Broad Market Outlook
As the overall market continued to stay within the confines of its breakdown stage putting in a lower pivot high at $440, the talk of the town was the Energy sector that has slowly transformed from the class clown to the prom king.
Even though this transformation has taken 2 years of hard work, we are quick to forget that as Mr Market puts the crown on top of Energy's head, it seems like the transformation happened in an instant.
The biggest individual winner this week was OXY, as Django and his grandfather Warren Buffet have done an amazing job holding there position. I sheepishly sold into $48 missing the monster action in the name on Friday.
Right now sector wise, the obvious leader is Energy, however we want to be playing defense as this sector is overheating. Trying to chase OXY up 50% in 4 days or CVX 6th day up is a receipt for disaster. The meat of the moves happened already. If you are apart of them, take advantage of the gains, if you missed them, its a part of life.
On the flip side the obvious loser among the major sectors continues to be Telecom as it continues to stay in its breakdown stage retracing more then 50% of its up move off lows. As painful as that seems, we need pull backs for the next leg(s) higher.
With the rest of there peers in a stage of limbo as most are trading inside there recent ranges while heading closer to there major areas of support other then Utilities as traders are flying into the safest sector.
With the broad market still staying in this downtrend, listening to the trend by trading less continues to be the best route. You have to remember that cash is a position, being patient is a position, doing nothing is a position.
Just like when the good times feel like they will continue forever, the bad times can feel like they will never change even more so, when in reality that isn't the case. Be patient and eventually those trends change, they always have and they always do with time.
Macro Rotation Outlook