The Big Picture Outline
- Broad Market Outlook
- Macro Rotation
- Sector Rotation
- Sub Sector Rotation ** Just added **
- New Big Picture Idea
- Updated Big Picture Idea's
(click on each chart for a bigger version)
Broad Market Outlook
Chop, chop, chop, chop chop.
Could summarize the week however it was not short of opportunities, for myself and most it seemed like Wednesday was the day where we got some great follow though however Thursday's indecision (doji at short term highs) and Friday's late day sell off showed us that we are still in the woods (which seems like we will for much longer than expected, I would pin 2018 as a year where we consolidate this range before the next leg). Which can be a fun place to be when you have a plan and think positively.
Seems that the market is showing us plenty of clues that it wants to retest those correction lows which would be healthy and should be expected. With that being said, there were a few red flags this week that need to be worked out. Your price is all that matters, if you are getting into a trade at $89 when everyone else was buying $84 and the stock goes $1 in your favor yet your willing to give it $3 of risk, makes no sense. If you bought a breakout through $51 and it goes to $51.12 yet your willing to give it to $47, does not make sense. If you have $3k in your account and put your entire account into an option day trade, brag about said mickey mouse 18% gain, and than lie about it, peace! On a trade desk your word is your currency and lying is a death sentence.
Now we all make mistakes, shit I make them daily, however you have to be accountable for your mistakes and be realistic with your expectations. You need to ask yourself nonobjective questions about your trading to keep yourself in check. I.E. if some else put this trade on would I think its smart or stupid? We are here to throw that cold water on you when its needed when you get off the rails. Now for most you reading this, you have been doing a great job. Theo's putting up Comma weeks, Garret as well, John Mendez has been putting up some crazy numbers with his trades, and team wise the collaboration has been nothing less than impressive.
Big Picture wise, we have added a cheat sheet section to Sector Rotation so you know the levels we are adding through. There is a new Sub Sector Section where we will start to add some of the other more niche sectors that are setting up. We completed a new program with lesson to learn from Dumb Money.
We are also working on our next installment that will focus on how to trade in this choppy environment (How to Swing with Sharks) that will be out before we step on those white sandy beaches of Exuma. Damn that was a mouth full.
Macro Rotation Outlook
Nasdaq 8400+ 12 Month Target
Short term it seems that we need to retest and or shake the correction low, which Big Picture wise is very healthy and normal action, we would all love for the market to trade higher ever day however this is the real world. The last correction back in 2016 retest the correction lows 4 times over an almost year long period before going on a monster run. Need to embrace the new market we are in.
SPY 300+ 12 Month Price Target
SPY 270 was support just a short month ago, now 267 is becoming resistance, a retest of lows should be expected if we get a move down near 250 that is when I will look to start putting risk on when everyone is shitting there pants saying the world is over.
MDY Mid Cap Stocks $400+ 12 Month Target
345 is the level for MDY however seems more than likely that we will see 320ish before we see anything above 345.
IWM Small Caps 200+ 12 Month Target
VGK Europe ETF $82+ 12 Month Target
Europe has been flagging for quite some time and showing us that $59 is the level for the sneaky buy back, so far showing some legs vs $57.
VWO Emerging Markets +$58 12 Month Target
In time this wedge break through $47 should see a retest of highs and the next set up to take it through those highs down the road.
EWJ Japan +$85 12 Month Target
Similar to Europe, Japan is showing us a sneaky buy back through $61 to start adding to this position so we can have some stock for that monster move through $66 down the road.
INDA India +$53 12 Month Target
Starting to get the story? India just like Europe and Japan showing us $35 is the level for the sneaky buy back and even if it retest the lows or even breaks it, would be very healthy.
10 Year Treasury Note Yielding 2.78%
10 year T Note has been in this range from 2-3% in time we should see that 3% breakout in time, we just want to make sure the 10 year is always yield more than the 2 year T Bill.
You might start to hear terms like "inverted yield curve" in the media (turn off the tv). There is one historic leading indicator that will give us a big red flag that a recession is on the horizon which is an inverted yield curve.
Very simple an inverted yield curve is when the 2 year Treasury Bill pays more than the 10 year Treasury Note.
Right now 10 year Note is yielding 2.78% (higher = good)
Right now the 2 year Bill is yielding 2.27%
Were Gucci however when the 2 year starts to yield more than the 10 year, that's a red flag.
Weak dollar = Good for stocks.
