Broad Market Outlook
After a 4% pull back from all time highs with the SPY breaking its Micky Mouse pivot of 410, most of us thought the top was in and time to pack it in as the famous adage "sell in May, go away" goes.
Yet like most pull in's, in the moment the world is ending, then a day or two later, we are often scratching our heads wondering why we get so worked up about them.
With the SPY continuing to respect the psychological level of $400 and individual sectors looking exhausted/extended after almost parabolic runs (financials, industrial's, REIT's, DOW 30, materials, staples) one could safety expect these sectors to shift into a range bound consolation type market.
As Small Caps, Bio's, Tech and Discretionary's have already been in this consolation mode as these were the first to get extended/exhausted at the beginning of the month. These sectors are presenting some of the best opportunities to find great deals on top tier stocks.
While most are selling and going away for the summer, there still will be plenty of opportunities for us to take advantage of on both fronts (swing trading and long term add's).
Prepare your shopping list, but never go shopping on an empty stomach.
From Ben G
Macro Rotation Outlook
MDY Mid Caps
IWM Small Caps
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Sensitive - sectors that have moderate correlations to overall market conditions.
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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
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Big Picture Set Up
ABBV still inching higher as it continues to work its way back to its all time high.
Picked some up vs that recent pivot low and will look to add through $69 in time.
With CDNS so close to this $120, if it can flush that $120 to the downside to run some stops would be much more interested in this set up buying up vs that area. If it continues to hover down here or hold that $120 one could expect a slower bounce back as most traders wont need to do anything.
DHR is starting to flag in a $12 point range up here near all time highs, will add above $260 when its ready to inch higher.
After the little doji at highs we got the first pull back in MMC after more then a month of it continuing to inch higher, at this point it could make sense to have a stop vs that $132 if you have not taken any profits yet.
Looking at the weekly of PEP it looks as textbook of a blue sky breakout as one could find. Will be getting involved above $148 with a stop vs $140.
After the doji at highs, we had to expect a pull back and for now $55 seems to be the new pivot low as a potential new range starts to form between $55 and $64.
As SNAP came back into support and for now has put in a higher pivot low (good sign) even though we were expecting a shakeout of $48, added at $53 and will look to add more above $56.
Got back into VRTX on Friday up through $217 vs $210 for the dozenth attempt at being involved for this base breakout, will look to add above $220 if it actually wants to go sometime soon.
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