Big Pictures - Wait For The Next Train

Broad Market Outlook
As the 10 year continues its ascent through the retest getting near that area of max capitulation is often just when it seems as if it will continue its upward trajectory forever, yet its often near the peak of its mark. 
Even if I didn't learn much in science class, we can all remember that what goes up, must come down. Now as the 10 year continues to climb and interest rates rise along with mortgage rates we can see some broader shifts in the economy as the stock market continues to head towards 52 week lows with most sectors pushing down through there lows. 
Let's talk about the broad shift in the real estate/mortgage space for a moment. For the last decade post 2008 as the real estate market recovered, it was mostly status quo, no real fire works, until 2020 kicked out and the real estate market went from housing is going to crash for a few weeks, into the biggest real estate boom we have seen in more then a decade.
With record low interest rates, people wanting more space due to the lock downs and most home owners seeing the easiest refinance trade in history in front of there faces. It was an upper cut and left and right hook all at the same time. We had cheap money, cheaper debt and a limit supply of houses then pushed the real estate market out of its boring and safe 3-4% yearly appreciation into the high double digits. 
We saw this with lumber, oil, used cars, furniture, basically anywhere you looked over the last two years, it was a similar set up. But eventually the trade changes and often on a dime just when it seems like it will continue forever. 
We saw this in the equity markets also, we had a scary month of the pandemic and then 2 years of easy street when 2022 turned into a rocky and pothole filled road. 
In the lending world, they went from a gold rush for 2 years where a refinance wasn't even something they had to try to sell, people lined up for it. They didn't have to market to new clients, as people were banging down the door to get a loan. But when interest rates double in under a year, just like when gas prices double in the same span, people start to drive less. The joy rides stop and the speculation tames itself as they revert back towards there averages. 
As the 10 year starts to get towards its peak trajectory in the short term pushing most major sectors near max pain, we should start to see some pull back in the 10 year that would help the market snap back after the shake outs. However we do not want to anticipate the turns, we want to be aware and ready for when they do. 
We do not want to stand in front of the train as the major markets push through lows but merely let this train pass by where waiting for the next one will get us where we need to go in a much less crowded cabin. 

From Bennett

Macro Rotation Outlook

Dow Jones
Mid Caps 
Small Caps
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Sector Rotation

Sensitive -  sectors that have moderate correlations to overall market conditions. 

Cyclical - sectors that are more sensitive overall market conditions.
Consumer Discretionary
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Defensive - sectors that tend to outperforming during sub par market conditions.

Consumer Staples
Bio Tech
Big Picture Set Up
It may have sold off 5% on Friday and look to be in a tight range when in reality its a 10% range, but NFLX still is showing us a text book base and after a few attempts at 250, eventually we should see a break into the gap fill in time. 
The pharma names for the most part have been taking quite the beating as most stocks and sectors have but this VRTX just does not seem to care as it continues to flag up here near its 52 week highs. Once to keep an eye on for a move up through this 290 in time. 
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