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Broad Market Outlook
Just when we thought nothing could top 2020.
2021 kicked off with a bang as the Davids of the market have finally for once knocked a Goliath out cold.
Or did they?
For a moment, just imagine if this was one big ruse.
As much as a multi billion dollar hedge fund getting squeezed and closing up shop sounds unheard of.
Hedge funds close up shop each and every day, this one just happens to be in the news.
Cornering a stock or squeezing shorts has always been juicy gossip since Jesse Livermore was bouncing around Wall Street over a century ago.
Hedge funds in general have been so out of favor lately that maybe this is just what they needed to shake up some interest from the smart money crowd.
Any person you met this week either invested in it or asked you about Game Stop, right?
I had people coming up to me on the lift line asking about it, making me second guess the Trading Experts patches on my jacket.
You don't think rich people want in on this action to squeeze other shorts as well?
What if Melvin capital was a Trojan house.
An obvious target to direct the mob attention towards.
Who is to say someone like Steve Cohen or Ken Griffin worth billions could not have be long through another fund and rode the wave as GME created $20+ billion in market cap out of thin air.
By novice investors blindly buying yet not even knowing what a sell order is?
Would you sacrifice a few billion while quietly picking up an extra $10 to $20 billion while everyone is point fingers and screaming they wont sell?
When everyone was told they could only sell, they folded there arms and said no we wont sell.
Reverse psychology in its simplest form.
Yet when your up 1000% what do you need to do realize a profit?
Sell.
Someone was selling except the tape only shows us how much, not who.
Now do I really think something fresh out of a scene from Billions happen in real life?
With hedge funds paying for dumb money order flow?
Why would this be so far fetched or more outlandish then say a nearly worthless company on the brink of bankruptcy trading at a share price the same as TSLA?
The market has the memory of a gold fish, right now this is all everyone can talk about and that is usually the end of it. A lot of talk and no action.
Just like in the past there was a time when no one could stop talking about TSLA, NKLA, TLRY, DRYS, TOPS, CGC, AMD, CRON, Bitcoin, and the list goes on.
Each day there's a new class of speculators who enter the market because human nature never changes.
This week millions of new fish entered the market and the fish tend to pile in at the end of the move.
Remember last week when it was Small Caps? Now they're breaking down.
Keep focusing on what you are doing and avoid joining the circus. As they always move onto the next town once the crowd dwindles.
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Macro Rotation Outlook
SPY
Dow Jones
Nasdaq
MDY Mid Caps
IWM Small Caps
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Sector Rotation
Sensitive - sectors that have moderate correlations to overall market conditions.
VGT Tech
VDE Energy
VIS Industrial
VOX Telecom
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Cyclical - sectors that are more sensitive overall market conditions.
VAW Materials
VCR Consumer Discretionary
VFH Financials
VNQ REIT
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Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
VHT Healthcare
IBB Bio Tech
VPU Utilities
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Friends and Family Challenge
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Tell them to DM us on IG saying "friends and family"
They can start for the next 90 days at no cost.
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Big Picture Set Up
CRM
Have been waiting on this CRM since December after 4 attempts at this $230 it's starting to look more likely that it will breakout up out of this base then down after it filled the gap to the downside.
This will be my main focus going into next week.
NLOK
We can see this clear battle ground at $21.50 with Earnings next week, I have a buy stop limit for NLOK, if it opens under $21.50 and rips through I will be filled. If it gaps up above $21.50 I will miss the trade and will be completely ok with that.
