The Big Picture Outline
- New Business
- Broad Market Outlook
- Macro Rotation
- Sector Rotation
- Sub Sector Rotation
- New Big Picture Idea
- Updated Big Picture Idea's
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New Business
Atlanta Racing Trip Dec 6th-9th
Trade Theory 12/31
Trading Experts App 12/31
Vermont Snowboarding Trip Jan 23rd-27th
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Broad Market Outlook
The market has been weak (no shit Sherlock) however we have to think back and remember when the SPY was at 280 and we were saying it was defense time. Now that we are almost 20 points lower near support (sure we will/should flush that area) we need to start preparing our offense. As I have mentioned a few times this year that we tend to retest correction lows more often than not. When it was SPY 290, expecting to see SPY 250 felt the same as finding out who killed 2Pac. Now that we are a mere 5% away from that happening, it seems a tad bit more realistic. Now I am not saying go out Monday morning and buy the world, what I am trying to get across is that if you are not scanning the market every day (at least the Dow 30 and S&P 500 names) when the time is right, you will be caught flat footed and trying to chase off the idea's of the more prepared traders.
Bottoms are a process and no one is going to call it, not myself, not you, not the guy on CNBC, however as the overall complaining across the market is reaching a new high is when we want to have our cash ready to start deploying.
Talking with a lot of you guys one on one these past few weeks, it has been great to see most have not gotten to banged up, sure there's going to be a trade or two that fails and that life. The market is set up to make you feel like a King just long enough to make you do something stupid while holding its foot on your neck just long enough to make you think that the pain will never end. Trust me, it does, it wont happen on the next 15 minute candle in the SPY however in time it will.
We are entering the last month of 2018 which is crazy to think how fast this year went by. It is time reflect on how much you made this year, not how much (or little) you lost in this past few weeks. Starting now and into the end of the year its time to start game planning 2019. You need to reflect on your best trades, really dig into any major fuck ups, link up with a friend and exchange your business plan (if you need help with that let me know). Shake and myself do this quarterly. For 2019, you should be at saving weekly, contributing to a retirement account, reading daily, and improving on some skill that is not directly correlated to the green back.
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Macro Rotation Outlook
Cheat Sheet
Nasdaq retest of supports in the cards
S&P 500 retest of supports in the cards
Dow Jones retest of supports in the cards
Mid Caps retest of supports in the cards
Small Caps retest of supports in the cards
China 92.50 DCA
Japan 55 DCA
Europe 51 DCA
Emerging Markets 40 DCA
India bouncing
Russia range bound
10 Year pulling back to prior breakout level
Bond's new lows
USD hitting resistance
Oil smoked support
Nasdaq
Lower lower and lower highs is what the market is showing us aka weakness. However one traders complaint is another traders dream. As we start to get closer and closer towards major support of 2018 are we going to hold the line perfectly? More than likely the answer is no, however just like when the market was at highs and most felt it could only go higher (opposite followed) when the market seems dead and bound to only go lower, what usually happens?
SPY
As we mentioned when we were taking out new highs, that we felt we could just as easily out new lows that most people brushed off. Now that seems like a much more realistic outcome however these are the times we want to start looking for the deals. We want to find the deals when most traders are bitching and moaning, not trying to find them when the market is up 20 points and everyone is high fiving. Now for all of 2016 and 2017 that was the market, buy highs, however as we continue to shift into this range bound market we need to buy when most are scared and sell when everyone is bragging.
Dow Jones 
We see the same pattern forming and we did a really great job locking in some gains in the large caps on that monster bounce. Virtually all of the names other than BA that I can think of, we made good money in and now have the chance to buy them all back at the same or better prices. In a range bound market you are more often paid buying up off support and selling into resistance (when prior we would be buying resistance looking to sell higher). They don't call it growing pains for nothing.
MDY Mid Cap Stocks
Mid caps starting to form a new range and will continue to add back on the way up.
IWM Small Caps
Small caps as we know have been the runner at the front of the race setting the pace, and he is showing us that he wants to flush the low which is fine, we just want to add on the way up when he gets his legs back.
GXC China
China is still down trending however it might be starting to pivot as its recently put in a higher low. Want to keep an eye on the 92.50 area.
EWJ Japan
Japan also back into a tight prior range that is giving us a spot to add some stock above 55 on some tight risk.
VGK Europe ETF
Europe is hovering close to what would be a double bottom, however below $50 look out below.
VWO Emerging Markets
Keeping an eye on the $40 level in VWO.
INDA India
India grinding higher after the 17% correction in October. Still holding some.
RSX Russia
Still range bound with the $21.50 level becoming more defined as time continues.
10 Year Treasury Note Yielding 3.05%
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.
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 3.05% (higher = good)
Right now the 2 year Bill is yielding 2.81%
BND Bond Market
New lows tend to be followed by new lows.
USD
The USD has been having a hard time breaking this area, remember weak dollar good for us.
OIL
Oil smoking support, seems like $62 will start to become resistance.
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.
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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
VGT 176 DCA
VDE 88 DCA
VIS 132 DCA
VOX avoiding
VAW range bound
VCR expecting flush of recent lows 158/159 DCA
VFH avoiding
VNQ range bound
VDC middle of range
VHT 166 162 lines in the sand
VPU flagging
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Sensitive - sectors that have moderate correlations to overall market conditions.
VGT Tech
Dropped the buy stop from 184 down to 176.
VDE Energy
DCA 88
VIS Industrial
DCA 132
VOX Telecom
Holding off on adding to VOX as it continue to flirt with new lows.
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Cyclical - sectors that are more sensitive overall market conditions.
VAW Materials
Nice 10 point range in VAW between 122 and 112 needs some time before the next add.
