The Big Picture

by Ben G May 04, 2019

The Big Picture Outline

- Financial Planning

- 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

Shake and myself have been working on a new set of lessons to add to our programs, the goal is to have them ready for you guys by May 31st, so please hold us to that deadline!

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Financial Planning

Take any hundred people at the start of their working careers and follow them for 40 years until they reach retirement age, and here's what you'll find, according to the Social Security Administration:

1 will be wealthy, 4 will be financially secure, 5 will continue to work because they need to, 36 will have already died, and 54 will be broke living off Social Security and help from family. 5% are successful while 95% are unsuccessful. Care to guess which group had financial planning?

Clients pay thousands of dollars a year to have a financial plan run for them at my investment bank, we include this benefit to you for no cost. If you would like us to put a plan together for you and your family so you can get closer to being in the 5%, shoot me a message on GroupMe saying "planning" and we will show you the simple steps to get you to your first your first million.

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Broad Market Outlook

We saw the Nasdaq retest the prior all time highs this week and for most market participants their hands are in the air. Now that we are back to these highs, and most globally and even most major sectors near highs, this trend tends to continue much longer than you or I can think so.

If we look back to 2015 to 2016 we were in a similar situation, every time we got back to highs, everyone thought we were going higher. Everyone was wrong, after the market flirting for 2 years banging on highs, when everyone thought we couldn't go higher, guess what? We did.

Now if a regular stock typically takes that 3rd plus attempt at resistance to break, the overall market tends to take even longer since its hundreds of stocks moving higher not just one.

Could we grind higher? Sure, just look at VGT, VNQ or VPU, they all took out they're prior high, however they're tanks were empty. Sure they grinded a few percent higher, however you can see in VNQ and VPU that they are starting to turn back around. Broadly the market is just slow enough when it needs to trap people and fast enough when it needs to scare people. Right now its very slow as anyone can get the prices they want.

We saw this week how the market can worry about something that the odds of actually happening anytime soon is probably 1 to 100. Yet the healthcare sector and bios reacted as if the world was coming to an end. From flagging near highs to losing half of its gains in a few days. Right now there isn't a broad story to scare the market. Interest rates are no longer inverted, no one cares about the trade deal anymore, quiet frankly, its really quiet up here.

For us we have nothing to worry about, and we could careless what happens next, if we breakout to new highs, awesome, if we chop around up here near highs for a few months before really pulling back, great. If we tickle new highs and sharply sell off, we will be ready. If you are worrying about the market (you should not be) answer these simple questions:

1. What are you worrying about?

2. What is the worst possible outcome?

3. Can you accept that?

4. Can you improve on it?

If you answered those questions and are still worried let me know and we will fix it.

Regardless of where the SPY, Nasdaq or Dow is trading at, all that matters is what you own, where your stop is, and what is on your radar to buy next. It's that simple.

From Ben G

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Macro Rotation Outlook

Cheat Sheet

Nasdaq retested prior high

S&P 500 284 Stop

Dow Jones 260 Stop

Mid Caps 350 Stop

Small Caps 148 Stop

China hand sitting

Japan 56 DCA

Europe 53 Stop

Emerging Markets 43 Stop

India 36 DCA

Russia 20.45 Stop

Bonds grinding

10 Year at 2.56%

USD flagging

Oil grinding higher

Nasdaq

We are right back to retesting the prior highs, now if we look back in time we have seen this before. For 2 years in 2015 and 2016 the market battled with all time highs (at the time), when it retested the prior highs (where we are now) it stayed near those highs for an entire quarter before reversing the entire move.

Now is the market going to do exactly that? Probably not.

We could hang out at highs for months, so don't raise all the cash and hide in the bunker just yet. The market needs time to lure in the suckers.

What is your game plan if:

We continue to grind to new highs?

We consolidate at highs in a range for a few months?

We sell off back to lows?

SPY

284 stop while the SPY works its way to retest 294.

Dow Jones

260 stop as the large caps head to the 270 retest.

MDY Mid Cap Stocks

350 stop.

IWM Small Caps

158 is resistance with the out being 148.

GXC China

China continues to grind, hold on!

EWJ Japan

Still flagging, 56 DCA.

VGK Europe

53 stop and let it work.

VWO Emerging Markets

43 stop and let it work.

INDA India

36 DCA.

RSX Russia

$20.45 stop and let it work.

BND Bond Market

Just trending higher.

10 Year Treasury Note Yielding 2.56%

Yields still near lows, great for someone needing to take on debt, not so good if you need income. Not inverted.

3 Month Treasury 2.37%

2 Year Treasury 2.38%

5 Year Treasury 2.37%

10 Year Treasury 2.56%

30 Year Treasury 2.95%

USD

Still flagging.

