Broad Market Outlook
Might be time to start playing some defense as we go into the end of the year.
There seems to be 3 different camps we can place most of the major markets and sectors in.
Those camps are; the party goes on, the party is slowing down and the party is ending.
The party goes on includes Nasdaq, Tech & Utilities.
The party is slowing down includes S&P 500, Mid & Small Caps, Industrial's, Materials, Consumer Staples & REITs.
The party is ending has Dow 30, Healthcare, Telecom, Financials & Energy.
From the party that goes on crowd, Nasdaq has just ticked a new all time high, yet from a percentage standpoint it has ran up faster then the prior run up before it got exhausted and turned over.
While most other sectors are showing us signs of weakness, could this excited party guess start to feel the effects of his prior rapid consumption?
That could be the case, yet in the moment those extra drinks always seem to be the best ideas.
We often discount these red flags until the hangover the next day that we promise to never repeat, yet rarely do.
In the party slowing down (Industrial's, Materials, Consumer Staples & REIT's) all did the same exact thing, they ran up to their prior all time high, pushed just enough for those chasers to pile in then lost momentum and started to pull back.
All 4 of these sectors look identical expect for REITs that respected the retest. Prior to this retest and mini breakouts, things looked great, until we got more information that this is more then likely a shorter term top.
Information we discount when the party continues like in the Nasdaq. Yet after the fact the tops always look so obvious.
In the party that is ending, we have black and white proof of our prior nights blunders that we often forget.
Telecom is showing us a text book head and shoulders pattern while Energy broke support of the flag it was forming confirm it just left its Stage 3 Topping Pattern and has entered its Stage 4 Breakdown that will need to continue until it can base out before its ready to work its way back up near its relative highs.
As we finish out the end of 2021, this seems to be the time to reflect on the overall growth of your account from the beginning of this year, and find ways to protect the gains you have made.
PS If you live near NJ I will be having some people over on Black Friday. Reply to this email if you would like to attend!
From Ben G
Same percentage move as the last run up in an even shorter span, as the saying often goes, the faster they raise, the quicker they fall, lets respect the pivots if/when that day comes.
Could we continue the march higher? Of course, but we still want to remember how far we have came and to keep raising those stops.
A new 10% range seems to be forming in the Dow between 330 and 370.
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Sensitive - sectors that have moderate correlations to overall market conditions.
Energy looks to be an avoid for some time as it just entered a stage 4 breakdown and would need to start to base again before looking to add back to this sector.
Nothing bullish about this head and shoulders pattern in the telecom sector.
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Cyclical - sectors that are more sensitive overall market conditions.
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Defensive- sectors that tend to outperforming during sub par market conditions.
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Big Picture Set Ups
If you are in this AFRM, could be time to place some defense here, after a nearly 300% run up in a few months, the name sold off on earnings(bad), put in a lower pivot high (bad) and has h'ed back over to the prior breakout level (bad). Often when we start to miss this major red flag when we are up huge in our winners, hopefully this cold glass of water might help you see the reality of the set up and what most likely is to follow.
This AIRC (REIT) is setting up nicely for a breakout up through that 54 in time.
Got ticked into this ANIP maybe just a bit too early, and my stop is keeping me in by the skin of my teeth, the proper spot to add most likely will be above that 46 on the way up.
Took this post earnings bull flag but not really getting much follow through, keeping a break even stop in for now.
MDNY is showing us a textbook bull flag where we can look to get in up through that 420 area for now.
This recent IPO is showing us it might be worth to keep on the radar for a move up through 44 in time.
Got ticked into this SSNC, paid up a little extra waiting till 80 and for now keeping the stop vs 78.
So far this W support buy back has been working nicely and for now have an offer out near the 200 days around 291 and a stop for the rest near my break even at 250.
Waiting till the up move on Friday (reacting to the price action) to raise the stop is the lesson for myself to continue to hammer in vs trying to raise it too soon, such as the day prior.
Fun new event planned for summer 2022!
For those car and motorcycle enthusiast, we rented out a private race track in June! If you live on the east coast near New York State and would like to attend let me know!
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