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
Market wise we saw the SPY pull in for the entire week however did you feel any of that? From the start until the end of the week across the board it seemed we were well positioned from the prior week booking profits.
There has been a ton of opportunities out there either buying through resistance as we always do and also buying up vs support. Deck $92 vs $90, HD $180 vs $175, MRK $56 vs $54 for example.
Seems overall the more you can tune out the noise of what the SPY or overall market is doing and focus more on the names you are trading the better you will be able to navigate this market.
For the week ahead I will be looking to add to VOX, VDE, VIS, VPU, VAW, EWJ and VCR above there resistance levels that are mentioned in Sector Rotation.
Stock wise I will be looking to add to CMG, LULU, V, MRK, MSFT, PG, WRLD, GRFS, NKE, TTD, SWKS, VEEV, ESPR, SINA, ANTM and EDU.
It is wildly impressive to see the numbers you guys have been putting up, Kris with returns that almost don't look real up over 50% in the last few months, Scott Kee also up over 50% in the last quarter, Carl and Garret putting up Comma days with ease, John Mendez being patient putting up monster numbers when his trades set up making over $40k in profits since the start of the year, Michael Higgins and Michael Peters putting up $3-$4k days, Nathan and Dangerous D dropping casual $5k days and cant forget Totou with his 15% chop (yes we shipped you your shirt to Spain that cost more than one could imagine lol). As a team it is great to see how everyone is coming together and pushing each other higher.
At the beginning of the year Shake and my self's goal was to have the Alpha chat exceed $1,000,000+ in profits, so far we have been averaging around $50k+ each weeks in locked in profits with our best week so far being over $200k (with the help from Adam Rav).
To better keep track of your profits as a team, we have created a document below. Very simple, locked in profits count, (not open PnL), you lock in profits for the day regardless of the amount, you can post it there and lets see if the Alpha team can exceed that number starting from today until the end of the year! We want to see if we can exceed those numbers without the help from Shake or my self's PnL to truly gauge the success of the Alpha chat (gotta show the haters what you guys can do).
$2,000,000 Profit Goal for the Alpha Chat 2018
SPY $280 still holding to the penny as resistance as we called out two weeks ago after $270 held. Notice anything about those red circles?
Mid caps same story as the SPY, lower volatility and orderly pull backs.
Retest of prior highs met with resistance? Shocked, jk, we see this all day long, 3rd times a charm.
Have been a buyer at $58 in VGK, expecting it to stay under $64 for some time.
VGT just didnt have the juice for a major breakout, right now the line in the sand is basically right there below $182 should expect some selling pressure back into the recent range, above $184 could be a cute add on tight risk. Below $182 the next line in the sand is 5% lower at $172.
In this VDE have been adding in this $90 to $94 range as of late and will continue to buy $94, as of late we are seeing that the market has been holding VDE above $91 if I am wrong on this $94 breakout I will look to get out below $91 which is around 3% risk from $94 and 1-2% from the other $92/$90 area's I have been adding.
Financials have just been flagging after flag, this current one need to see a break of $74 vs the $71/$70 area however have to take note this is the 4th bull flag in a row so we need to keep the risk tighter as the set up starts to become more obvious to all market participants.
VDC has been the kid who doesn't get invited to the party yet sees it on social media and shows up as its ending, was late to the market rally going into January and was the first to get taken to the woodshed during the correction, and also one of the sectors who has not been able to catch its footing lately while other sectors are marching back to highs, sucks for the guys in this sector (me).
VPU was a similar story, I was early to the $112 buy and had to sit through some pain and how it is started to set up again knocking on the $112 door again. Will look to add through that level vs $110.
VOX has been in this range for a bit and was able to add on Friday on a low risk add as buyers came in to pick up stock vs that support area. Next area is the $90 break than $93 for the major down trend break.
MU had to shake the tree before that monstrous breakout, we want a shakeout in LULU to get ready for a feasty move through that $82, a push down through $75 would be ideal.
Mental capital in LULU still 100%, took a baby 1% loss in it after it came back a week ago and as we can see $82 is still the level, add 2 will be above $84. This chart is look better and better as time goes on. This has been consolidating at highs for almost 4 months. Remember the longer the consolation the bigger the breakout.
JAZZ $160 still setting up and will need some time however we are see how $148 seems to be the new line in the sand for the out.
Bought the level however knew how late I was from the overall trend after seeing it find resistance near that prior high took the trade and will buy back $112 in time, odds of $110 holding up I would put at slim to none. Lets let it shake the tree and when it starts to turn we will hope on for another ride.
SHAK had a nice bounce into that prior support turned resistance level of $43 for now have a break even stop in the name and will look to add in time.
Took off the adds into that prior resistance level and still have the $111 stock. In time will look to add $118 however much more inclined to find a spot on the turn of a pull in vs trying to buy the breakout in the bigger oil names like CVX.
