Big Picture - Forget Sprinting, Valet Jogs Only

Broad Market Outlook
What an emotional week we saw out of the markets this past week. The week kicked off with the mickey mouse flag that was forming under 416 to the down side and even take out the prior pivot low of 405. By mid week, things looked bleak as a potential break below 400 and a roll over back into the broad range seemed in the cards. Only for the shakeout move head faking most of us as the market went on an end of week rally inching in a new pivot high that we have not seen since February.

Just as we are about to mark the 1 year anniversary of this Stage 1 Base in the S&P 500, the market is showing us clues that it may want to stretch its legs into price points we have not seen since the bear market of 2022. 

Now it's easy to get excited and bullish after a few bullish engulfing days but zooming out a bit we do see a clear sign (red lines) that buyers have been stepping up and putting in new pivot highs since the lows of 2022. 

As bulls and bears continue to meet at what seems to be equilibrium at 420, that will be where the real show down occurs. If we can finally break this 420 area and continue this higher trend climb higher then we will have successfully entered the stage 2 breakout phase. As we know, the length of time a base tends to form, often times equals around the time the following stage follows suit for. 

The best case scenario would be a year-long breakout that catches most traders either flat footed with cash on the side lines afraid to put it to work or short as most of the data shows to be the case.

The worst case would be something along the lines of a bull trap where we push higher to say 430 only for sellers to hold the line and the continued higher pivot lows start to get tested as the market takes the elevator down.  

Looking at most of the major headline fears to cause the market to see the worst case scenario don't seem to really carry much weight unless we get a new scary headline. Inflation is old news as it's been fading since the summer. Rate hikes will start to become rate cuts as the FED has helped blow up a decent amount of regional banks giving them more problems to try and solve. The regional bank problem is self cleaning, like any industry, stocks and companies go bankrupt every day, right now the lights are just focused on a few crappy banks. Anytime you hear the headlines of "it's going to be just like (insert last time)" that rarely happen. As the headlines are to expect another 2008 crash, when that rarely would be the case. 

This base might not breakout this week, this month or this quarter but with enough time we should see this stage 1 base turn into a stage 2 breakout. Just keep a steady pace with your savings and investing. This is not the time to sprint hard every day, keep the valet jog going as the market works itself out, which with enough time ends up being higher then where it is. 

From Bennett




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Macro Rotation Outlook

Dow Jones
Mid Caps 
Small Caps
Sector Rotation
Sensitive -  sectors that have moderate correlations to overall market conditions. 

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Cyclical - sectors that are more sensitive overall market conditions.
Consumer Discretionary

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Defensive - sectors that tend to outperforming during sub par market conditions.
Consumer Staples
Bio Tech
Big Picture Set Up's
With an earning miss out of the way that barely moved the stock, this BA continues to flag out nicely. If an earnings miss couldnt send this stock lower, then it might just be setting up for its next leg higher. 
CRM is setting up for this $200 breakout, yet not looking to buy 4th day up if it were to go on Monday. 
DHI is showing us that it wants to attack this $110 level that it has been battling with since 2021, going into Monday would be 4th day up into that level, so if it were to go on Monday. It would be a pass for me, but if it can set up some more, then I will look for an entry vs $105 for now. 
NVDA after an impressive run has held up the move as it flags tightly in a $20 range as it seems to have its sights set on retestings its all time highs in time. Just as much as when a stock seems too expensive it tends to get even more expensive. With earnings still a few weeks out it might give us a breakout move higher into the earnings report. 
YETI continues to base out under this $40 level vs $38, with a few weeks till earnings it may give a quick few day trade into earnings. 
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