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Broad Market Outlook
Have to say, quite shocked at the fact that this correction (10% drop from highs) has not been plastered all over the media. But those are the facts, the SPY officially cracked correction territory as it flirted with 320 this week.
During this recent downtrend, it reminds me of a classic Warren Buffet quote:
"The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, 'Swing, you bum, ignore them"
I have yet to figure out the market fallacy where in down trending markets most traders feel as if every day is Game 7 of the World Series with bases loading and a full count. Instead pretend its little league where a walk was just as valuable as a hit.
As the major markets continue this controlled pull back with lower highs and lower lows (that is the trend), just as it was on the way up with higher lows and higher highs.
We are getting these 2,3,4 day moves to the upper end of the ranges where these are the days we want to be looking to sell (not buy because things look great), in these down trending markets, you need looking to buy the gap downs on the way up. Not buying the gap up the following day.
This is a time to sit on your heels and be patient, no sense at swinging for the fences when there out of sight for this brief moment in time.
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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
Tight risk add up through $128
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Big Picture Set Up
LEN
LEN has been showing us clear as day that there is a seller at $80, now this is not a macro level by any means and actually falls more inline with a mickey mouse flag, yet the level is clear and the market has shown us that what's expensive wants to get pricer.
INSM
INSM has ran back into this $34 level that it has been battling for years, and giving us a tight flag on $2 risk, this may or may not be the time however if it is finally ready to push through this level, we are being giving the best shot from a risk perspective.
CSX
CSX has been showing us a seller is present at this $80 level for over a year now while also showing us the buyers aren't far behind with the smallest range its traded it at this $80 level.
CL
This $78 is a soft level yet once that could be ready in time and a prime candidate that we can easily grab off support to be ready for the $78 breakout. Just remember this is a boring name, they make toothpaste, not electric cars.
APPN
Still in a wide range for our taste however this $64 level is clear as day, it most likely will take some time before this is ready, for now just keep it on the radar to see if $54 can really hold up as support.