ALNY made it extremely difficult to buy $140 running up to that level up 5% on the day. Have to flip from wanting to buy to book profits since we were able to get such a better entry price vs the out than having to risk $20 vs the level we were planning to buy. Was able to look in some decent chops in it taking profit on the way up and getting stopped out on the way down. Its started to show that it wants to hold up above $140 for now however much more difficult spot as you now need to be perfect. I am flat in this name and will keep it on the radar for a re entry.
Nasdaq 8400+ 12 Month Target
The market is showing us how its trying to turn that resistance level into support, however just like any other breakout where 3rd times a charm, we tend to see that pop through and than the eventually shake out to push people out, only to sneakily good at a latter date for a much meatier move. With that being said, much easier to do that in a stock that has limited eyes on it compared to the Nasdaq.
Above 7000 is a great sign however a little shakeout never hurt nobody (who has a plan), below expect some chop however don't take your eyes off it for too long as that next push through should set its sights on 8,000.
SPY 300+ 12 Month Price Target
(Big Picture from 2 weeks ago)
It seems now that for the week ahead we will be inside this new range between $265 to $280, and just like how we wanted $270 to hold, the market had to push it just enough to shake people out, I would suspect the same when we get near highs of this range.
SPY $280 still holding to the penny as resistance as we called out two weeks ago after $270 held. Notice anything about those red circles?Lower volatility, the market has digested the correction, world ending talk and its back to business as you can see the sell offs have been as orderly as waiting in line at 2am at the Wendy's drive thru.
Right now we are still in this $10 range in the SPY which is fine, even if the market wants to tickle or flush $270 who cares. We need some shake outs to push people out to force them to chase. Just think of MU, flushed that wedge came right back and ripped 40% in a month. With the market were talking about 500 stocks so you have to be realistic with your expectation.
The SPY is showing us its going to need some time compared to the tech side, its going to need to fight $280 and retest the prior highs for the 2nd time before any major breakout which is completely fine, we don't trade the SPY anyways just a way to gauge the market.
MDY Mid Cap Stocks $400+ 12 Month Target
Mid caps same story as the SPY, lower volatility and orderly pull backs.IWM Small Caps 200+ 12 Month Target
Retest of prior highs met with resistance? Shocked, jk, we see this all day long, 3rd times a charm.
10 Year Treasury Note Yielding 2.89%
You might start to hear terms like "inverted yield curve" in the media (turn off the tv) or online, and it may seem confusing. 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 2.85% (higher = good)
Right now the 2 year Bill is yielding 2.295%
Were Gucci however when the 2 year starts to yield more than the 10 year, that's a red flag.
VGK Europe ETF $82+ 12 Month Target
Have been a buyer at $58 in VGK, expecting it to stay under $64 for some time.VWO Emerging Markets +$58 12 Month Target
VWO $48 has almost been equilibrium for this market as of late, will have to see how this recent range holds up between $46 and $49.
EWJ Japan +$85 12 Month Target
Started to nibble on this EWJ through $60 however we know $66 is the major level, for now seems like a retest of recent support is in the cards and above $61 of this downtrend break will look to add to this country.
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.
VGT Tech
VGT just didnt have the juice for a major breakout, right now the line in the sand is basically right there below $182 should expect some selling pressure back into the recent range, above $184 could be a cute add on tight risk. Below $182 the next line in the sand is 5% lower at $172. VIS Industrial
Were still seeing how the market is not ready yet to break that $148 level that cracked during the recent correction. In the middle of this range where there is a chance for a cute add above $144 on $2 risk however would rather wait for a better set up in this sector after a retest near support.
VCR Consumer Discretionary
Orderly slow pull back, above $166 can add, however would like to see how if it can hold up above $158.
VAW Materials
This $135 area has been an interesting spot in VAW for quite some time now, will look to add back through that level, would like to see another few days down before a push through that level for a move that can break those recent highs.
VHT Healthcare
Started to take some profits as VHT started to roll back over, in this sectors where we are starting to see more of a range bound market after those highs were put in, need to be more nibble and book some on the way up so you can load up during the pull ins and keep your mental capital fresh. Will add back in the $156 area if given the opp.
VDE Energy Sector
In this VDE have been adding in this $90 to $94 range as of late and will continue to buy $94, as of late we are seeing that the market has been holding VDE above $91 if I am wrong on this $94 breakout I will look to get out below $91 which is around 3% risk from $94 and 1-2% from the other $92/$90 area's I have been adding.VFH Financial
Financials have just been flagging after flag, this current one need to see a break of $74 vs the $71/$70 area however have to take note this is the 4th bull flag in a row so we need to keep the risk tighter as the set up starts to become more obvious to all market participants.
VDC Consumer Staples
VDC has been the kid who doesn't get invited to the party yet sees it on social media and shows up as its ending, was late to the market rally going into January and was the first to get taken to the woodshed during the correction, and also one of the sectors who has not been able to catch its footing lately while other sectors are marching back to highs, sucks for the guys in this sector (me). All kidding aside, we will more than likely see a retest of support or even a break of support, will be adding above $139/$141 in time.
