Broad Market Outlook
We ended last month hitting new all time highs which followed our first correction for quite some time that went virtually unnoticed. The only ones who really noticed were the Robinhood perma bears who has already blown up their accounts on puts as the market bounces.
As that short lived breakdown turned into an even more brief consolation this month, its switch gears back into breakout mode as virtually all major markets and sectors are trying to inch back towards those prior highs.
Now what tends to happen the first time a stock or sector retests the prior high?
Its often met with resistance, however the first sector to retest that prior high has shown us why we use the word often.
The healthcare sector has shown us that it still wanted to trade higher, and seeing this we might "hope" that the other sectors follow suit. I'm not really buying into this assumption much, as we are often reminded after the fact of what happens.
Remember Visa through $200?
Going into the $200 Breakout in V, we knew the game plan, buy up through $200 and look to sell into the retest. Once it got up there, we quickly forget that it was retesting the prior high and started to look up expecting it to continue the trend, only to fully reverse that two week move in two days.
As the markets and sectors continue to grind back to there respected prior highs, lets not let the allure of greed suck us into thinking that the market will rage higher.
It can (hoping) but realistically what we are seeing is a shift into a range bound (consolidation market). Which is very healthy and much needed for a move higher down the road. The Consumer Staples section depicts this perfectly.
We can see periods of Expansion (green) then periods of Consolidation (yellow), as we can see last time Consumer Staples started to consolidate it took months before the next leg started. We are barely a month in currently.
Let's go into next week and the weeks ahead with the mindset that we will most likely start to see more markets and sectors inch toward retesting those highs. When they do, they may spend a few days above those retests to lure in the last bit of the crowd to chase, yet ultimately they will likely need to pull back and continue to consolidate before the next leg can really start.
Big ups to Alex Smith, Andy Hsu, Ashish, Ben McMullen, Doctor Moore, Garret Eddy, Greg Delport, Reid and John Negrete for starting to track your net worth and monthly goals!
If you would like to start tracking your goals as well shoot me a PM on GroupMe and we will get one made for you!
Macro Rotation Outlook
MDY Mid Caps
IWM Small Caps
Sensitive - sectors that have moderate correlations to overall market conditions.
Cyclical - sectors that are more sensitive overall market conditions.
VCR Consumer Discretionary
Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
IBB Bio Tech
Big Picture Set Up
With so many names breaking out this week, this CSX is still flagging in a few dollar range under this $80 level, with alot of names out there looking extended, CSX might be ready one of these weeks.
We spotted this super tight flag in HAS that as broken out of this significant area of resistance this past year, for now the first target is the mid 90s with a stop vs the 84 level.
We got the breakout in LOW this week however giving the overall run its been on the last two weeks, keeping this stop tight vs the LOD.
Solid 3 day move out of PG after our 140 entry, for now my stop is break even, if you wanted to trail this by the LOD that could be a wise move as well.
Saw this support buy back setting up and was looking for a bit more (a move up to that 102 prior pivot high, was originally giving this vs 96, however starting to up my stop has this stock has show its asleep at the wheel at the moment.
We saw some indecision on the day of entry followed by another day of indecision at highs, while the buyers and sellers duke it out, I am out of this fight below 136 for break even.
Got lucky on this gap up in ANET, and so far its respecting the gap up low, for now the next resistance area is this 220 prior pivot high, if it can clear that the next area to keep an eye on will be 240, past that its a chip shot back to the prior high. For now the stop is vs the gap up low that held on Friday.
If it starts to fill that gap, it will more then likely be back at our price in a day or two.