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
Trading Experts App 1/1
Trade Theory 1/15
Vermont Snowboarding Trip 1/23-27
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Broad Market Outlook
We started 2018 on a monster run that made it extremely difficult to keep that momentum going the entire year. After two years hiding Mr Markets step brother Uncle Correction peaked his head out and came back to visit right after we ticked new highs. All year we have highlighted that the market likes to test the correction lows to push out the week hands. Which is happening as we speak. There is blood in the water, and most of you are in cash, if you continue to focus on what we do best, you will come out of this ahead. If you start to ditch the game planning, charting and keeping it simple, there is only so much we can do.
This will not be the first or last time we see these types of moves, the week ahead will be the last time that the rich can sell off there shit positions for tax loss harvesting. Net across the board it will be hard to find anyone trading this week and even fewer trying to buy anything.
Spend the week with your friends and family, reflect on your improvements this year, be honest where you didn't do well and cut those excuses out of your routine for 2019.
Over the past year it has been crazy to see how you (Alpha's) have improved, even with rough market we have experienced this last quarter, as a team we cleared over 7 figures in profits, even if you take out some of the big dogs, this group of traders locked in some serious money in the market. Some of you guys are putting up numbers that put our old prop firm (of professional traders) to shame. Embrace the tough times because if the market went up everyday it wouldn't be a market.
My goal for 2019 is to have the Alpha chat lock in $5 million in profits, you with me?
From Ben G
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Macro Rotation Outlook
Cheat Sheet
Nasdaq need capitulation (wide range doji day)
S&P 500 need capitulation (wide range doji day)
Dow Jones need capitulation (wide range doji day)
Mid Caps need capitulation (wide range doji day)
Small Caps need capitulation (wide range doji day)
China 92 DCA
Japan avoiding
Europe avoiding
Emerging Markets 40 DCA
India out for now
Russia 19 DCA
10 Year inside flag
Bond small bounce
USD strong
Oil weak
Nasdaq
Sure we are ending the year negative which is setting us up for a great 2019. Just like on the way up when we feel it can only go higher, on the way down it can feel like they can only go lower. The difference is the downside tends to be much faster yet it feels slower because you are watching every tick. Remember the old saying be greedy when others are fearful? Odd lot your outlook sometimes.
SPY
Bear flag breakout in the SPY? Never thought I would be saying that in 2018, a year of firsts for many. As we continue to breakdown we are nearing the measured move of this pattern. As we mentioned last week we expected a break of the pre correction lows and now we can flush all the weak hands who were jumping up and down to buy just a short 2 months ago.
Dow Jones
This is a great example on why we buy UP off of support and why we don't buy on the way down into support. Just when it looks easiest to buy support tends to be the worst time imaginable.
MDY Mid Cap Stocks
We sold 345, started to DCA at 305 which was a few percent early so far, as we work our way into this next range we will be keeping an eye on the next spot to add on the way up. For now that area is 300.
IWM Small Caps
Small Caps broke that major area of support without putting up a fight, about another 10 points of room before the next significant area of support.
GXC China
The overall downtrend is starting to turn into a base, will need plenty of time however the overall tune is slowly changing from negative to neutral.
EWJ Japan
We know Japan 66 is the 20 year level however for now it still needs to pull back a bit more before looking for an add.
VGK Europe ETF
VWO Emerging Markets
Similar to China the overall downtrend is starting to base out, this patterns take months to set up as it took all year to start to break the downtrend, now it should take months to base.
INDA India
10% bounces like nothing, we took profits in India and sold the rest into this bounce. If you think our markets are jumping around India is gaping and crapping 3% moves a day.
RSX Russia
Russia paid out its annual dividend hence the 4%+ gap down, above 19 is the spot to keep an eye on.
10 Year Treasury Note Yielding 2.79%
We started to get the first warning sign of an inverted yield curve (shorter term rates yielding more than longer term rates). Most people panic at this which is something to take note of. For now the 10 year is still yielding more than the 2 year so we are still good.
10 year Treasury Note 2.79% (higher = good)
2 year Treasury Note 2.65%
BND Bond Market
Remember the bond and stock market is on a seesaw for the most part, strong market tends to mean weak bonds and vice versa.
USD
Running into a prior pivot high, remember we want a weak dollar to help stock prices.
OIL
Cheap oil great for the overall economy, not so great for us holding energy stocks.
