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Broad Market Outlook
We saw some interesting market action this week, where its hard to generalize the action under one common theme. As we saw Energy breaking out along with Consumer Staples to new highs, while the most prevalent theme has been the lose of momentum at the retest areas in this current trading range that we are in.
We saw that in the S&P as it took out new ATH's and have since pulled back into the recent range of 450-470, Industrial's followed a similar path of the S&P by retesting and losing momentum along with the Dow 30, Materials and Healthcare all doing virtually the same.
Running back to there retest levels and then losing momentum falling back into their range. The only laggard in this space are the Financials that look amazing at the moment as they run right into their prior retest.
As we continue to trade in this range, we have to remember to be looking for buys up off support while looking to take profits into resistance. In the moment this can be hard because on the way up (like Financials), it looks as if they are going to continue higher.
Yet in reality, this is often what follows:
Now as a sector like healthcare comes back into support in its range, is when it looks the scariest, but in reality, after the 5-10% pull back, we can often find the better deal, then looking to get in after the 5-10% run up.
Right now we are seeing some of the major markets showing us that we want to continue to trade in this range, Nasdaq for example is quickly right back at support.
Now we should expect a shakeout down through this 15,500 area given the recent action but if it is only a shakeout and turns back up, looking for deals up through that 15.8/16k area could be a much better risk reward opportunity then trying to be perfect buying the ATH breakout.
Heath care is another sector that has already pulled back quite a bit into its recent range, where if the buyers can set up and hold this area, this too, could offer a better deal, then markets like the SPY, Industrial's or Materials that are still too close to there resistance areas.
From an active trading standpoint, we are starting to see a few more set ups recently then we have over the last month or so but it still seems to be a less is more environment, while on the more passive side such as buying these ETF's weekly, there are some opportunities out there.
It has been great to see those who have picked up on M1 as it pretty much does all this work for you, giving you two approaches to work on. Where it is your own battle against each account, will the active account beat the passive, compare to those with only 1 approach, where it is often you vs the market. If you need any help setting up a second approach let me know and we can set it up in about 15 minutes.
From Ben G
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Macro Rotation Outlook
SPY
Dow Jones
Nasdaq
Mid Caps
Small Caps
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Sector Rotation
Sensitive - sectors that have moderate correlations to overall market conditions.
Tech
Energy
Industrial
Telecom
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"Don’t tell me what you think, just tell me what’s in your portfolio"
Cyclical - sectors that are more sensitive overall market conditions.
Materials
Consumer Discretionary
Financials
REIT
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Do You Have The Patience to Make It On the Leader Board?
Or the PnL?
Email a screenshot of your YTD PnL to be added!
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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
NTAP
We can see this earnings flag that has been setting up for the last two quarters, more recently, it has started to put in higher pivot lows where we can limit our downside when this name is ready for new highs.
THRM
Over the last two quarters THRM has done a nice job forming this wide bull flag at highs, once it can start to tighten up, we can find a better area to define our risk.
UPS
UPS has been trading in this very wide range over the past year and most recently has starts to get back up near those all time highs, it is a bit tricky because earnings are about a month out. Earnings more then likely will be the catalyst to send this name higher and out of this range, or keep it within this range trading lower. If it wants to go this week, I will take the $220 break as a pure swing looking to get out before earnings.
ZIM
ZIM is showing us that 62 level is the resistance for now and in time could be a text book blue sky breakout level, one to keep on the radar.
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Traveling Experts
We have a few exciting experiences planned for the year ahead. We hope you find a trip that sparks your interest to come enjoy and network with other like minded members!
Dates:
4th Annual Vermont Snowboarding Trip Jan 20th-23rd
2nd Annual Blue Ridge Rally May 13th-15th
2nd Annual Long Beach Island June 15th to 19th
4th Annual Vermont Trip
Less then 2 weeks until our Vermont Trip kicks off! Excited to see everyone attending!!
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