Broad Market Outlook
We started the week in correction territory only to finish the week in what looks like a new bull market. Everytime I think Mr Market has no more tricks up his sleeve, a new impressive feat is unveiled. We had two big pieces of news this past week that sent the market rocketing out of the correction.
We had the FED doing nothing with rates and a weaker then expected jobs report that sent the market heading for the skys. This temporary eurphoric moves in a market that is in a broader breakdown stage should be taken advantage of. The moves we saw last week rarely have much legs to stand on once we realize what actually happen.
What actully happened wasnt much, the FED did nothing, the same nothing that really has not came as much of a surprise given what rates have been doing on there own.
Now the 10 Year has been doing what we have been talking about over the last few weeks. As we mentioned how the 5% area should start to act as a psychological level of resistance. Once the 10 Year can start to break the red trendline of the current breakout stage, we would expect it to shift into a topping stage (between the orange lines).
What we want to remember is how quickly this gains can be given back.
With each rally that we have seen since August, we have seen a new low that followed just when it was looking its best. We saw that during the bounce in September and the mini bounce in October.
As long as we stay in this breakdown stage with lower highs and lower lows. We should be ringing the register when we get these moves higher when the news behind it often lacks much substance.
Just think of the real market headline for the week "market rallys 7% on a weak jobs reports and the FED doing nothing new." One might think that headline would come from a parody account on Twitter.
If we somehow get a Monday Morning Gap Up it would be a gift worth taking advantage of. It was great to see that the market still has some fight in it. That a rally to new highs could be something that only needs a week or two to happen. But the market still has plenty of work to do before it can work itself out of the current breakdown stage and start to form a real base.
Macro Rotation Outlook
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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
After the run the market had this week, new set ups are going to be slim picking going into the week ahead. But this AAPL setting up through 180 could be one to keep on the radar for the time being.
This TXT did not get much love during the market bounce this week but the 80 level is still setting up and with earnings out of the way it could be setting up for a move through that resistance area in time.
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