Broad Market Outlook
With an impressive jobs report on Friday, the market really woke up from the bearish slump it had been in lately. After pulling back nearly 8% off highs, the market ripped higher closing ony 1% higher on the day, yet the bullish engulfing candle showed how quickly fear can turn into confidence.
Now we are far from out of the woods but for now 420 seems to be a decent line in the sand for the week ahead. Where best case we see a move up to 420 if this action wants to continue.
Coming into the week we had the attacks on Israel that are causing the futures to fall and oil to rally. As sad and defavasting as what is going on over there, when the new cycles shifts towards the next fearful headline the market will quickly forget. It is hard to say but an unfortunate reality, Mr Market lacks empathy, if you had not noticed. The turmoil over in Israel could test that 420 pivot low but it will not be a catalyst to cause serious damage to the US Markets. As much as people try to complain about the places that they live in or how "bad" our country is, this is a time to remember how lucky we are to walk around without the fear of what is going on in these countries at war overseas.
After the strong move on Friday, we should expect some profit taking and some fear to enter the market at the start of the week, we do not want to chase names as most need some time to settle out and set back up.
Nasdaq and the tech names continue to show that they are leading in this market, while consumer staples, REIT's and Utilities should be avoided at all costs right now.
Stock wise, my focus is this BA after 21 down days in a row in the most controlled pull back in a Dow 30 name. That I have seen in quite some time, once this sell program gets turned off and BA breaks this orderly down trend, there should be some shorts getting squeezed out of the trade. That could yield some bounce back type of move, I will be looking out to see if/when this downtrend is about to break.
And last but not least....
The 10 year does seem to be starting to capitulate once it can start to fade this breakout and pull back into the trend line we should see more of a bounce out of the market.
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.
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Defensive - sectors that tend to outperforming during sub par market conditions.
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