Broad Market Outlook
After a 6% pull back off all time highs that broke the steep uptrend the market has been on for the better part of the last year, the mood was as doom and gloom as it could get.
All the bad news started to pop up and mattered when the daily candles were red for a change.
With the main news story that seemed to stick was how a sub $30 Chinese stock was going to crush the world economy.
(If this is not a reminder on why we try our best to avoid cheaper names)
Separate the viscous that revolve any company lately with the word "ever" in it has had this year (Evergreen, Evergrande).
The market quickly came to its sense to realize how stupid that idea was. This was not another Lehman situation but just another sketchy Chinese company blowing up after too many risk bets made.
As the market found its senses and footing we had a nice week overall as support buy backs started to work and over favorite social media name broke out to new all time highs.
As the overall market has reclaimed half of the recent pull back leaving it dead smack in the middle of this 6% range the shift from a breakout market to a consolidation market continues to take hold.
In these types of markets we want to be looking to take profit at the retests (SPY 450) just when the market looks perfect.
If we learned anything from this recent pull back, just when it looks the worst, it's often about to get better expect if it has "ever" in it.
From Ben G
Macro Rotation Outlook