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 for the 10th* time
Audible on the Play - Private Charter out of Miami in April to Bahamas!
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Broad Market Outlook
Global markets as a whole are drifting higher, in our back yard the SPY is up an insane 17% this month, Russia up 16%, China up 16%, Emerging Markets up 11% with the rest of global markets drifting higher. Broadly this is a great sign when global markets are moving in lock step. For the year ahead this should be an amazing year filled with opportunities to make money hand over fist. As you have seen fist hand the Alpha chat made over $315,000 this month.
With that being said, shorter term we need to be ready for the inevitable, Dow Jones doji at highs, SPY doji at highs, Nasdaq doji at highs, Mid Caps doji at highs and Small Caps doji at highs. The SPY on average returns 7% a year and around 10% with dividends, most of the major markets in less than a month achieved what usually takes 2 years. A month ago virtually anyone I spoke to said the work was ending and to get out of the market, that same crowd thinks everything is peachy again. I have tight stops across the board for all the major markets and ETFs.
If the market wants to keep inching higher like SPY 280 even better for us, we just need to be prepared for the turn which for most of the last year we have done very well at and we will continue to do so.
So far these past few months have shown us alot and being able to free up cash when the turn starts will give you plenty of ammo to pick up deals when they are there. Just remember after the 1st down day in the SPY that is not when the deals are found, the deals are found when there has been 6 messages in the Alpha chat by noon.
From Ben G
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Macro Rotation Outlook
Cheat Sheet
Nasdaq 6800 stop
S&P 500 268 stop, 260 line in the sand
Dow Jones 248 stop
Mid Caps 330 stop
Small Caps 148 stop, 144 line in the sand
China working, hold
Japan avoiding
Europe avoiding till Brexit issue over
Emerging Markets working, hold
India 33 DCA
Russia avoiding
10 Year 2.69%
Bond back under 80 level
USD h'ing into support
Oil basing under 64
Nasdaq
Seeing alot of doji's near highs, sure could we get a push through to trap in some FOMO long chasers? Sure, however we need to be aware that 15,16,17% run ups in a straight line in the broad markets tend to be followed by the complete opposite. Stop below 6800 when this roller coaster wants to dip.
SPY
In the end of 2017 into 2018 it took the market 6 months, 180 days for it to grind 19% higher which at the time was a blue sky breakout virtually the entire time, after the super short bear market that lasted a mere 2 months we have recovered 17% in 26 trading days. Please for your own sake, say that out loud. The market on average returns 7% a year, we saw 2+ years worth of returns in less than 1 month. For the rest of the year and the range bound market we will be in that is great news. Short term however these parabolic moves look like they will never turn, and when they do they turn hard. Still expecting a retest of lows. With the doji at highs on Friday, a tight stop vs 268 and a hard line in the sand at 260, we are about 10 points away from the major resistance levels.
Dow Jones
Doji under the downtrend line after a 15% bounce off lows in a month, time to play some defense. 248 stop.
MDY Mid Cap Stocks
As you can see this is one of the biggest runs we've had with no pull back and you can see what happened last time. The convo's that I have been having a month ago vs today are leading me to believe some pain is in store since the people who were puking a month ago are chasing today. 330 stop in the mid caps.
IWM Small Caps
19% bounce off lows in the entire small cap sector with a doji at highs, if that isn't a sign to play some defense I am not sure what is. 148 stop, 144 line in the sand.
GXC China
China was making me look stupid all year, however after it has finally broke out of the downtrend it can start to work its way back towards its highs.
EWJ Japan
Still avoiding Japan.
VGK Europe ETF
Till the new Brexit news is settled will continue to avoid adding to Europe.
VWO Emerging Markets
Similar to China, the emerging markets are finally breaking the downtrend and are starting to work its way back to prior pivot highs, might take some time to get back to prior highs however the worst of the storm seems behind us, time now to sit on our hands and be patient.
INDA India
Still flagging under 33.
RSX Russia
Up a cool 16% as well running into a major area of resistance, avoiding.
10 Year Treasury Note Yielding 2.69%
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 2.69% (higher = good)
2 year Treasury Note 2.50%
BND Bond Market
BND tagged the 80 level all for 8 hours before gaping back down into the range.
USD
The US Dollar starting to h back into the support area for the 3rd time. Good sign for us.