OIL

Still grinding higher.

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If you have a friend that can benefit from what you have learned with us, shoot me over there contact info and we will see if we can help.

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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 new highs, 204 Stop

VDE 92 resistance, 88 Stop

VIS near highs, 144 Stop

VOX freed up some cash

VAW took some profits

VCR near highs, 176 Stop

VFH took some profits

VNQ near highs, 84 Stop

VDC at prior high, 146 Stop

VHT Avoiding for now

VPU near highs, 126 Stop

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Sensitive - sectors that have moderate correlations to overall market conditions.

VGT Tech

Retest prior high, little pull back, to new highs, stop below 204 and let it do the work.

VDE Energy

Have some troubles at this 92 level, stop below 88.

VIS Industrial

144 stop and let it work back to the retest of 151.

VOX Telecom

With VOX running into that 88 level of resistance and not the best price in the world in this name, took some stock off for cost.

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Cyclical - sectors that are more sensitive overall market conditions.

VAW Materials

Took some more gains after the solid run this lagging sector has been on.

VCR Consumer Discretionary

Working its way to the 182 retest, stop below 176.

VFH Financials

Took some gains as financials ran into a major resistance level. If earnings can't take the sector higher, not sure what else can for the time being.

VNQ REIT

After this insane run, 84 stop will keep the profits in your pockets.

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Defensive- sectors that tend to outperforming during sub par market conditions.

VDC Consumer Staples

Right back to the prior high before the bear market, 2 weeks to drop, 4 months to recover. 146 stop.

VHT Healthcare

Healthcare showing us a little fear can turn new highs into new lows real quick, the overall market can do the same once it picks a topic to be worried about that most likely will never happen.

Still would like to see a retest of the prior lows before looking to add, if that is not in the cards, will not be adding until a break above 164.

VPU Utilities

Utilities finally coming back to earth after the monster run they have been on.

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Sub Sector Rotation

Cheat Sheet

IBB finally broke 106

IBB Bio Tech

Finally that 106 broke, time to let it get back into the value zone so we can start grabbing the deals.

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The New Big Picture Set Up

The Big Picture MU $90+ 12 Month Target

I can't believe I am talking about MU, if you know me, you know how much I hate the semi space, nothing to do with the business, just the crowd who hung around in AMD and MU. Now Dumb Money has the attention span of a gold fish and has to run to the next fad. It is in their DNA, after the 50%+ breakdown, most of the dumb money suckers took their L and moved onto Bitcoin and lose their and are now figuring out the next place to lose their shirts. Once I figure that out you will be the first to know.

Now given how much I hate the name, makes me like the set up even more, because charts don't lie. Last time Shake called that sick move through $44. I am not expecting anywhere close to that type of explosive move due to all the overhead supply. With that being said, if we can start picking up shares through this level maybe just maybe we can hold ourselves accountable for the retest of 64. Sure we failed being patient enough with HD so why not try to improve on this skill with MU?

Big Picture Target $90+

Big Picture Entry $44.05

Stop $39.89

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The Big Picture's Updated

The Big Picture PGR $95+ 12 Month Target

PGR has gone on a crazy run this year and has started to flag exactly how we would like to see it, I started a feeler position to keep an eye on it, and will look to buy through 74.

We added on that gap and go which looks sick, however didn't have the juice to continue, not giving anything back, breakeven stop below $74.

Big Picture Target $95+

Big Picture Entry $74.05

Stop $73.89

The Big Picture INXN $90+ 12 Month Target

Back in 2018 you might remember trading INXN however it just was not ready, and we moved on, now its right back to this level and looking better than ever on even tighter risk.

The retest failed to breakout, no biggie, I messed up, had a stop in that was only good for the day vs the GTC stops that I always put in, human error, as a result I ended up selling about $1 lower than the out. Not the end of the world, small paper cut, and will be ready to buy this sucker through 69!

Big Picture Target $90+

Big Picture Entry $67.05

Stop $66.89

The Big Picture MTCH $70+ 12 Month Target

This 60 level is looking great for a nice 4th times a charm vs 52 for now.

The owner of Tinder is getting tighter and tighter with that being said we can now tighten up what we need to risk to be in this name.

Big Picture Target $70+

Big Picture Entry $60.05

Stop $54.89

The Big Picture EXPD $73+ 12 Month Target

EXPD has been setting up similar to FIS, defined level of resistance, has attempted the level over 3 times and is showing us a nice clean out vs 73.

EXPD holding up great as it turned 78 level of resistance into support. Breakeven stop at that level for now.

Big Picture Target $95+

Big Picture Entry $78.05

Stop $77.89

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.