Broad Market Outlook
We walked into last week with virtually every market h'ing over and knew to expect one of two major outcomes, either a hard breakdown through lows as we shift from correction territory into bear market areas or the snap back off the retest where the moves can be fast and viscous.
The market handed us the latter and quite frankly we were not expecting it as Mr Market loves to keep us on our toes. During these times of indecision, we often want to re invent the wheel that's rolling forward. Maybe I should day trade, or short, put some puts, maybe even an NFT or two. Yet often during those small periods of time where indecision is paramount staying the course is often the best route.
The markets action on Thursday was bottoming type action as its easy to stay writing this now after the follow through we saw that makes any short term entry very difficult, which is exactly the reason why. Bottoms are difficult to catch and when they aren't to catch, there going lower.
Now the broad market is still technically in a breakdown stage broadly.
But eventually breakdown stages, turns into bases and those bases set us up for our favorite times ahead. We probably still have another day or two of follow through to the upside before the market gets extended and will continue its overall trend of lower highs and lower lows until it can nudge its way out of this stage and start to trade sideways.
From a trading side, I am with you on how difficult it has been to find set ups. After scanning 1,000 plus names, I found 2 set ups and of those two, only 1 that I would be eager to take.
The more you (or I) try to force trades or find set ups that are not there is just more work and our ego talking. We are not required to put on risk every day and sometimes less is more.
I have done virtually nothing on the trading side for the last few months (6 trades in total) and I do feel like I missed a thing. On the passive side, M1 continues to dollar cost average each week improving my cost basis.
Just because you feel like you should be doing something, does not mean that you have to do something. As all those famous trading books say in one way or another, wait for the trades to come to you, instead of trying new things that you don't fully understand yet.
Macro Rotation Outlook
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Sensitive - sectors that have moderate correlations to overall market conditions.
Cyclical - sectors that are more sensitive overall market conditions.
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Defensive - sectors that tend to outperforming during sub par market conditions.
Big Picture Set Up
MNRL as finally worked its way back to its IPO highs and most importantly already shown us it can break it, the next time up through the $23/$24 area could give us a low risk trade to be in for this IPO high breakout.
PAYC has now shown us that it wants to support $300 for now as it continues to base out in a nearly $70 range between $370 and $300, for now $340 seems to be the spot to look for an entry in the short term but not 3rd day up $40 off lows.
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