The Big Picture Outline
- Broad Market Outlook
- Macro Rotation
- Sector Rotation
- Sub Sector Rotation
- New Big Picture Idea
- Updated Big Picture Idea's
Broad Market Outlook
Summer trading is in full effect, similar to the beginning of the year where everyone was expecting the shit show to start on Jan 1, only for the market to rally for a month to trap most for the correction that followed.
Most expected summer trading (low volume) to start right in the beginning of June, yet the market gave us a sick start of the summer just to get everyone excited for the shit show to follow (hasn't show us all the shit yet) . As you look at the major index's we have had a lay up quarter where the market needs to fuck people plain and simple. If you are complaining that your down 1% on a given day yet made 20,30,40,50% in the last month or quarter just say that out loud and quit ya bitching. Instead of complaining, lets hear what you learned from the fuck up. Not the boo hoo'ing (no one likes a cry baby).
Sector wise the overall tone has been selling great trades, expecting shakeouts and stepping back to give these sectors time to set up. If you are basing trades off what the SPY is doing in a 15 min chart, quite foolish.
Now from 30,000 feet looking down, best to be off the gas pedal, these are the times where months of hard work can be taken away in a few days of doing dumb shit racing through traffic. I've gone to the beach more this week than one could remember. Enjoy the summer and embrace the time where you can take a step back.
Stock wise this is still a stock pickers market, so this is where the real trader shines, anyone can look like a genius in a bull market yet this is where the grinder shows his skill. There are still thousands of stocks out there and plenty of great charts. Cant expect to not to the homework and than know when the turn is happening. 365 24/7 charting doesn't change, execution wise or how much you put on depends on market conditions (be lighter).
All summer you should be charting more and trading less.
Macro Rotation Outlook
Cheat Sheet
Nasdaq rough waters
S&P 500 h over in the cards
Dow Jones wait for downtrend break
Mid Caps 360 DCA in time
Small Caps giving her space, keep eye on 160
Japan 58.5 DCA
Europe 57 DCA
Emerging Markets needs time
China needs time
India 34 DCA
Russia 22 Gap Fill area
10 Year 3% flagging
USD cant sleep on 95
Oil retest 80 will need time to take that out
Nasdaq 8400+ 12 Month Target
Easy times (green) rough times (red) we had 3 almost 4 months of an easy market, embrace the rough times however don't be naive and expect a bag of gold when the market is handing out bags of shit. Be selective, be patient, wait for your meatball. This is not the 9:31am market.
SPY 300+ 12 Month Price Target
Take a second and draw out the letter "h" when you draw out the letter where does your hand end? Lower than it started or lower? The answer is lower, we tend to see this "h" or bear flags in a weak market which has not been one that you've probably seen while at TE. We are right back to this 268 pivot which just looks like a level that just screams smoke it please. I would not be surprised if we take out new lows this summer just to rip it higher.
Dow Jones 300+ 12 Month Price Target
Never fight the downtrend, wait for the turn, 232 big line in the sand.
MDY Mid Cap Stocks $400+ 12 Month Target
To a T how we called it, a retest to take out new highs just to trap enough people before the pull in. Now we will see if these higher lows continue to hold up, if this was a stock would say for sure, given its the market which needs time to take out major levels would say this perfect uptrend of higher lows will have to be broken.
IWM Small Caps 200+ 12 Month Target
We rode the small caps very well and caught the meat of the move however now its time to give the small caps some space as they work on there issues, trust me its not you its her, as she says. Onto the next one.
EWJ Japan +$85 12 Month Target
Will be keeping an eye on how this breakdown plays out, will it sell off hard and close bearish engulfing or will it flush through and rip back, if so will be looking to add above $58.50 after a shakeout.
VGK Europe ETF $82+ 12 Month Target
Got a great DCA on the way up now $57 will be a battle ground as it was previous support should except that level to start acting as resistance, in time will be looking to add above $57.
GXC China +$150 12 Month Target
This is why we say we need to buy these ETF's after pain vs how we buy breakouts in stocks. Stocks are the jet skis, ETF's are like a yacht while markets like the SPY are the cruise ships. They take time to change course, some are easy to move some take time. When the seas are rough are when the real captain handles the voyage. $117 looks like a sick level in time, so now I will hold onto this $103 stock and find other spots to add to be ready for that level down the road.