VCR Consumer Discretionary
VCR is getting back near support, we should expect a flush to shake the weak hands, in time I will be looking to add above 158/159.
VFH Financials
VFH is still in a 5 point range and needs some time to settle out.
VNQ REIT
REIT's had a nice bounce off lows however expect the range bound market to continue in this sector.
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Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
Staples are dead smack in the middle of its recent range, glad now that we took some profits $2 points off highs, now with the chance to pick some back up in time.
VHT Healthcare
166 and 162 are two area's to keep an eye on if VHT has any legs.
VPU Utilities
Are we surprised that the most boring sector is flagging near highs when the market is weak?
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Longer Term Financial Planning
For most the thought of planning for retirement is almost a joke however having a plan in place to keep you on the road with the proper goals can help make the path toward your first million or tenth much more concrete, realistic and attainable.
We have being doing this already for quite a few Alpha members (Gina, Carl, Adam, Yousef, Valentino, Rich, Sir Wil) and we would be more than willing to put a plan together for you as well. If you would simply DM me and we will get a plan put together.
For all the members who are maxing out there retirement accounts here are the new limits for 2019!
2019 IRA max contribution $6,000
2019 Roth IRA AGI Limit $130,000
2019 401k max contribution $19,000 (no income limit on Roth 401k)
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Sub Sector Rotation
Cheat Sheet
IBB DCA 105/106
ITA Sneaky buy back 190
IBB Bio Tech
Will be looking to DCA 105/106
ITA Aerospace & Defense
ITA is giving us a 190 sneaky buy back.
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The New Big Picture Set Up
The Big Picture HPQ $31 + 12 Month Target
HPQ has been a name we recently took through $25 and $26 however it was just not ready, we made some lunch money however nothing to lose sleep over. This has been a pattern that has been in the works since before the financial crisis. This one is going to take some time however when it does clear this area and the prior highs, we could expect a similar move to MSFT, MSFT took 20 years to take out the doc com highs, after it did, it took less than a year to double.
Big Picture Target $31+
Big Picture Entry $24.05
Stop $21.89
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The Big Picture's Updated
The Big Picture AAPL $300+ 12 Month Target
After pulling back right into a prior resistance level Apple is giving us a change to add back to a name that we have not traded in quite some time. We are still holding onto our 165 stock and have no problem looking to add some 30 points higher.
Week later and we are able to drop our buy stop $15 points, it really must be the only real Black Friday Special out there with some value.
Big Picture Target $300+
Big Picture Entry $176.05
Stop $160.89
The Big Picture BA $420+ 12 Month Target
Throughout this correction and bounce, BA had 1 shit day and 2 days later recouped the entire days move that was lost. With this name flagging at highs in a major flag, and sneaky buy back, there are so many good things working for it. Can't drop the ball on this one.
BA finally got a bit beat up, when the market is weak, as much as we can focus on the best charts, sometimes they are just not ready, and this shakeout as crappy as it seems, tends to set up for an even better break down the road when most say there is no way it can go this time!Big Picture Target $420+
Big Picture Entry $370.05/$372.05
DCA $330.05
Stop $298.89
The Big Picture CSCO $60+ 12 Month Target
We took CSCO back in August and you might remember how slow this name moves for a tech name however when the market is rip and dipping hundreds of points a day hanging with your grandfather tends to be just what the doctor prescribed. We can see how this $46 has been a clear line of resistance for CSCO, going forward I will continue to DCA above $46.
CSCO is still flagging, some interesting side info, I recently joined a few dumb money FB group, straight shit show in there of people losing money hand over fist in dog coin, UGAZ, TVIW, every weed penny stock that you can think of. Just for kicks I posted this chart and asked if anyone would buy the $46 level. Not one person would. Great info for us.
Big Picture Target $60+
Big Picture Entry $46.05
Stop $45.89
The Big Picture HD $250+ 12 Month Target
Down the road that 3rd times a charm through $208 looks great however we don't want to be buying just than, as HD pulls back into a prior area of support I will be looking to DCA above the $180 area in time.
Eariler in the month we caught a nice 5% bounce in HD and avoiding the breakeven/failed trade that would have followed, with earnings behind it, had no problem getting back in.
Big Picture Target $250+
Big Picture Entry $208.05
DCA 172.05
Stop $166.45
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Trading Experts NYC Meet Up
Awesome to see such a big turn out last night with over 20 members showing up throughout the night bringing along wife's, girlfriends and friends. Great catching up with everyone and we can't wait to see you guys again in Atlanta in December and the East Coast snowboarding trip in January!
Trading Experts Atlanta Racing Trip
Date Dec 6th to the 9th
Airport Ticker ATL
We will be flying down to Rob Learn's hood to spend my 28th birthday racing some Porsche's around a private track in Atlanta on Friday December 7th at 4pm. For the Alpha's who live in Atlanta and want to join us in the race on Friday let me know as the price will be much different since housing is not an issue for you.
We are looking forward to meeting Yon, John M and Rob, if there is any other members in the ATL area let me know!
Trading Experts East Coast Snowboarding Trip
Date January 23rd to 27th (Wednesday to Sunday)
Airline Ticket RUT
This year we have decided to descend to Vermont for a week long trip of snowboarding, trading and a few other surprises! We have rented a ski on, ski off cabin from January 23rd to the 27th (Wed to Sun). A 3 day pass will be included, if you plan on attending let me know! Also if you need a snowboard or a set up I have a dozen plus Burton snowboards in all sizes.
So far on this trip it will be Shake, myself, Kriss, Colin Rafferty, Darrin, Sam and whispers that Nick Aza might join as well. There is still room for 4 more Alpha Members to attend!
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