Broad Market Outlook
The market is constantly changing cycles every few months for the average Joe they always figure it out as the cycle is changing. Going into the start of 2020 it was a grind up to new highs that was never going to end. In March and April it was doom and destruction. These last few months have been the V bottom back to highs that no one saw coming with it reaching its crescendo in the beginning of this month as everything went up with bankrupt companies being some of the best performers.
We are now starting to get in the chop fest, this tends to be the time where the trader who missed the April to June run tries to make up for lost ground during the harder times doing more damage then good.
We are not those traders, but we have to be aware of what the average Joe is thinking and make sure we are doing the opposite or as far away from them as possible. 9/10 people still cant wait to explain to me there airline thesis yet I walked through LAX, EWR and PHX all in under 5 minutes combined.
As we come back into recent support for the 3rd time (SPY 297, DIA 250, MDY 310), we will most likely blow through it as its pee wee support at best. If we hold it then we continue to trade this range until this range changes. If it does break to the downside, then be patient, for some reason people just love to run into the building as its going up in flames.
Being selective will be key during the coming chop fest. For myself, especially as we get into the slower summer sessions will be to wait until at least 10am before looking to buy and having a small list of names I am focusing on. JPM 96, UNH 300, ULTA 200, SAIC 76, HCA 96 and AXP 100 are a few I am keeping an eye on going into next week.
Be nimble, be patient and be willing to change gears as we press on into the summer, for myself I will be coasting into the turn ahead, foot off the gas with my foot hovering over the break pedal.
Macro Rotation Outlook
Sensitive - sectors that have moderate correlations to overall market conditions.
Cyclical - sectors that are more sensitive overall market conditions.
VCR Consumer Discretionary
Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
IBB Bio Tech
Big Picture Set Up