3rd times a charm at that $70 level in Oil should see higher prices in time. Fun fact there is 42 gallons of gas in a barrel of oil which comes out to around $1.66 per gallon. So when your at the pump paying $3-$5 now you know why these countries fight over it so much.
- 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 on levels that we are looking to add through
VDE $94** prime focus for week ahead
Was adding up through $168 this week as it was showing us a clear sign of the sneaky buy back however it just did not have the juice as we saw the market quickly roll over that monstrous Wednesday that we had. I will still continue to buy up through $168 in time however seems like we might see mid $150s before that time.
Industrials have been on a nutty run this year and as of late have been a little choppy, above $141 is the spot however we should be see low $130s before any real break of that area.
VCR Consumer Discretionary
Was adding back up through $156 which similar to VGT was showing the sneaky buy back level, for now $162 is resistance and $154/$152 are support. Same story as the rest, should expect to see more of these sectors testing support than banging on resistance until we have a catalyst to shift the complaining market we have been seeing.
We navigated this VHT very well all year and that is a trend we should look to continue, the sneaky buy back was $156 however now we are seeing that $155 is now resistance. A sign that lower price are probably in store.
Energy has really been the only sector with a clear definable setup, we have been trying to break this $94 for almost 3 months now, still in this $4 range and getting tighter. Stock wise CVX $118, SLB $66/$68, XOM $77 had all been setting up as well. Leader is CVX and my primary focus stock wise, sector wise this $94 should give us a move to least $104 on the short term when it finally goes.
VDC Consumer Staples
VDC gave us some tight risk adds up through $134 however for now $138 is the key line in the sand below $131 expect lower prices.
$76 still too rich for us as a level to be buying, for now seems a retest in this range near $73 is due, in the meantime holding and clipping coupons (dividend yield 3.75%)
Similar to VNQ $112 is still a battle ground and will need to push lower before any real break of that level will be ready. Clipping coupons in this one as well (3% dividend).
Telecom has been the laggard as of late however still need to add and was able to pick up some shares on the way up through $83. For us as traders who like to buy highs, it is almost against our nature to add to the weaker sectors however we have to remember that Big Picture wise we are looking to hold these for a year plus, and a year from now the VOX, VPU and VNQ deals now will more than likely look like very smart buys.
$49 is the spot we want to see break however we will more than likely see $46 break.
$78 has been the spot in WOOD, making new all time highs, for now just holding vs $76 for now.
$148 is the key level to add through vs this recent lows, below $142 we should be see mid $130s in time.
IBB Bio Tech
Different beast after the stock split however seems a break of $100 (previously $300 before split) however if $100 breaks and it is some what a weak break will look to add back up through $100 in time.
NVRO has been setting up for this break for over a year now, we can see how $90 is still the level that needs to break and could just as easily still pull back in a bit, however in time NVRO is setting up for what could be a WIX type move.
Now I will be the first to admit that I mooked and took some profits early however that's life, if NVRO does break with some juice will be looking to sell at $107 to sell at that prior high than hold some for the Big Picture move.
Big Picture Target $130+
The Big Picture's Updated
The Big Picture MOMO $70+ 12 Month Price Target
MOMO has been on our radar as of late from a technical standpoint, however do you know what MOMO does as a business? Crazy question I know, however they are the Chinese Tinder. I don't want to get too deep into the fundamental story because were traders however knowing this information and seeing how successful both Tinder (owned MTCH) has been as well as Bumble (owned by Badoo private). Both extremely successful business here in the states, however in China its a much bigger market that people are willing to pay for. Now MOMO is a subscription business which is consistent however it is not a sexy bio tech. Need to hit up the Red Army and find more out about it if it really is the next Bumble of China or the next Tinder.
Chart wise could sneak in at $38 however it seems best to just let this thing really set up and take it through $40 and look to add above $46 which is where we should expect the real move to be.
MOMO is showing us there is a seller at $38, will look to add when that seller moves along.
Big Picture Target $70+
The Big Picture WVE $70+ 12 Month Price Target
We caught a nice move in WVE where a few of the members literally caught the top of the short term move for over 30%+ in a week, I on the other hand was not watching it as closely and got stopped out for most for a measly 19%, cue up the baby violins.
Recently it started to drift back down towards the prior breakout level of $40/$42, so far I have taken two small shots in it and see how I am just too early which is fine with me.
