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 - resubmitted for approval (fingers crossed)
Vermont Snowboarding Trip 1/23-27 (two weekends away!)
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Broad Market Outlook
Market continued to heat up this week with virtually all sectors grinding higher, as you will see in the rest of the newsletter, for myself it is more defense than offense for the week ahead. Monster moves in virtually all sectors since the start of 2019. Just when the Dumb Money crowd was puking into lows, we picked up great stock and two weeks into the year you guys have already locked in $70,000+ in gains as we continue to chip away at the $5,000,000 target.
This week sector wise I took some profits after catching 10-20+ point moves in ETF's, there is money to be made in a range bound market. These are moves that can take months or a year to happen that we are able to take advantage of in weeks. Most major markets and sectors are running back into what were prior support levels that tends to become resistance levels. These are also what look like mirage levels, where they look so good because they have been trading higher that we feel the trend must continue (on the flip side when a stock is falling, we tend to feel it will continue to fall as long as we are not long).
Towards the end of the week, we started to hear from the people who were too scared to buy two weeks ago saying how they were ready to start buying again. Cant reiterate the defense mode for the week ahead, primarily with the focus on proper stops in profitable positions. There have been some great set ups being posted in the chat and as we continue to scan daily we will find more A+ set ups. Already know Shake is licking his chops for that COUP, what stock is giving you the same feeling?
From Ben G
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Macro Rotation Outlook
Cheat Sheet
Nasdaq 6500 stop
S&P 500 256 stop
Dow Jones 236 stop
Mid Caps 315 stop
Small Caps 140 stop
China double bottom holding
Japan avoiding
Europe behind (avoiding)
Emerging Markets 40 DCA
India 33.55 DCA
Russia 21.50 DCA
10 Year 2.66%
Bond working towards 80 level
USD weakening
Oil range bound
Nasdaq
Similar to the large caps and the small caps still some room to run however given the run it has already had, defense time sub 6500.
SPY
After a 16 point run up we locked in some profits as it looks so perfect to break 260, and sure it may however two weeks ago no one wanted to buy 240 yet most cant wait to buy 260, I will be on the other side of this trade looking to lock in more profits. Stop below 256.
Dow Jones
Like the small caps, it seems the large caps want to run into the downtrend line for now if it does not want to do that, stop below 236.
MDY Mid Cap Stocks
After a 20 points had to lock some in as it continues to run into what was support, stop for the rest is sub 315.
IWM Small Caps
Took some profits after a 12 point bounce in the Small caps, still seems like it wants to work its way into this prior resistance area, stop sub 140.
GXC China
Double bottom holding true so far, next battle will be a new pivot high.
EWJ Japan
Japan had a nice bounce however still in an overall downtrend, avoiding for now.
VGK Europe ETF
Europe still a few months behind the emerging markets.
VWO Emerging Markets
The emerging markets finally starting to show us some basing as it gets away from the downtrend that it has been in, next up will be a 40 DCA.
INDA India
India still flagging under 33.50.
RSX Russia
21.50 is the next area to keep an eye on.
10 Year Treasury Note Yielding 2.70%
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 2.70% (higher = good)
2 year Treasury Note 2.54%
BND Bond Market
BND working its way toward the 80 level of resistance.
USD
The dollar has started to roll over which is good new for us equity guys.
OIL
Nice bounce off lows in Oil as it continues to play in the range between 50 to 64.
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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 168 stop
VDE holding
VIS 125 stop
VOX 78 stop
VAW holding
VCR 157 stop
VFH 60 stop
VNQ 77 stop
VDC 132 stop
VHT 162 stop
VPU holding
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Sensitive - sectors that have moderate correlations to overall market conditions.
VGT Tech
VGT looks as if it wants to test 173 however it has came a long way in a short period, defense sub 168.
VDE Energy
Like the Fin names, Energy has been lagging in this bounce, took some profits as it will need some more time to work itself higher.
VIS Industrial
Took some off after the 10 point bounce, still wants to run higher, which is even better, stop for some vs 125.
VOX Telecom
VOX had a strong bounce, if your in a stop sub 78 could make sense if you picked any up through 72.
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Cyclical - sectors that are more sensitive overall market conditions.
VAW Materials
Nice bounce so far however not doing much, just giving it time.
VCR Consumer Discretionary
Up a quick 13 points from the spot that dumb money wanted to sell, that we were buying, while they now want to buy 160, we will protect our profits with a stop below 157.
VFH Financials
Not as strong of a bounce as the other sectors however booking profit is the name of the game, took some off into the bounce. Stop for rest sub 60.
VNQ REIT
Picked up great stock in VNQ up off of support, currently just upping stops, for now 77 is where my stop is.
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Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
Was able to take VDC for 7 points and freed up a DCA for breakeven. Will wait for the next set up to add back in time. Stop for the rest is sub 132.
VHT Healthcare
Took some profits after a 12 point rip, starting to poke its head above the 164 level, as much as we want them to run in vertical lines often just when it looks soo good tends to be right before the turn. Stop for rest sub 162.
VPU Utilities
Wake me up when something happens here.
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Longer Term Financial Planning
Did you start maxing out your IRA this year? The new limit is $6,000. You also have until April 15th to max out 2018.
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Sub Sector Rotation
Cheat Sheet
IBB stop under 106
IBB Bio Tech
Took IBB for 12 points on super tight risk, still holding some as it continues the vertical run up back to the 112 level, for now have a stop for the rest below 106.
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The New Big Picture Set Up
The Big Picture PG $118+ 12 Month Target
We took the PG in early December however it just wasn't ready, market got smoked however you would have a hard time knowing if all you owned was PG. If you bought the dead high at worse you were down 9% for all of an hour during this recent bear market. If that isn't relative strength I don't know what is. $94 will be the spot to DCA.
PG just hanging out this week flagging in front of that 94 level.
Big Picture Target $118+
Big Picture Entry $94.05
Stop $89.89
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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 has been working on this 50 level since the beginning of summer, will add through the level however would not expect much fireworks.
Big Picture Target $57+
Big Picture Entry $50.05
Stop $42.89
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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.
Trading Experts East Coast Snowboarding Trip
Less than 2 weeks away!
Date January 23rd to 27th (Wednesday to Sunday)
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!
If you can only make it for a few days or just want to come hang let me know as the pricing is much different!
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