The Big Picture

This week we saw some red in the waters from a terrifying pull back of 1.7% off all time highs. The market does a great job of giving a false sense of confidence. April, May, June, July, August and September all higher prices, than we get a little 3 day pull back and most people's egos are at lows wondering if they should start shorting or to pack it in. The market cannot and will not go up each and every day. If you only want to play when the sun is shining, the market will chew you up. You need to plan for and expect weeks like this and quite frankly the two days down is nothing to boo hoo about. Globally its much more painful to be overseas, India is down 17% this month, China is near lows, Europe is near lows, Emerging Markets cant catch a bid. While the SPY is at highs, DOW is testing new highs even with Small and Mid Caps breaking down, giving us some red flags that our markets can too go down. Global markets tend to move in a broad sense in tandem, if mostly everyone is weak, we should expect some weakness as well. No matter how strong you think we are.  

Shake and my self's role is to remove the stuff that gets in your way which tends to be all the fancy lingo and terms that has nothing to do with a simple trade. These fancy terms that we see getting throw around tend to give a false sense of confidence in a trade that is not needed. We are here to remind you of what you need to do in the first place. A bull flag is a bull flag, a bear flag is a bear flag, this isn't rocket science. This is a simple game of human psychology against oneself. 

Sector wise virtually every sector pulled in this week and closed looked quite weak other than financials. Now markets and sectors tend to not just drop from highs to lows in a straight line, they tend to bounce around hence why we were saying to avoid trying to short into the 3rd red day in a row as your late to the move. If we get a bounce next week and your in a position that you can free up for breakeven, those tend to be gifts worth taking.

Stocks I will be keeping an eye on are KORS 68, HI 53, ABBV 96, NEWR 92, SIVB 330, GWW 360, LLL 215, XPO 116, BLK 480, JPM 118 and TRV 132.

Retested prior highs and is pulling back, something that we have seen a thousand times, also that break of the step uptrend is healthy, seems like we will be in a range bound market for the time being with 7700 being resistance and for now support to be determined even a pull back to 7000 which technically would be a correction would be completely fine.

200 days trending higher and 2 down days and everyone gets there panties in a bunch, you should embrace and expect the market to pull back, the market moves in waves, it comes in and goes out, it doesn't just keep coming. One could wish I know. 

When it comes to ETF's or buying the market as a whole, you tend to get paid as Buffet said when most are scared and sell when everyone is happy. The reason why this tends to pay when buying an entire market is that the odds that it is going to drop 30-40% more after dropping 10% is much less likely because it is a basket of stocks. One stock can easily lose 40-50% in a month, however the odds that the top 30 largest companies in the US will all do that? Not so likely, this is why when it comes to ETF's your paid to buy pain.

Same as mid caps however small caps which lead the market on the way up is still sprinting ahead showing us that he can go lower after breaking 3 of the last pivot lows. $160 will be an interesting spot to see if that's where some buyers come in.

Glad I was able to get off some costly stock near the highs of this most recent bounce now as long as it can put in a higher pivot low Japan should be in good shape to eventfully retest highs.

The more it hangs around support the more likely its going to blow through it to the downside.

When support breaks look out below, luckily for us we took off most of our position in India in the last bounce and only bought back a bit before this breakdown, as shitty as this free fall looks, I will be looking to add to INDA after this 17% pull back off highs.

RSX Russia +$30 12 Month Target 

Russia is continuing to show us that it wants to play in this range, so lets play, we bought low, sold into the pop now when it comes back into support we'll step back in.

10 Year Treasury Note Yielding 3.23%

As rates continue to rise we will continue to see the 10 year inch higher which crushes bond prices as you will see below the bond market just put in a new low as the 10 year is putting in a new high. 

As rates rise expect to see the bond market continue to put in new lows.

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The tighter the slope the more obvious the break, should expect some type of pull back after the monster of a run Healthcare went on.

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