Broad Market Outlook
It took the Nasdaq less then 1 month to drop over 30% and in that same span it reversed more then 80% of the down move. I don't think anyone on this planet saw that one coming. Frankly I thought it would take about a year to claw back to highs, when in reality it has happen much faster.
Now the tricky part is that once the Nasdaq inches another 5% into the retest, we know what tends to follow. The SPY is also running into 300 which has acted as a significant resistance level for the past few years. Could 8th time be a charm and we blast up through 300 and never look back? Given how flat foot most of the people who were running for cash when the market was at lows, that is a reasonable possibility that one could hope for. Yet we hate to even utter that word, realistically I feel we need to continue what we are doing.
Which is continue to focus on the support buy back play, if the market decides to chop around up here and flirt with 300 before drifting back to 270 and run around in circles. We can continue to look to buy on controlled pull backs.
If we give the names we are watching a few days to pull back into support and buy on the turn, we can find low risk entries to either trade the range it is in, or be prepared to hold through the breakout without having to be perfect.
These past few months have been a great lesson as to why we have different investing strategies for each account. We leave the longer term accounts (401k, taxable) in the market and continuously add (not market timing). Then we have the account that we can be more/less aggressive with given market conditions (your IRA). By doing this, you can try to beat the market, while still catching the markets average returns (a hedge against yourself).
Macro Rotation Outlook
We are seeing how the crashes and snap back are becoming faster and faster, could it be the continuous ease of entering the market (free trading) or the increase of information being spread around the world in an instant. Who knows, all we know is that 296, we'll call it 300 has acted as a major resistance level for a few years now. Above 300 the market was expensive, below it was cheap. The hard part is that most want to get in when its expensive and out when its cheap. With the market running into resistance, we should expect it to get a bit more choppy so we need to continue to focus on the support buy plays as the resistance plays might lead to more fake out moves.
Nasdaq is a mere 5% away from all time highs, just say that out loud for a moment.
The Dow continues to flag under 25,000, keep an eye on that, once it can get above that, not much in its way until its back up to 27,000 and then prior highs.
MDY Mid Caps
312 was the area where the Mid Caps really started to breakdown in March and we can see it has continued to act as resistance however the buyers continue to step up. So far this set up has shown us higher prices in time.
IWM Small Caps
This 135 will act as resistance in the small caps for now, time will tell if 3rd times a charm is enough to push it up through this resistance level.
Sensitive - sectors that have moderate correlations to overall market conditions.
Tech continuing to grind higher, in 3rd place behind Bio's and Healthcare, for now the out is vs 230.
Added up through 48 and next will be looking to add up through 52, energy might be down but its not quite out just yet.
Will be DCA'ing up through 120 when its ready to go.
Continuing to add and hold to telecom has it work its way back toward pre crash highs.
Cyclical - sectors that are more sensitive overall market conditions.
The next battle ground will be this 116 as Materials continue to inch there way back up to pre crash levels.
VCR Consumer Discretionary
VCR looks like it might need some time before really pushing through this 180 with any momentum.
Will be adding above 55 for a support buy back vs 51.
Will be DCA'ing up through 75 to get some stock before we have to buy that 80 level down the road vs 70.
Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
Will be adding above 148 for a support buy back vs the recent low.
Healthcare a little behind the bio's as they flag to make that next push back to retesting the prior high. Hold hold hold.
IBB Bio Tech
Bio's continue to flag up here near recent highs, however it might take some time before its really ready to push higher. Could up a stop vs 120.
124 is setting up for a nice support buy back vs 120.
Big Picture Set Up
Even though virtually everyone walking around is wearing a MMM product on there face, the stock will got taken to the woodshed with its peers. Back in April I started a position up through $140, a few of the members wanted to rush in and buy $150 however it needed some time. Recently its starting to get quite tight under this $150 area again, where the risk is around 1%. I will be adding up through $150 when MMM wants to go.
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