Broad Market Outlook
It is great to see that over the years with each new pull back the group has faced, we enter them more calm and better prepared then the prior.
Shake had a bold and correct call two weeks ago, calling the top and hammering in the lets sit on our hands and avoid the chop, which is what we have been seeing lately and doing a great job at avoiding.
The mistake I personally made during the last crash (not expecting this one to be) was that I put risk on too soon when names looked "cheap" during the breakdown.
Yet they all got much cheaper in such a short span that as we start to see these new deals, we need to remember that when stocks look cheap, they are bound to get cheaper.
We need to wait for names to start to base before looking to buy, my prior mistake was trying to buy in the breakdown stage, when it was easier, more profitable and smarter to wait for the bases.
Given the obvious "h" pattern in the broad market, we almost want that level to get smoked to let the market actually correct and reset after the insane run its been on lately.
Right now we are only 5% off highs, yet it feels as if we are in a bear market.
Correction territory puts us at 420. A price earlier this year we thought was too high, now most are thinking that is too low.
Right now we are shifting out of breakout market we have grown accustom to and are shifting into a breakdown market.
This is where you want to be very careful with support buy backs. As tempting as they may look like low risk trades, they can often be much riskier when the market is "h"ing over.
We are still just about 2 weeks into the hard trade and really should be open minded to giving the market another 2 weeks before we look to put any capital to risk.
Continue to be patient with your active accounts, continue to let your longer term accounts stay the course and just when you feel like you have been patient enough, be even more patient.
From Ben G
Macro Rotation Outlook