Market Outlook
So much for the Japan carry trade and these so called recession fears. The S&P successfully broke out of the month long break down stage. As it now appears to be starting to form what should be the start to a new basing stage.
What is funny now as we have long left the rate rising environment and how the FED put in its out topping stage without cutting. Now as you start to see the new scary spin. You will start to read headlines as to why you should "sell" stocks when they start to cut rates. As the media's job to get you to click and read is there purpose. When rates were rising, there spin was "wait till they cut" that will be a great time to buy. Now as the cuts will be starting to come sooner then later. It is now, you should sell when they cut. The market readers memory is that of a gold fish and scary sells.
Over the past weekend in California, Shake made a very good point about the difference between the market and the economy. It was a very smart and long winded point that I will do my best to summarize in a line or two. The economy and the stock market are two different animals, the economy can be in a recession with high interest rates, yet the market does not have to care.
We don't care about Japan and even after August 6th, no one really cared. It carried that trade right off our time lines. The media will pump "recession fears" until they are blue in the face. All you have to do is look at a weekly chart of any index to gauge the recessionary environment near all time highs.
We saw the S&P 500 and Nasdaq both leave there month long breakdown stages. We saw Healthcare and Consumer Staples hit new 52 week highs last week. We saw virtually every major sector snap back at least 30 to 50% of the Japan Carry Trade Correction.
The market is showing us obvious information, the only problem, with obvious information is that the risk reward is rarely in our favor. With most sectors dead smack in the middle of there respective ranges & index's very extended after a two week run.
We now know the odds of new highs are far greater then new lows, but with this information comes harder set ups. If we can get a few day pull back to back test the breaks of the break down stages. That might be just enough to find some tight risk set ups.
Just remember the news will take something you were looking forward to 6 months ago into the next big fear. The more you can see and understand that, the easier it will be to know when to act when they tell you to be still.
From Bennett
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Macro Rotation Outlook
SPY
Dow Jones
Nasdaq
Mid Caps
Small Caps
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Trading Experts Book Series
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Sector Rotation
Sensitive - sectors that have moderate correlations to overall market conditions.
Tech
Energy
Industrial
Telecom
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Cyclical - sectors that are more sensitive overall market conditions.
Materials
Consumer Discretionary
Financials
REIT
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Defensive - sectors that tend to outperforming during sub par market conditions.
Consumer Staples
Healthcare
Bio Tech
Utilities
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Big Picture Set Up's
CVX
HON
HSY
IDXX
MMM
STRA
TRV
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