OIL
Oil started to get some legs in this base under 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 180 Stop
VDE 82 Stop
VIS 134 Stop
VOX 78 Stop
VAW holding
VCR 158 Stop
VFH 64 Stop
VNQ 82 Stop (retest pre bear market high)
VDC 136 Stop
VHT 164 Stopp
VPU holding
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Sensitive - sectors that have moderate correlations to overall market conditions.
VGT Tech
Tech is running right into the downtrend line if it wants to continue higher great, if it wants to turn, lets exit under 180.
VDE Energy
Oil basing and some of the large cap oil names with some strong earnings helping this sector to continue its grind higher for now our stop is below 82.
VIS Industrial
We have been peeling some off and now with another doji at highs are stop is right there under 134.
VOX Telecom
Nice pop in this sector for now a stop under 78 makes sense if you added lower.
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Cyclical - sectors that are more sensitive overall market conditions.
VAW Materials
Still working its way back toward the prior pivot high, holding what we have.
VCR Consumer Discretionary
Still working its way back toward 170, stop below 158
VFH Financials
Tight bull flag, hard to add up here much easier to up the stop vs 64.
VNQ REIT
Who would have guessed REIT's would be the first sector to get within pennies of its pre bear market highs, stop below 82.
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Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
Staples waking up a bit as it too is showing us that reclaiming the prior bear market highs is possible, stop below 136.
VHT Healthcare
As long as VHT can hold above 164, in time a move toward the 180 area seems in the cards.
VPU Utilities
Still in this range, holding what I have.
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Sub Sector Rotation
Cheat Sheet
IBB 112 DCA 106 Stop
IBB Bio Tech
IBB working it ways towards 3rd times a charm through 112 for now holding with a stop vs 106.
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The New Big Picture Set Up
The Big Picture ORLY $400+ 12 Month Target
Could not be a more textbook bull flag, high and tight just how we like them. It was not quite ready two weeks ago however held up like a champ.
Big Picture Target $400+
Big Picture Entry $350.05 3rd time/ in time
Stop $325.89
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The Big Picture's Updated
The Big Picture AAPL $230+ 12 Month Target
We have been slowly DCA'ing into wall street most loved name, as of late most will complain about its pull back off all time highs, this pull back is all par for the course as we have seen Apple do this number times. As of late this 20 point range seems to be finding its footing and after earnings are out of the way we should be able to get stock through 160 for an eventually move back to highs.
After a strong earnings report and a nice gap up Apple is now up 26 points off lows, 140 to 180 still looks to be more of the value range where picking up stock could make sense for the move back to retesting highs. Short term it is only recently retesting the 170 area so we could see it pull back into this 30 point range. Will take plenty of time to work its way back to highs, so be patient with it or be willing to kick some on the way up and add some after it settles out.
Big Picture Target $230+
Big Picture Entry $170.05 3rd time/ in time
Stop $139.89
The Big Picture CDNS $56+ 12 Month Target
So we are shifting gears away from the large cap names and taking a look at CDNS that has been setting up through this 47 level since July. Now this is by no means a cake walk 47 buy as it has ran basically in a straight line up from 40. Will start light and if it wants to blast 47 and never look back even better, if it wants to start setting out we should have not problem adding in time.
Great move this week as it broke out and traded higher, for now the stop is breakeven.
Big Picture Target $56+
Big Picture Entry $47.05
Stop $46.89
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 took out the prior high and is in uncharted territory, on Friday we saw members selling as soon as it broke when that would have been spots they would have been buying if they were flat. When you are buying blue sky break outs, up your stop, don't look to kick $.20 above the new high or you will just give good stock away to better traders.
Big Picture Target $118+
Big Picture Entry $97.05
Stop $96.89.89
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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 Vermont Snowboarding Trip
Audible on the play!
Trading Experts Miami/Bimini Bahamas
After having a chat with Captain Joe we are making an audible on the TE trip, instead of heading back to Turk, we are playing a more exciting trip to Bimini. The game plan will look something like this, we will fly into Miami on Thursday spend the night in south beach, and from there on Friday morning we will hope in Capt. Joe boat and leave Miami and charter his boat over to Bimini Bahamas!
Once we get there we will have an ocean front house available for the weekend where we can travel around and check out the sites as well as potentially swimming with the sharks if you have the balls.
This trip will be a tight crew of Capt Joe, myself and only 6 Alpha members who will be coming to Bimini.
If you are interesting in coming on this once in a life time adventure let me know as it will be first come first serve on the 6 Alpha's that will be attending!
Dates will be a weekend in April that Capt and myself are still coordinating, if you are interested shoot me a PM on Group Me.
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Doji's means defense