The Big Picture Outline
- Broad Market Outlook
- Sector Rotation
- New Big Picture Idea
- Updated Big Picture Idea's
(click on each chart for a bigger version)
Broad Market Outlook
This week in short could be summarized by the skin of our teeth, the SPY just tickled that $270 and look as if it was going to smoke it the following day, only for Mr Market to give a big fuck you to the shorts and rip it higher (lets all give Mr Market a round of applause).
We also witnessed the Tom foolery in LULU for the $.89s crew we live to fight another day (JD Shake Myself and a few others). That could not have been more of a real world example of a shake out in real time. LULU shakes $80 just low enough to take out the low of the recent flag and run those stops at or under the figure only to rip it right back to $82 by the end of the day.
There are a ton of opportunities out there as the market is showing us that a retest of highs seems more likely to be in the cards. Tech has been leading, Healthcare has been strong, Telecom has been finding its footing, and Energy is starting to show its hand.
As you are starting to become more aware that markets and stocks tend to go much farther on the down and upside that we can usually foresee. The overall theme as always, offense wins games however defense wins championships. If you are asking where to put your stops (LOD) you should not be trading this market plain and simple. We are starting to turn the corner getting back in the euphoric, sun is always shinning territories as we get closer to those prior highs.
What usually happens when a market or stock gets back to prior highs? The people who are trapped try to sell for breakeven. The prior high becomes "the top" for these folks. A healthy market will pull back, form a higher low and keep fighting that level until all the weak hands are pushed out and left to chase at a later date.
Thank you to the members who helped last week!
For the rest of the Alpha's if you have learned something valuable from TE or could share your experience by leaving a review on our Facebook page that would be dope. If not no Big Picture for you (jk).
We saw the buyers hold $270 like we saw those buyers hold LULU $.89s on Friday. Save to safe was a "skin of our fucking teeth" week. We were excepting a flush of that $270 area after the monster/tricky V bottom that was put in two weeks ago. For now it seems that we are on the path to retest/test new highs (just to fuck the most people).
As you can see from the big ass green and red circles, above $270 SPY risk on, below $270 risk off.
Nasdaq 8400+ 12 Month Target
Nasdaq has been leading us higher since last year, as it is still doing the same now just a hair away from those prior highs. Above 6750 all good, below expect some chop. Looks to be started to form a pattern we know all too well.....
MDY Mid Cap Stocks 400+ 12 Month Target
Mid Caps are starting to flag above $347.50 is where we want to see break for a grind back to retest those highs. What usually happens when a stock or sector gets back to a prior high for the 2nd time?
IWM Small Caps 200+ 12 Month TargetAs we have seen tech has been leading, SPY is right behind, Mid and Small caps are trailing behind. Sounds like some shit Dr Seuss would say? We will add to IWM above $154, as a swing this would be around $2 risk for around a $6 gain to retest highs (3:1). Sector Rotation wise, will be adding in here with no hard out.
VTWV IWM Value
VGK Europe ETF $82+ 12 Month Target
VWO Emerging Markets +$58 12 Month Target
VWO flagging before its next attempt to retest those prior highs. Tough add through $49 up here as its very late, best to wait for a better opportunity if not already in.
EWJ Japan +$85 12 Month Target
Japan $66 probably one of my favorite macro set up out there however its been in motion for 20 years and so far has shown that $58 is the real out when it wants to go.
Take note of for how to utilize sector rotation. For any of the major markets or sectors, we are parking this 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 either buying or adding, and only selling for either profit or getting out for breakeven. If we are early like we were with the utility sector we will hold through any pull in if getting out breakeven is not in the cards.
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 free capital that can be put to better use in individual stocks.
$156 has been the buy in VHT as of late, for now its a hold until we can find a more definable add.
REIT's have been getting pretty beat up after the new tax changes a few months back, now we are starting to see them settle out a bit. In VNQ we want to see a $76 break which is where we will add, however there is still a decent chance that we can easily still take out those recent lows. This is why we continue to average into the sectors instead of cannon balling with everything you got.
VOX is starting to get some legs holding up that $84 area, now that it is starting to show signs of consolation, expect some more side ways action for a while before the telecom sector is really ready. For now we want to keep an eye on $92.
VAW looking as if it wants to bust up through $138 to retest those prior highs, line in the sand is $135 if you are getting in late up here.
VDC Consumer Staples
Consumer Staples has been interesting to say the least, so far it has been the most emotional sector during this recent correction. It has been trying to form a higher low (red line), will look to add up through $141.
