“That's why the philosophers warn us not to be satisfied with mere learning, but to add practice and then training. For as time passes we forget what we learned and end up doing the opposite, and hold opinions the opposite of what we should.”
Epictetus
Glad to see that we all survived the great 2% ATH crash from Friday. Like the mother who says "don’t touch it." I have been trying to relay my cautious outlook about the market over the last few weeks. We highlighted how as the market continues to climb and each pullback gets shallower, eventually that trend has to change. It finally did on Friday.
For 5 months, Mr. Market has gifted us one of the fastest snapback rallies the market has ever experienced.
Even further, after the gap up in May, Mr. Market showed us the most obvious breakout channel that we've ever seen.
He showed us very simply, hold long in this channel for as long as you can, and we did. We knew to ride the trend and avoid fighting the wall of worry.
However, as traders got used to the non-existent pullbacks as of late, we are quick to forget the nearly 7% intraday ranges the market experienced, just a few months ago.
We saw last week Telecom shifting out of its breakout channel and now we are starting to see the index and some sectors following suit. Just one trading day, shifted mostly all beautiful charts, to now ugly bearish ones.
In bull markets, most people, smart and dumb, often are overleveraged and when this happens it creates artifical selling pressure as they get liquidated. Another reason why I avoid leverage. Its great until something happens, and that something is far costly then most can imagine.
Going into the week, ALNY is my only focus. If somehow this 2% drop is the extent of the market drop and we get a rally this week, ALNY showed so much relative strength on Friday. That is where I want to be if we rip higher into the week.
If we continue to sell off, that should be welcomed. We saw how the macro breakouts recently have been failing. We had the Put/Call ratio alert to de-risk, along with the key mini pivots alerting us as well to get defensive.
Let the market flush out, we had a half-year insane rally. If we can be patient and sit out for 2–3 weeks if the selling spills over into the new week, we will be ready for all the support buybacks that will set up. Right now feels like the start of a mini breakdown stage and that is never the time to be rushing in long.
If you are feeling fearful or debating between some potential rash financial decision that is rolling around in your mind, shoot me a DM and we can chat.
Macro Rotation Outlook
ALNY
BUD
KO
SHEL
TSLA
WMT
Our Utah trip features much backcountry riding — ideal for riders with a bit more experience who want a bigger challenge.
Most spots are already filled, but there are still one or two openings for each trip. Shoot me a DM if you’d like more details or want to grab a spot before they’re gone!
