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
Private Charter out of Miami in April to Bahamas!
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Broad Market Outlook
This week we saw the market get a bit quiet as we started to run into very extended areas of the overall market and the fear and world ending talk was no where to be found. There are still plenty of issues that have hard dead lines that could send a spike into the market. Like that deadline on March 1st? We experienced two years worth of market returns in barely a month, this year should be an amazing year from a trading standpoint as we are locking in moves in weeks that most wait years for. With that being said we are in a range bound market and are at extremely overbought levels broadly speaking. In a range bound market we want to be buying up off support and selling into resistance. Fun exercise, out of 10 stocks how many are up 20% this month and how many are down 20%? When 8/10 names are all up, its time to be defensive because the turn will come, when is anyone's guess.
From an individual stock standpoint the leaders tend to be able to hold up much longer than the weaker names so you want to be extremely picky with your stock selection, we need to get rid of looking at these mickey mouse flags (two dojis at highs) and thinking those are set ups. We need to focus on the major daily set ups that have been in the works for months or years and clean up there as we have been doing.
From Ben G
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Macro Rotation Outlook
Cheat Sheet
Nasdaq 6800 stop
S&P 500 268,264,260 stops
Dow Jones 248 stop
Mid Caps 335 stop
Small Caps 148 stop
China basing
Japan avoiding
Europe avoiding
Emerging Markets basing
India flagging 33.50
Russia range bound
10 Year 2.63%
Bond trying to break 80
USD flagging
Oil basing under 64
Nasdaq
We saw Nasdaq poke its head above the downtrend line that has been in place since October, just enough to have the late buyers chase the move only to see it start to pull back. You will or should start to notice that the turns are quiet at the top, smart money holds the market up just long enough to offer out there stock before they move on. Up here are the monster run we have been on its time to brace for some rainy days.
SPY
Super impressive how much the SPY has been able to reclaim from the end of year bear market move, this is a perfect example of why we don't panic, prices move up and down all day long, if you are in the habit of selling on the way down you wont last very long, sell on the way up and you will do just fine. The SPY is still trying to inch toward that 280 level and by all means still can however the upside is very limited at this levels for now as long as we hold up above 260 its all par for the course.
Dow Jones
Like Nasdaq, the Dow also tickled above the downtrend line for all of two days before heading back under the trend line. Tight stops.
MDY Mid Cap Stocks
Similar song, sharp V bottom off lows that no one saw coming, all that mattered for us was that we bought when there were deals and sold on the way up as they got expensive, rinse and repeat.
IWM Small Caps
The small caps which have been leading the market for the past year are starting to lag from a charting standpoint. Still under the downtrend break, sure we might see a little pop however we need a real shake of the tree before any real moves higher.
GXC China
China finally got out of the downtrend and is starting to form a solid base, these bases can take months, so if we are given a chance to lock in some profits and free up cash, as we trade the range that is exactly what we are going to do.
EWJ Japan
Still avoiding.
VGK Europe ETF
VWO Emerging Markets
Similar to China, broke the downtrend and is running into a level of resistance in the base that it is forming, time to lock in gains and be ready to buy back in time.
INDA India
Still flagging, with 33.50 being the level we want to see break.
RSX Russia
Russia running right into the major resistance level and pulling back, above that level will be a key area.
10 Year Treasury Note Yielding 2.63%
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 2.63% (higher = good)
2 year Treasury Note 2.46%
BND Bond Market
BND working to break this 80 level for the first time since 2017.
USD
Still flagging, remember strong USD is not the best for us equity guys and gals.
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 took profits
VDE 82 stop
VIS 134 stop
VOX 78 stop
VAW 115 stop
VCR 158 stop
VFH 64 stop
VNQ took profits
VDC 137 stop
VHT 164 stop
VPU ripping - red flag
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Sensitive - sectors that have moderate correlations to overall market conditions.
VGT Tech
Locked in 30 points on the sale as it ran up into the prior resistance level, can it go higher? Sure, however took the meat of the move and will add back when there is a deal in the range.
VDE Energy
Stop for the rest vs 82 as a shakeout/roll over could be in the cards.
VIS Industrial
After this move and some profit taking already, the stop is vs 134.
VOX Telecom
VOX still in the macro downtrend, if you picked up stock sub 78, a stop under 78 could make sense.
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Cyclical - sectors that are more sensitive overall market conditions.
VAW Materials
Seems like Materials want to h over, if you picked up any sub 115, a stop there makes sense.
VCR Consumer Discretionary
Still trying to inch its way toward 170, for now have the stop vs 158.
VFH Financials
So far held 64 however it seems lower prices might be in store, have no problem taking profits if stopped out.
VNQ REIT
If you were to ask me what sector would be the first to retest highs, REIT's would not have been on the list, however we bought near support and sold near resistance, playing the range.
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Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
Still grinding higher, stop vs 137.
VHT Healthcare
Still trending higher, stop vs 164.
VPU Utilities
Utilities ripping, should be a red flag to take notice off.
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Sub Sector Rotation
Cheat Sheet
IBB flagging
IBB Bio Tech
As we mentioned recently IBB has been flagging from 106 to 112, the last time we bought was 92, this week a member asked when he should get out of IBB because it triggered. When it did not break $112, nor do we look to take losses in ETFs. How we trade stocks vs ETF's is quite different, as the risk and goals are different. If you are not aware of the difference, please make sure to ask questions to avoid any mistakes.
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The New Big Picture Set Up
The Big Picture DXCM $200+ 12 Month Target
We tried to buy $150.05 this week and it was withing pennies of ticking us in, lucky for us and our mental capital, that 3rd times a charm $153 is looking mighty nice for a blue sky breakout.
Big Picture Target $200+
Big Picture Entry $153.05
Feelers $148.05, $150.05
Stop $134.89
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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.
Apple is currently up 25% this year and as it gaped up into a prior pivot high, it was time to lock some profits in, as this base continues to form.
The Big Picture CDNS $54+ 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.
We moved our stop up to $49.45 as the monster move and CDNS played along and has held up, we are aiming for $54+ so let the stock work, if it turns move on.
Big Picture Target $54+
Stop $49.45
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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
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