VCR Consumer Discretionary
VDE Energy Sector
VDE $94 have been pretty vocal about as its forming a sneaky buy back, was early last week as it just ticked the level, however pulled in and that $91 level like a champ, closed bearish engulfing and was bought right back up. If we open this week inside the $91-$94 range say around $92/$93 and can punch through $94 I will look to add again, if we open above it will wait for the $96 add. As a trade $91 is the out.
The New Big Picture Set Up
The Big Picture SHAK $60+ 12 Month Price Target
You guys remember when Shake called SHAK through $38 that was good for almost $10 as well as it triggering the Big Picture $40 level. After that run it, has traded as we expected, retesting $39 and attempting to shakeout that prior $37 area that we were originally buy against.
Now this is when we want to keep an eye on SHAK for the sneaky buy back up through $39 again.
Big Picture Target $60+
The Big Picture LULU $110+ 12 Month Price Target
This LULU gave us the textbook shakeout this week and ripped higher, now just two weeks ago we were looking to buy $80 a week later, some were getting shaken out at $80. What a time?
With that being said, black spanx's are still battling with this highs, and earnings are not until April, so we have some time if this wants to get going. However if not, not the end of the world. So far the tightest risk stop on a Big Picture Trade since NKTR that was a $1 stop.
Big Picture Target $110+
The Big Picture's Updated
The Big Picture WUBA $140+ 12 Month Price Target
WUBA has spent the last 3 years getting back to those prior highs, and when the market was at highs, just enough people were able to push it through those highs to take about that perfect level. However after the dirty shakeout that followed as the market corrected WUBA put in a higher low (good sign). $84 will be the level we want to keep an eye on.
$84 is the real level however WUBA is just showing us a nice tight $80 entry on $4 risk. A week ago the out was below $66 now we have been able to limit the risk by $10.
Big Picture Target $140+
The Big Picture CVX $160+ 12 Month Price Target
We made a mistake when we were focusing on the energy sector and that was focusing on XOM sure chart wise it was a great value play and had the smallest amount of risk from our entry the overall headwinds were still south.
Yet the leader CVX received much more love. So far we can see how there's two key areas we want to watch, $120 and $134 while the real line in the sand has been above $100 in CVX for going back as far as October 2016.
If Energy continues its overall weakness as it hovers near support of its wedge, we want to keep an eye on CVX to see if it can hold up vs $100. If it can great signs where we can start small and add through levels. This will be a patient one. Remember this is a heavy thick oil name, not a light and wide bio tech.
CVX gave us a tight risk trade vs those prior lows on around $1 of risk, the next spot we will look to add will be through $114 than $120.
Big Picture Target $160+
The Big Picture WVE $80+ 12 Month Price Target
WVE is a recent new issue biotech, as we have seen this name has been a beast this past month and showing its hand that $40 is still the major level (2nd time retesting it) where we can expect the sellers who were trapped from the first go around to take stock off for as close to break even as possible.
37% gain this week, this is why we focus on top right regardless of market conditions, so far WVE has showed us that we are right and when are right it tends to pay to be more patient. If you wanted to keep it tight you could give it vs $50, however if you were willing to give it the real room vs $40 you should be able to stay in for the real move.
Mini lesson on a mistake I made, after WVE opened above the prior days high, I figured great sign and as insane as it was for this stock to be up some 37%. Figured let it work while I upped my stop for some vs $50 which seem liked plenty of room only to get LULU'ed.
Now in hindsight, looks so obvious. Duh $49 stop right? Lesson learned, pumped for the guys who were taking profits near the high of this range locking in 36%+.
Going forward we would like to see a flag form between $49 to $56 however it would be too perfect for $49 to hold. Will look for a spot when WVE starts to set up for an add.
Stop Upped $39.89
Big Picture Target $80+
ALNY $280+ 12 Month Price Target
ALNY has been setting up for this $140 level for quite some time now, which looks somewhat similar to ENTA a prior Big Picture Idea that's up 50% in 8 weeks. Now will it trade exactly like ENTA?
Probably not, however chart wise we know $140 is the level that we need to be in for.
ENTA took around 2 months near highs before going, ALNY has been flagging in this $20 range for 3 months now.
ALNY has been battling with this $124 area for a bit now, getting much tighter for a lower risk entry.
Big Picture Entry 140.01
Big Picture Target $280+
WDAY $200+ 12 Month Price Target
WDAY $116 was too early as we saw, will be on the look out for the sneaky buy back for the 4th attempt through that level.