VWO Emerging Markets +$58 12 Month Target
Added after that $41 held, still in an overall downtrend, DCA'ing for when this downtrend wants to change courses.
INDA India +$53 12 Month Target
India continues to get tighter and tighter, either we will see a $32 breakout or a $34 breakout, time will tell.
RSX Russia +$30 12 Month Target
Added to Russia as it is starting to poke its head out of this recent downtrend however the real battle with be $22 which is the gap fill area.
10 Year Treasury Note Yielding 2.84%
The 10 year is starting to flag in this 2.7-3% range seems like we will see higher yields in time.
You might start to hear terms like "inverted yield curve" in the media. There is one historic leading indicator that will give us a big red flag that a recession is on the horizon which is an inverted yield curve.
Very simple an inverted yield curve is when the 2 year Treasury Bill pays more than the 10 year Treasury Note.
Right now 10 year Note is yielding 2.90% (higher = good)
Right now the 2 year Bill is yielding 2.54%
USD
Dollar has been trying to get out ahead of this $95 area however it might need some time.
OIL
Oil heading back to retest the prior highs, we know what to expect, eventually an $80 breakout down the road should send us to $90 a barrel.
Fun fact there is 42 gallons of gas in a barrel of oil which comes out to around $1.88 per gallon. So when your at the pump paying $3-$5 now you know why these countries fight over it so much.
Sector Rotation
Key points
- For any of the major markets or sectors, we are parking these positions in a taxable account looking to hold for a year plus (Long Term Capital gains)
- Meaning we are willing to hold positions against us as overall sectors and markets are much less volatile than individual names.
- We are buying or adding (dollar cost averaging) when there are actionable set ups.
- We are selling for either profit or getting out for breakeven if better opportunities arise elsewhere in other sectors.
- If you plan to add this strategy to your portfolio please discuss it will me so we can make sure you are not parking these ETF's in retirement accounts locking up tax deferred capital that can be put to better use in individual stocks.
Cheat Sheet
VDE needs time for next leg
VGT needs to lose some weight
VIS eyes on 132
VCR giving her space
VAW needs time
VHT needs time
VFH h'ing over
VPU great trade
VNQ needs time
VOX shakeout seems in the cards
VDC waiting for new higher low pivot
VDE Energy
Energy is starting to flag however it will still need some time as Oil above $80 is what is needed to send this sector higher however chart wise Oil will need some time for that to happen, give energy some time and we will catch the next leg of this trade to $140+.
VGT Tech
Tech needs a little more pain into this support line and if it can hold we can buy back up vs it, chart wise still looks good just needs time.
VIS Industrial
Senior prom'd these adds as it seems that a retest of $132 is in the cards and added after that test was the real spot, however for now if that happens will add up after that retest, if that does not happen and this area is the low before the turn back up towards $144 even better.
VCR Consumer Discretionary
Caught the meat of the move, missed the last few days (who gives a shit) and now the roll over is starting while were out and onto the next like the Small caps let VCR work out her problems and get her summer body in shape as she trims the fat and we will circle back when shes a little lighter.
VAW Materials
Still needs to shed some pounds, give it time unless it wants to break above $134 will avoid for now.
VHT Healthcare
Needs time.
VFH Financial
If we flipped this chart upside we would be drooling to buy that $67, we continue to test $67 more and more likely its going to smoke that level to the downside, however after it does will be just what we need to shake these sector up and the next rip back above that level could be exactly whats needed to break this trend of lower highs. Short term bearish, bigger picture great deals in the making for a much bigger run down the line.
VPU Utility
Lot of breakups and giving space to alot of these ETF's this past week, we had a sick trade in VPU catching 13 green up days in a row and took our money and ran. We will see you in time VPU, if you want to grind another buck or two do you, for now we will wait for the next spot to pick you back up.
VNQ REIT
Sold a little premature however thats trading, real level is $86 down the road if you zoom out, for now no real set up.
VOX Telcom
Was able to sell all the stock we got down in $83/$84 for a few bucks as it continued its lower highs, $82 is still the line in the sand similar to Financials, even though I am long, I am expecting that shakeout so when the turn happens it will have the momentum to take these downtrend out.
VDC Consumer Staples
Before all the DCA's were during the downtrend, now the tide is starting to turn where we need to see new higher low pivots get put in and start to add above them, still needs some time to pull in and set back up to take out this $137 level.
