Broad Market Outlook
Just when it looked like the market was losing its momentum as it seemed almost obvious that we would shift into a short term consoldation. The market said otherwise as it held a perfect higher pivot low gapping up through the prior pivot higher area of 444 and never looked back.
As the market continues to trend higher towards the prior all time high in this stage 2 breakout. We want to still remember that taking profits into resistance of the channel (red line) just when we want to be greedy is prudent. Just like when it seems like the trend is going to break at support (green line) we want to remember to stick to the game plan and put risk back on. Right now it seems almost impossible that we will see a retest of the major area of support but if we know anything about Mr Market, what seems impossible today, is often extremely obvious tommorow.
It might be hard to believe but one sectors has already hit new all time highs when most felt we would be entering a recession with a crashing market not too long ago.
Take a moment and guess which sector achieved this feat and spoiler alert it is not tech stocks.
The offical leader are the Industrials stocks as they were the first sector to retest their all time high that was set at the start of 2022.
18 months later they were the first to reclaim the techincal leader of the market even if it was a quite cerimony as most would think tech is leading from second place.
From a rebalancing standpoint, this is a great real world example to learn from. If you follow or invest in the Big Picture model that evenly invests in the 12 major sectors.
With Industrials retesting its all time highs, most of us will have a bigger position in this sector compared to say Telecom that is still in last place sector wise.
This could be a time where one rebalances and locked in some profits in the industrial sector at highs and takes those proceeds and reinvest them back into the sector most on sale such as Telecom.
After the week we had out of the market, it was hard but not impossible to find some set ups out there, names such as SYK setting up for an eventual move through the blue sky breakout area of 307 are setting up. CMG is bullflagging for a move through 2,100. DOX is setting up for a sneaky buy back through 98. OMC has earning this week while setting up for a textbook blue sky breakout. We can see SO forming a nice base through 72 and TDG with a mickey mouse flag forming through 900.
We should expect the good news to follow with a positive earnings season around the corner as we continue to inch higher towards the all time highs that were set a year and a half ago.
It was a hard year last year and now we are getting the benefits of a rising market as your long term more passive accounts should be continuing to climb higher each week. You sat through the pain, be patient during the climb higher.
Macro Rotation Outlook
Sensitive - sectors that have moderate correlations to overall market conditions.
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Cyclical - sectors that are more sensitive overall market conditions.
Defensive - sectors that tend to outperforming during sub par market conditions.
Big Picture Set Up's
CMG has been flagging in a 5% range since the earnings gap up in May, it is reporting soon, so we want to wait till after it reports but once we are past that, keeping an eye on that 2100 breakout should be on the radar.
Took a papercut loss in DOX after it failed to continue the blue sky breakout move higher from 97 up to 100. As it has came back and failed to break lower then 96, it could be setting up for a sneaky buy back move higher on 2 dollars risk.
FIS has been flagging nicely after the gap up eariler this month, it most likely will still need some time so it can be one to keep on the radar.
OMC is looking great for a move through 97, the only issue is earnings are a few days away, so we need to let it report and then see if we can catch an opening range breakout through 97 if the report is positive.
SO has been basing out since the end of May under this 72 area with the recent run up giving us an out vs 70 and earning not an issue for quite some time.
TDG has gone on quite the run and this bull flag at highs could not be more mickey mouse, eventually the flag will be a topping pattern but for 25 points risk in a 900 name (about 3% risk), might be worth seeing if it can continue higher as it would be a blue sky breakout through the 900 area.
From the basket of swings from the week prior, V is the last swing standing after a nice breakout through 236, it has turned that prior resistance area into support and continued to climb higher. For now leaving the stop at 236 to see if it can continue higher.
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