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Broad Market Outlook
What a week! TSLA almost hitting $1,000, the market reclaiming it's uptrend continuing the new highs train and AMZN ticking new all time highs. There were 3 key lesson's that hit home for me.
When someone says "looking to hold this longer term" when starting a position, they have about 48 hours until they are going to sell said position. We saw this in GE, VDE and YETI. All 3 cases were the same, day of "holding long term", 3 days later (stock or sector down) and we hear "getting out." If you hear yourself saying the statement above, put a break even stop in and hold off on the longer term talk until your in the name for 90 days.
For myself from a trading standpoint, I started to shift from a heavy foot to getting back into positions lighter and more nibble. The last few weeks and months, has been a "buy anything with your eye closed" type of market. I was having no issue buying up 10-20% allocation's in just a few names.
After the recent little shake up, that we saw last Friday, my gut feeling is that we start to get back into a more consolation type market instead of the breakout market we have gotten chubby with. I will start to buy lighter and focus on finding support buy back's going forward.
If we get into more of a consolation type market, we get paid buying up off support, and selling into resistance. I saw this first hand last Friday (2% down day), where I took some trades off for losses and by this Friday all of those trades were back above my prices and running into there respective resistance. I sold into support for a loss and learned the lesson.
Macro Rotation Outlook
Ticked new highs on the retest to trap the chasers!
We were aware that the retest is met with sellers as the SPY lost steam as it got back to the prior high. Now just like when we see mickey mouse flags at the end of moves in stocks, markets and sectors too can start to consolidate less as it drifts higher (more people cramping to get in).
We all thought the top was in, and the market say jokes on us, as it ripped right back to new highs.
MDY Mid Cap Stocks
Mid caps trading a few steps ahead of the Small Caps as it's a smidge closer on the retest.
IWM Small Caps
Small caps still forming a new flag as it continues to work on getting to new highs.
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Sensitive - sectors that have moderate correlations to overall market conditions.
Higher highs continue, stop 250.
Energy took out new lows, we need a real scary breakdown to flush out the low, like we saw in telecom going into the start of 2019 before that sector turned it around. Still some pain ahead.
Right back to the retest, yet technically a lower high, which tends to be followed by lower lows.
Higher lows continue for now, the real test will be if the higher highs continue. Heath care below is showing us other wise.
Cyclical - sectors that are more sensitive overall market conditions.
Materials forming a new flag as it continues to form higher lows which is a great sign.
VCR Consumer Discretionary
Got stopped out after what looked like a short term top, and all it took was one more down day before the discretionary's said nope and ripped it to a new high. 186 is the new out for now.
Fin names tickled the top of this mickey flag, still seems like they are going to want to hang in this box for a bit, like some of the other sectors below.
REIT's snapped right back to the prior high, seems the new range will be in between 93 and 96 for now.
Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
Staples retesting that prior high, seems that we could be getting into a consolidation phase vs $154 for the time being.
Lower highs, not a good sing, when tends to follow lower highs, is lower lows.
IBB Bio Tech
Wide $12 range forming in this Bio's, hard to buy up here, also hard to buy when they look like they are dying.
Getting a bit mickey up here, stop vs 150.
Big Picture Set Up
This 132 level has been setting up for quite some time now going back 2 years, recently it has tried that level 4 major times, one of which we tried to take it through, it just was not ready.
We can see how the buyers are stepping up, first they were defending $112 and now they are holding up vs $120, in time, we should be able to take this through $132 into new highs!