Sub Sector Rotation
Cheat Sheet
WOOD holding
IHE needs time
IBB needs time
XT next DCA $36.50
BND still basing near lows
WOOD
Got a nice sneaky buy back after it came back to the prior breakout level.
IHE Pharmaceutical
Needs time.
IBB Bio Tech
Showing us this new range of $106 to $114, will need some time to set up where we can find spots to add and buy through.
XT Exponential Tech
Picked some up into the pull in this week, $38.50 is still the major level however will continue to pick some up while it sets up for the bigger picture move down the road.
BND Bond Market
Still basing, if you cant sleep just watch this trade and you'll be sound asleep in 5 minutes.
The New Big Picture Set Up
The Big Picture ROL $75+ 12 Month Price Target
This $53 has been setting up all quarter and sure it did take it out once on the retest however as of late it has been flagging very tightly in a $1.5 range, whats even better is as of Friday it came very close to the level however just couldn't do it. So if it wants to go Monday, its a tight $.50 trade, if it doesn't who cares, we just want it when it wants to go. Above $54 its all new highs.
Big Picture $53.05
Stop $51.45
Big Picture Target $75+
The Big Picture's Updated
The Big Picture STX $75+ 12 Month Price Target
STX has been setting up for this soft level at $60 for a few months now since we will be DCA'ing into it we will be giving the first DCA $6 worth of room so we dont LULU ourselves for months before it finally goes.
DCA $58.05
Big Picture $60.05
Stop $53.89
Big Picture Target $75+
The Big Picture DHR $130+ 12 Month Price Target
It is showing us $100 is not has hard of a level just yet, however we dont want to simply buy $101 because that's how high it flushed recently.
DCA $100.05
Big Picture $104.05
Stop $99.89
Big Picture Target $130+
The Big Picture AFL $60+ 12 Month Price Target
This $46 level in AFL has been setting up all year and as of late it is handing us the tightest risk entry as possible, now sure the real out is $1.50 lower however we are seeing how we can sneak in on less than $.50 risk.
Still wants to head lower and no biggie since we never got in, will look to get in above $43.60 for a DCA, could still head a few dollars lower.
DCA $43.60
Big Picture Entry $46.05
Stop $44.89
Big Picture Target $60+
The Big Picture EDIT $100+ 12 Month Price Target
We started to nibble on this EDIT through this recent $38 level however we know $44 is the real level in this somewhat new issue biotech, will be looking to continue to DCA up through $40, $42 and than the Big Picture level of $44.
Woof you peep that stop, talk about skin of our teeth, still looking great for another add when its ready.
DCA $38.05
Stop $33.89
Big Picture Target $100+
The Big Picture AKAM $150+ 12 Month Price Target
We recently traded AKAM back in Feb/March and caught a nice little chop in it, as of late after a pull it, its marching right back to those $78 highs. Now doesn't this 20 year level look somewhat similar to an old friend of ours?
Remember little $25 NKTR that set up during a similar 20 year level.
In these bigger picture trades a weakness of ours has been holding through the first pull back as we focus on squeezing as much out of each trade, AKAM will be a good test to see if we can weather this pull back and hold for the next leg.
Now normally we would have gotten out below $81/$80 however for myself I have noticed that I was being too greedy on the stop like LULU at $98 vs $100 which at the time looked like we traded it perfectly yet we missed the next leg. For AKAM I wanted to give it the room to hold through the pull in, and bought on the gap down on the 15min rule that looked great however was still a tall ask. So this trade didnt work yet it was pretty much just open PnL given back and a small loss. First trade that I can remember being up 5% and losing money in which is a good problem to have. Chart wise we can't ENTA $51 this name, back through $76 we need to be involved.
Big Picture Target $130+
Next Trading Experts Retreat has been selected!
Turks and Caicos
Airport Ticker PLS
Dates August 9th to the 12th
Thursday to Sunday
Cost will be $1349 if paid in full by end of July
Cost will be $1498 if paid by August 9th
So far the Turks crew will be Shake, myself, Rob, JD, Kriss, Gina, Carl, Max and John Mendez!
15 Alpha's attending we will be chartering a 100 foot yacht for the day!
30 Alpha's attending and we will be renting a 20,000 sq foot villa
Any questions please let me know
Every moment waited is a moment wasted
Every wasted moment degrades your clarity of purpose