Broad Market Outlook
The hard money end of summer trading has finally showed its face. Typically the low volume paint drying summer market tends to show its face a bit earlier, yet we can't complain for a tardy attendance from the market on that front.
We have offically exited the easy money stage 2 breakout market that we have grown acustom to lately. We saw this similar market action for most of 2021 and when the easy money trade ended, it took 2 months of chop and basing before the next run to new highs.
We are about a week in of the hard money trading starting. We should expect some back and forth action over the short term as the market shifts out of the breakout market and starts to flag out in a new range. If we could see it flag between 430 and 460 in the SPY, it would give the market the range needed to retest prior highs and some extra juice to push towards SPY 500.
Scanning the market it seems sector wise the overall theme has been a retest of a major pivot high in most names being met with resistance which is no shock to you. Energy stocks have been sneaky lately as the sector finally broke out of the wedge which is the one exception to this general theme of retests being met by most major sectors as they pull into there respective support areas.
Consumer Staples are another sector that has been quietly flagging out very nicely for an eventual move to the prior highs. Industrials seem a tad extended as they try to hold up here near its all time highs, could be wise to raise some stops if you have exposure to this sector.
As the hard money trade starts, less is more when it comes to swing trading. Idea's have been slim pickings the past week with most names pulling back in. However there are a few diamonds in the rough. HUM is showing us a textbook earnings bull flag for the last month or so and if we remember anything from the Rocky Earnings Parody "4-6 weeks then they go."
As always even with trading ideas in a hard money environment as long as we scan the names on our watchlist daily. There often tends to be a name or two to keep an eye out for.
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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
With earnings out of the way, we can see the clear level of resistance in MLM at this 463 area giving us a text book blue sky entry when its ready.
SHOP feels as if it needs to shakeout the prior earnings gap up low of $53.50 area before we get any support buy back move. For now keeping on the radar to see when a change of trend is in store for the name.
UNH with a textbook earnings bull flag forming in a $15 range between $515 and $500.
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