It closed under $40 and other than $37 below that line in the sand it has a far way to go until the next pivot. For now its just on the radar for adds above $42 for an eventually move to retest those prior highs and down down the line to take those highs out. Given the blood in the streets this week, felt it was best to have this more of as a stock to watch not a stock to go out and buy just yet.
The feeler add through $40 has been ok so far, WVE is starting to show us that it cares more about $42 will be looking to add through there in time.
Big Picture Target $70+
The Big Picture LULU $110+ 12 Month Price Target
This LULU has been wearing down the patience of most however Big Picture wise its just chilled and for the most part has been doing everything we would want in a stock. Consolidating at highs on tight risk. For this name to really get going still feel it needs to really shake the tree before we are going to see a powerful momentum break of $82. Lets look at MU for example.
MU had to shake the tree before that monstrous breakout, we want a shakeout in LULU to get ready for a feasty move through that $82, a push down through $75 would be ideal.
Now lets take a look at another name that spent a few months also consolidating near highs. Same name also had a shakeout that is barely noticeable on the chart now before ripping for months.
In LMT I just kept buying it the tightest flag for months only to eventually stop myself out the day before the start of what became a $100 point rally. LULU is reminding me of the same story.
We got jerked around for months in this LULU and it finally broke on great earnings, be patient, this is all new price discovery, pick an amount of stock that you are willing to give back to $77.89 and lock em away. Trade the rest how you see fit, however if we had to flip a coin and say LULU higher or lower than $78 in 3-6 months would have to say higher. Should be looking to at least to $100 for now.
Some indecision at new highs after a 10% run so far. Upping stop to below $84
Big Picture Target $110+
The Big Picture JAZZ $220+ 12 Month Price Target
JAZZ has been off our radar for almost a year now as we last tried it through $156 however we were too early. Recently it has been started to set up for a move through $156/$160 eventually through that area we should see JAZZ take out those prior highs.
Big Picture Target $220+
The Big Picture SWKS $172+ 12 Month Price Target
This SWKS $112 has been a level since Shake and myself were trading next to one another on the Mook desk. This $112 looks sick however we want to see it pull in and settle out a bit, as its just ran $17 points in a month. Earnings are out of the way and tech has already been leading this market higher. We give SWKS the proper room and $112 should be like CAT $114 that was good for $50-$70 in a year.
Wooffff, from almost new 52 week highs to almost new 52 week lows, this is why we take paper cuts and move on. How dumb does that $110 buy low now, if SWKS takes out the $90 area will look to start adding on the way up with $100 being the more important level.
Big Picture Target $172+
The Big Picture CVX $160+ 12 Month Price Target
We made a mistake when we were focusing on the energy sector and that was focusing on XOM sure chart wise it was a great value play and had the smallest amount of risk from our entry the overall headwinds were still south.
Yet the leader CVX received much more love. So far we can see how there's two key areas we want to watch, $120 and $134 while the real line in the sand has been above $100 in CVX for going back as far as October 2016.
If Energy continues its overall weakness as it hovers near support of its wedge, we want to keep an eye on CVX to see if it can hold up vs $100. If it can great signs where we can start small and add through levels. This will be a patient one. Remember this is a heavy thick oil name, not a light and wide bio tech.
Took off all of my higher priced stock still have the $110 buy, $118 is the real level for now however this has been a name to buy in the the pull in's.
Big Picture Target $160+
ALNY $280+ 12 Month Price Target
ALNY has been setting up for this $140 level for quite some time now, which looks somewhat similar to ENTA a prior Big Picture Idea that's up 50% in 8 weeks. Now will it trade exactly like ENTA?
Probably not, however chart wise we know $140 is the level that we need to be in for.
ENTA took around 2 months near highs before going, ALNY has been flagging in this $20 range for 3 months now.
Woof that was quick, from a 20% swing in a few days that would have all been gone, glad we were taking profits, and not fighting this shit on the way down as it dropped $30 points in a weeks time (they fall just as fast as they rise). $108 has held up twice and now the 3rd time heading there not the best sign. For now the add is $132 which is far as shit and for good reason, we dont want to be near these things on the way down. Lets give it some time and we can sneak back in up through $124.
Talk about leader to loser, had new that PFE was coming to take there lunch and quickly went from new 52 week highs to new 52 week lows. A quick 40% hair cut in 2 weeks. Had to try it up through $100 and lost a whopping $.01 when it came back day 2. Big Picture wise it will be off the list set up wise however from a trading stand point, will keep an eye on that $100 for a sneaky buy back when most are not looking.