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
During one of the slowest weeks of the year, the market snapped back putting up one of its best days in history. The SPY was trading like a bio tech up 5% on the day that we snapped up some bargain basement deals in virtually all of the sectors we were selling a few weeks ago.
So far in every major sector we saw what looks to be a "V" bottom however that is simply "how it looks", as we know the market is great at showing us what we expect and than giving us something completely different. We can still take out new lows however most of the overall blood shed seems to have already happened as we officially tickled bear market territory.
From an advisory standpoint speaking with clients most were scared and needed talking off the ledge of wanting to sell out (when we are looking to buy). Talking with the dumb money crowd, they were all as bearish as possible, taking about buying VIX products. Both of these crowds are usually wrong, where the smart play is odd loting there idea's.
As we had said all year, this is a range bound market, and going into 2019 we expect the same. Don't look at this as a bad thing, this range is huge, we are talking some 60 points in the SPY along. You just have to take note in a range bound market we are looking to buy up off support and selling into resistance. Buy 260 in the SPY sell 280, buy back 240 look to sell 270 rinse and repeat.
This year was full of some great twists and turns, we navigated the first correction in two years, we than avoided for the most part an actual bear market through the 4th quarter. Now you remember all those stats about corrections and bear markets that years later those were the best times to buy (in hindsight). Yet in the moment most are too scared to take advantage. This is why we are a team so when you are scared you can lean on us to give you the confidence you need. Than when we are near resistance and you might be getting a tad cocky (don't we all) the team is there to check that ego and lock in that PnL.
This year we saw TE grow more into a family, we had over half a dozen meet ups, doubled the Alpha chat, cleared over a million in profits, adding the Alpha Alerts feature to avoid missing set ups, add half a dozen new programs and are a few days away from being in the Apple store. By focusing on daily improvements. Sure these last few months were not a walk in a park, however if the market was a walk in the park every day, what's the fun in that?
Spend this week, hand writing your game plan for 2019 and you just might surprise yourself in what goals you exceed this year. Shake and myself exchange business plans each year to hold each other accountable. I would recommend you do the same with someone you trust.
From Ben G
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Macro Rotation Outlook
Cheat Sheet
Nasdaq 6400 resistance 5800 line in the sand
S&P 500 252 resistance 232 line in the sand
Dow Jones 234 resistance 216 line in the sand
Mid Caps 285 major line in the sand
Small Caps 125 major line in the sand
China 83 DCA
Japan avoiding
Europe avoiding
Emerging Markets 39 DCA
India avoiding
Russia 19 DCA
10 Year back in flag
Bond retesting resistance
USD strong
Oil weak
Nasdaq
Sharp snap back this week on what tends to be one of the lowest volume weeks of the year. For now 5,800 is the new line in the sand. That is a level that we should expect to get retested if that does and the retest holds that tends to be a great sign that a bottom has been formed. Than its the slow grind back into the upper area's of the current range. Remember it took 7 months after the correction to take out new highs.
SPY
We have done a great job with the SPY lately, we sold 280 into the gap up, avoided the 50 point drop and bought on the way up through 240 vs lows. 250-260 will be an interesting battle ground has that was support that could turn into resistance. The much more important area will be 280 however might be some time before that is an issue.
Dow Jones
Prime example on why we avoid trying to catch support. 230-236 similar battle ground of what was support that could turn into resistance. As most say now we cant go higher, than in 6 months will be saying they wish they bought.
MDY Mid Cap Stocks
Did really well selling into the bounce than got 2 nice DCA's near the max pain of this $90 range.
IWM Small Caps
50 point range and we got a DCA 3 points off the low of this range.
GXC China
China is starting to loosely form a double bottom, if it can hold this low and start to form a new pivot high, we could be changing from the overall downtrend into an uptrend.
EWJ Japan
We have done well avoiding the pull back in Japan, still avoiding any adds just yet.
VGK Europe ETF
VWO Emerging Markets
The emerging markets are starting to hug this downtrend tighter and tighter, once we can start to poke out of this base, similar to China, we could see a change in the overall tune of the emerging markets.
INDA India
India has been the wild west gaping all over the place, we did a great job buying off lows and locked in some solid gains, for now avoiding any adds.
RSX Russia
Russia paid out its annual dividend (the gap down) and is currently setting back up vs a prior area of support.
10 Year Treasury Note Yielding 2.74%
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 2.74% (higher = good)
2 year Treasury Note 2.51%
BND Bond Market
Bonds running up back to a pivot high that it has not been able to break for all of 2018.
USD
OIL
Oil still smoked however we have not really seen much of a dip in prices at the pump, the current price per barrel is around $1.70 per gallon.
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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 V bottoming strong
VDE V bottoming weak
VIS V bottoming
VOX V bottoming
VAW V bottoming
VCR V bottoming
VFH V bottoming
VNQ V bottoming
VDC V bottoming
VHT V bottoming strong
VPU near support
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Sensitive - sectors that have moderate correlations to overall market conditions.
VGT Tech
Got a stupid DCA $1 off lows that is currently up $10, on the quietest week with most complaining about the market, the best deals were available.
VDE Energy
Was a bit early buying the prior support area, however got a great add $1 off lows.
VIS Industrial
Wide 40 point range, got a great DCA 3 points off lows.
VOX Telecom
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Cyclical - sectors that are more sensitive overall market conditions.
VAW Materials
Materials still quite weak and need some time to form a new higher low.
VCR Consumer Discretionary
After selling out near the upper range we started to buy back near support and our 2nd DCA caught the fast snap back, 124 is the new line in the sand.
VFH Financials
VNQ REIT
Wide 13 point range, after the prior low area held, bought on the way up.
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Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
Bought $130s sold $140's, bought back $130's rinse and repeat.
VHT Healthcare
After a 30 point free fall, snapped up some stock 2 points off lows, for now 148 is the new line in the sand.
VPU Utilities
Utilities are back near the prior area of resistance that is turning into support, still not the best deal to add to this sector just yet.
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Longer Term Financial Planning
Did you max out your IRA this year of $5500?
What is the deadline to do so?
If you don't know PM me so we can check that box and game plan 2019!
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Sub Sector Rotation
Cheat Sheet
IBB V bottoming
ITA V bottoming
IBB Bio Tech
After the 20 point drop, added back 2 points off lows.
ITA Aerospace & Defense
After a 60 point haircut, time to start hunting for an add.
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The New Big Picture Set Up
The Big Picture MCD $210+ 12 Month Target
MCD is setting back up for 3rd times a charm/the sneaky buy back through 179, we would like to see a little bit more of a consolation in this area as we should not expect the first tickle of this area to just blast through to new highs.
Big Picture Target $210+
Big Picture Entry $179.05
Stop $168.89
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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).
INTC is still in this 8 point range, for how rough the market has been, INTC has not been effected.
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.
In a 9 point range, 44 is still the spot however would still expect some chop vs a hard hold off what this current V bottom is showing us.
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
Less than 3 weeks away!
Date January 23rd to 27th (Wednesday to Sunday)
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