Broad Market Outlook
Ok, maybe the great retest is a bit dramatic but a solid reminder of what we need to do when the stocks we own start to retest those prior all time highs.
As we have seen numerous times in the past, those retests are so obvious after the fact in stocks that we were not in. Yet when we are in them, we blindly overlook and discount them, resulting in giving our names too much room as the stock could not look any better chart wise.
In one of my own trades this week, I discounted the retest, I saw a nice flag forming on tight risk and took it, only to obviously see the retest a mere dollar higher.
As we scan most names or even look at names that we are in, most are following a similar pattern.
Most names put in some type of high in the beginning of September, pulled back and are now working there way back to there respected high (broadly speaking in most names).
AFRM is another example of a much better trade then the FRT example, since Shakes call out in the $60s and this name trading more then 100% higher. Everything about the chart looks perfect, almost everything, the only downside is this is right at the retest.
We have seen names push through the retest area just a tad further as we see stops get run as names shakeout just a bit farther then most can handle.
When we have this huge cushions in names (up 50% to 100%+) it can be easy to take your eye of these winners and say, it needs time. Yet these are often times to ring the register.
How perfect did ROKU look as it climbed 80% back to retest its $480 prior highs?
Only for it to reverse the entire move back to support.
These are those reminders when we have those massive winners or my tiny winner in FRT, as perfect as those retests look, we need to use this times to ring the register.
When we retest that prior high in the SPY and the transitory positive news is plentiful look for spots to take profits.
Don't worry, if you, like myself and anyone else on the street have no clue about the made up terms wall street uses to sound smart, transitory means not permanent.
Just as our profits are not permanent until we ring the register.
From Ben G
Macro Rotation Outlook