Have to remember that when you have positions in every major sector, there will be winners and losers, as you rotate through, you sell your winners to lock in profit and put those proceeds back into the losers, rinse and repeat.
VNQ REIT
REIT's have been starting to turn a bit recently, was early to an add a few weeks ago, however it set back up and added through the 4th attempt at that major level. It was showing how it wanted to turn that prior resistance level into support. For now have essentially a break even stop in for the adds and will try to ride it as long as it lets me.
VPU Utility
VPU was a similar story, I was early to the $112 buy and had to sit through some pain and how it is started to set up again knocking on the $112 door again. Will look to add through that level vs $110.VOX Telcom
VOX has been in this range for a bit and was able to add on Friday on a low risk add as buyers came in to pick up stock vs that support area. Next area is the $90 break than $93 for the major down trend break.The New Big Picture Set Up
The Big Picture LULU $110+ 12 Month Price Target
This LULU has been wearing down the patience of most however Big Picture wise its just chilled and for the most part has been doing everything we would want in a stock. Consolidating at highs on tight risk. For this name to really get going still feel it needs to really shake the tree before we are going to see a powerful momentum break of $82. Lets look at MU for example.
MU had to shake the tree before that monstrous breakout, we want a shakeout in LULU to get ready for a feasty move through that $82, a push down through $75 would be ideal.Now lets take a look at another name that spent a few months also consolidating near highs. Same name also had a shakeout that is barely noticeable on the chart now before ripping for months.
In LMT I just kept buying it the tightest flag for months only to eventually stop myself out the day before the start of what became a $100 point rally. LULU is reminding me of the same story.
Mental capital in LULU still 100%, took a baby 1% loss in it after it came back a week ago and as we can see $82 is still the level, add 2 will be above $84. This chart is look better and better as time goes on. This has been consolidating at highs for almost 4 months. Remember the longer the consolation the bigger the breakout.My game plan will be to buy $82 and add $84 and than sit, with the out for now being $77.89. There is no reason why LULU wont be at $100 a quarter from now once we can clear that $84 area.
Trigger $82.05
Stop $77.89
Big Picture Target $110+
The Big Picture's Updated
The Big Picture JAZZ $220+ 12 Month Price Target
JAZZ has been off our radar for almost a year now as we last tried it through $156 however we were too early. Recently it has been started to set up for a move through $156/$160 eventually through that area we should see JAZZ take out those prior highs.
JAZZ $160 still setting up and will need some time however we are see how $148 seems to be the new line in the sand for the out.Triggered $160.05
Stop $147.89
Big Picture Target $220+
The Big Picture SWKS $172+ 12 Month Price Target
This SWKS $112 has been a level since Shake and myself were trading next to one another on the Mook desk. This $112 looks sick however we want to see it pull in and settle out a bit, as its just ran $17 points in a month. Earnings are out of the way and tech has already been leading this market higher. We give SWKS the proper room and $112 should be like CAT $114 that was good for $50-$70 in a year.
Bought the level however knew how late I was from the overall trend after seeing it find resistance near that prior high took the trade and will buy back $112 in time, odds of $110 holding up I would put at slim to none. Lets let it shake the tree and when it starts to turn we will hope on for another ride.Trigger $112.05
Stop $109.89
Big Picture Target $172+
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.
SHAK had a nice bounce into that prior support turned resistance level of $43 for now have a break even stop in the name and will look to add in time.Triggered $39.05
Stop $38.89
Big Picture Target $60+
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.
Took off the adds into that prior resistance level and still have the $111 stock. In time will look to add $118 however much more inclined to find a spot on the turn of a pull in vs trying to buy the breakout in the bigger oil names like CVX.Entry $118.05
Stop $107.89
Big Picture Target $160+
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 made it extremely difficult to buy $140 running up to that level up 5% on the day. Have to flip from wanting to buy to book profits since we were able to get such a better entry price vs the out than having to risk $20 vs the level we were planning to buy. Was able to look in some decent chops in it taking profit on the way up and getting stopped out on the way down. Its started to show that it wants to hold up above $140 for now however much more difficult spot as you now need to be perfect. I am flat in this name and will keep it on the radar for a re entry.Entry $140.05
Stop $136.89
Big Picture Target $280+
Trip Update's
Members - JD, Kriss Knapp , Mo, Sam, Rob Eskew, Carl and Gina Theodore
View from the 7 Bedroom house
Game Plan
Thursday - arrived, get food and drinks, get to ocean front villa, relax and get dinner
Friday - boat rented for the day to travel to all the other islands, see the pigs, go to the island where Pirates of the Caribbean was filmed.
Saturday - Longer Term Financial Planning Discussion
Sunday - Taxable vs Tax Deferred Trading
Any questions about the trip PM me and we can discuss. $50 off for any referral you send to TE.
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