Broad Market Outlook
From a swing trading standpoint, most of us came into this week in cash and missed out on some easy money as the market rocketed almost 10% in a few days. Like always, most expected the complete opposite given the uncertainly of the week.
This was a great lesson in why we have accounts that are tactical (Roth IRA, SEP IRA, Trad IRA) that we trade actively while limiting any tax implications and passive accounts (401k, taxable) where we dollar cost average continuously.
As we run into major resistance after the market increased by a years worth of average returns in the week. This is not the time to rush in just because we have a new president.
We are currently still in a range bound market in the upper end of said range, when we are in the upper end of the range, its defense time. Time to protect the profits you have.
Looking at most of the major markets and sectors, we are poised for an amazing 2021 (separate Energy), we should expect Healthcare/Bio's to continue to be the market leaders as the residing fear of the pandemic will take a long time to get out of people's minds.
Be patient, let your set ups come to you, and realize missing a trading day or week is not going to dramatically effect the rest of your trading career.
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
AAP has been battling with $160 all 2020 while showing us more recently that it is respecting $142 as support.
We can see there is still a seller at $75 in CERN, instead of getting stuck in the chop, lets just wait for the $76 level to break, or get stock up off support.
HD still flagging in a nice 10% range, however we want to be looking to buy up off a pull back vs trying to buy $292.
SHAK still flagging under this $75 level, given how wide it still is trading, we want to focus on trying to grab some up off support.
Congrats to Reid for a great trade in Snap buying up off the recent pull back! For those still in pre earnings, I am still keeping no hard stop in however if you do want to limit your downside in this swing, here are a few key areas for now depending on how far you expect SNAP to go.