funds. That became a very clear sign with the only major index last week putting in new all time highs was the Dow Jones.
While high beta names like OKLO and TEM continue to get taken to the woodshed.
OKLO is down 50% in a month of trading, highligthing why we need to know when to avoid a name and move on from it.
Even TSLA showed us that last weeks best looking chart can become this weeks worst looking chart from one candle.
Two weeks ago TSLA was flagging for the $470 breakout and then this week, it was as if Elon was quitting. Friday's price action saved this swing trade for us for now. As the 200 day MA continues to play catch up. If 380 holds, we live to fight another day, but if that area fails then the shakeout lower will be getting very close to the max pain we can take in this trade.
The main lessons on my end from this somewhat back and forth action from the market recently is to:
1. Trade less, one or two main ideas for the week is plenty
2. Have offers out to take profits into the up moves
3. Cash is a position
Having the offers out was a great reminder from the BSX swing trade.
Even with the markets weakness this week, BSX didnt care as it climbed higher most of the week. The profit taking area was to look to take profits north of $105 into the $109 area. Yet now this most likely will be a stopped out trade for a $2 gain.
We are not in the trending higher market and we are seeing plenty of signs of the shift into a range bound market. Where buying up off support and kicking into resistance areas are key. Often times, we feel like we need to be fully invested every single day, yet the hardest thing is to do nothing, often times avoiding a set up or two can be more profitable then putting that cash to work.
From Bennett
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Macro Rotation Outlook
SPY
Dow Jones
Nasdaq
Mid Caps
Small Caps
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Sector Rotation
Sensitive - sectors that have moderate correlations to overall market conditions.
Tech
Energy
Industrial
Telecom
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What Big Picture Offers:
Looking to join a group of swing traders focusing on low risk trades?
Need help with your personal or business tax filings?
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Cyclical - sectors that are more sensitive overall market conditions.
Materials
Consumer Discretionary
Financials
REIT
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What's been on your mind about your trading lately?
Reply to this email with any question or idea you've been thinking about. I'd love to hear it and dive in deeper with you.
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Defensive - sectors that tend to outperforming during sub par market conditions.
Consumer Staples
Healthcare
Bio Tech
Utilities
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Big Picture Set Up's
AER
BSX
CBRE
EDU
FANG
MSFT
TSLA
VNOM
OKLO
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Share it with the smartest person you know (or the one who needs it most).
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