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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 heading toward major support
VDE 68 major line in the sand
VIS just broke major support
VOX new lows
VAW h'ing over
VCR just broke major support
VFH just broke major support
VNQ 72 line in the sand
VDC eye on 126 prior pivot low
VHT 158 DCA
VPU 124 DCA
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Sensitive - sectors that have moderate correlations to overall market conditions.
VGT Tech
Should smoke this prior level of support. Earlier this year we were wondering who was going to de throne tech as the sector leader as it seemed impossible. Now it seems much more obvious than a change of leadership is in store. Short term industrials and airlines will benefit from cheap oil. The longer term whispers on the street will be healthcare and bio's will emerge as our new leaders in 2019.
VDE Energy
Was a bit early on the adds in energy after oil dropped 30% however was still too soon, hence why we DCA, still have no problem adding on the way up above 78 vs these lows.
VIS Industrial
Industrial's are getting taken to the woodshed with everything else however with cheap oil will help the airlines, trucking companies, shippers, mail carriers etc. While everyone pukes out in fear lets see if the 108 area can hold up.
VOX Telecom
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Cyclical - sectors that are more sensitive overall market conditions.
VAW Materials
Materials h'ed right over through lows, the next area to keep an eye on will be the 100 level.
VCR Consumer Discretionary
145 in VCR was a major level of prior resistance that it blew right through, when the dust settles that will be the area to start picking up some stock.
VFH Financials
Similiar to VCR the Financials also
VNQ REIT
8 months to grind $10 higher, 8 days to smoke lower, the difference between patience and panic.
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Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
Staples we tried to buy up however was too soon, next we want to see if the retest of lows will hold or flush before the next add.
VHT Healthcare
158 in VHT is a great spot and speaking with others in the industry, there has been whispers that smart moneys focus in 2019 will be less tech focused and more healthcare, bio focused.
VPU Utilities
124 is still the major level in this snooze of a sector.
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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 already and we would be more than happy to put a plan together for you as well.
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Sub Sector Rotation
Cheat Sheet
IBB 80 major line in the sand
ITA needs time
IBB Bio Tech
Aren't we glad we sold $110, whats a casual $20 points between friends? $80 is a major line in the sand that we need to keep an eye on.
ITA Aerospace & Defense
Just down a shy $50 from where we sold, still just water falling lower, needs time.
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The New Big Picture Set Up
The Big Picture HANDS
We had a great 2018, we had our first correction in two years, than we eventually took out highs and now we are ending the year red, 2018 started off on such a hard note to have a monster year than giving how we are ending is setting us up for a lay up 2019. Just remember 6 months from now when the talking heads say how the best deals were now when currently they are telling you the world is ending.
Any one with real money is on vacation this week and spending time with there family and friends. Spend the week goal setting for 2019 and reflecting on what you did poorly and what you did well in 2018.
Big Picture Target 2019
Big Picture Entry Jan 2nd
Stop December 31st
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The Big Picture's Updated
The Big Picture INTC $57+ 12 Month Target
For how rocky the markets have been, INTC is tightly flagging in this $3 range, Intel is the lower beta tech, old dog, however when the new dogs are getting sent to the pound, someones the old companion is just what we need. Have been trading in and around this range to get a feel for it. Eventually this 49 level should push though to retest highs and works itself down to the road to take that out (3rd times a charm).
48 is still the spot in INTC.
Big Picture Target $57+
Big Picture Entry $49.05
Stop $45.89
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 taking a breather and when it is ready we will pick some up above 44.
Big Picture Target $60+
Big Picture Entry $44.05
Stop $39.89
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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 at the East Coast snowboarding trip in January!
Trading Experts Atlanta Racing Trip
Was great to catch up with Rob and Mr Moon down in ATL this past weekend. Racing these Porsche's on a private track helped reinforced how much of dumb money I have been all these years whipping my Aston around.
In ATL 100% legal, in NJ that's an easy 3-5.
Rob "I'm going to leave the GT3 with you, take care of my baby"
I got you Rob!
Trading Experts East Coast Snowboarding Trip
Date January 23rd to 27th (Wednesday to Sunday)
Airline Ticket RUT
Cost $1098 by Dec 30th, $1198 by Jan 23rd
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 4 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.
If you have your own lift tickets or can only make it a few days, let me know for alternative pricing.
So far on this trip it will be Shake, myself, Kriss, Colin Rafferty, Darrin, Sam and whispers that Nick Aza, Gina and Carl might join as well. There is still room for 4 more Alpha Members to attend!
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