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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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
With the run up to highs in the rear view, its time to be prepared for what's to come. Mostly everyone has no clue as to what is going to happen tomorrow, let along a year from now. This tweet, that tweet, all mean nothing, ask yourself what was said a month ago that is still important today?
The answer is nothing, same holds true today, whatever is tweeted or said in the media has the shelf live of 30 minutes of fame. The more you act like the gold fish trying to change your game plans based off what people say, is just a sucker strategy.
The charts tell the story, focus on what you are in, don't worry about what you are not in or have no interest in buying. Focus only on what you are in, and what is on your radar, the more you can drown out all the nonsense the easier your trading will be.
Q1 was by far the easiest quarter in the last decade which has caused frustration from some traders, and the reason is that those traders are doing too much. Looking at 15 min charts of the SPY, while they are long Nasdaq names, reading up on earnings reports and future guidance yet can't hold a swing for 96 hours.
Trading is simple, formulate a game plan, execute and repeat. When we are at highs or started to change trend, this is when the traders who didn't make enough on the way up, try to rewrite the rule book on the way down.
Our old boss use to say, the index is just a number, leave your opinion of where it should be out of the conversation because the market does not care. Every day there are opportunities, some days there are hundreds other days there are just a handful. When we are near lows there are plenty, when we are near highs there are few.
For the week ahead, my focus is on 3 names, QSR, DRI and PGR, 3 buy stops in, if they trigger, I will be in, if they don't the world wont end.
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Macro Rotation Outlook
Cheat Sheet
Nasdaq 7400 next line in the sand
S&P 500 294 resistance
Dow Jones 266 resistance
Mid Caps lagging
Small Caps 158/160 DCA
China healthy pull back
Japan 56 DCA
Europe healthy pull back
Emerging Markets healthy pull back
India 36 DCA in time
Russia 22 DCA in time
Bonds boring
10 Year at 2.46%
USD flagging
Oil hanging onto uptrend
Nasdaq
The Nasdaq was up 32% off lows when we hit new highs last week, that is a great sign however that is also a red flag to realize the easy trade is over. Most miss the run up and chase the run down. Don't be that person, ultra selective is key, if you do not know what you are buying before 9am, good luck.
SPY
Eventually patterns get exhausted and new ones need to form, the last steep uptrend was found by hard selling, this time around with most expecting the same thing to happen, we have been some buyers come back and hold the line. When it comes to broad markets, resistance levels take so much longer to break than individual stocks. We look for 3rd times a charm in a name while in an entire market it by be 8th times a charm, broadly speaking when we are up near highs, its protect profits, be selective, and be patient. If you were too chicken shit to buy SPY 240, don't act like a hero buying 290.
Dow Jones
As we can see 3rd times a charm is not something to be bought broadly in the market, stock wise sure, broad markets take more hits at highs before they can break.
MDY Mid Cap Stocks
IWM Small Caps
Small caps still chopping around near a recent resistance level that has been holding up for quite some time. Above 158/160 we should see a retest of prior highs.
GXC China
EWJ Japan
Japan in a tight 3 dollar range, above 56 is the spot the add.
VGK Europe
Europe just trading in a small range, regular trading.
VWO Emerging Markets
Similiar to Europe, move up, pull back, higher low and continue on the new path.
INDA India
Wild market over in India, one day looks sick, next day dead, that 36 in time will be a money breakout, for now we might be able to be patient enough to grab a deal.
RSX Russia
While our markets seem over heated, Russia is flagging like a champ, over 22 should be a solid move to new highs when its ready.
BND Bond Market
Still inching higher.
10 Year Treasury Note Yielding 2.46%
3 Month Treasury 2.38%
2 Year Treasury 2.27%
5 Year Treasury 2.26%
10 Year Treasury 2.46%
30 Year Treasury 2.89%
USD
Still flagging.
OIL
Oil trying to hold onto this uptrend with everything its got.
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VDE Energy
Prior pattern broke and now a new pattern has to emerge, seems like we should be seeing a base form between 82 and 94 for now.
VIS Industrial
Still healthy action for VIS to retest 152 vs 140.
VOX Telecom
The 2 year downtrend is over, now its time to base out under 90.
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Cyclical - sectors that are more sensitive overall market conditions.
VAW Materials
Short term it seems Materials have found some support at 120, next time back down into this area would not be the best sign.
VCR Consumer Discretionary
Another sector like tech that has been on a monster run to retest highs, however now that the marathon is over, its time to walk it off.
VFH Financials
Still in the range that it has been in for the year, just choppy.
VNQ REIT
84 stop.
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Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
145 stop.
VHT Healthcare
Nice big wedge forming in healthcare.
VPU Utilities
126 stop.
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Sub Sector Rotation
Cheat Sheet
IBB chop fest
IBB Bio Tech
Little bear flag forming, 106,108 are spots to add on the way up however its more than likely we see a break down through 102 in time.
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The New Big Picture Set Up
The Big Picture QSR $100+ 12 Month Target
Back in 2017 QSR was a name that we swung very well and moved on for all of last year, after a year and half it is finally back to its prior high, a perfect example of how long stocks can take to get back to their prior highs. Above $68 there is no resisance in this name to hold it back.
Big Picture Target $100+
Big Picture Entry $68.05
Stop $65.89
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The Big Picture's Updated
The Big Picture MKC $200+ 12 Month Target
The first time MKC put in a new high it proceed to get smoked after grinding back to highs, the recent pull back has been nothing to lose sleep over. This might not go 9:30 Monday morning however when it does break 156 I will want to be involved.
Level trigged and took out the high of what would be the retest, for now we can up the stop as we know what could happen on a retest.
Big Picture Target $200+
Big Picture Entry $155.05
Stop $149.89
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 tend to hawk the blue sky breakout, however not all are created equal and most lack the juice to continue higher as we saw with PGR, now our biggest mistake has been forgetting these names after that pull back in. As we can see PGR is still respecting the same out and giving us a sneaky buy back up through 74.
Big Picture Target $95+
Big Picture Entry $74.05
Stop $70.89
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.
Hold your winners.
Big Picture Target of $54 exceeded
Stop $61.89
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Trading Experts Miami/Bimini Bahamas
We might be Trading Experts, however we are no photo experts, this was the only photo we took the whole weekend, there were a few funny highlights from the trip last week:
Kriss, Heaven, Capt Joe and Skender all won money at the casino, which was awesome to see them all actually leave with more money than they came with.
Getting to South Bimini required a bit of traveling taking ferry to ferry and having golf carts on both island, however the views on that private island especially at night were simply unbelievable.
Our goal was to see one of the sunken ships that was about 5 miles off the coast, after talking with a few locals, our friend Coconut Joe said he had one of the best captain on the island for a price only a fraction of what we have paid in the past to charter boats in Exuma and Turks. I didn't bat an eye as he mentions the boat is not "that pretty", when the guy pulled up, it was basically a drunk homeless man driving a 30 year of raft with a moped engine attached. One being all for adventure, we hoped in and set sail on a trip where we almost had to kill a man.
At first the drunken hobo was funny, however after he drunkenly pulled out his machinate and told us he was friends with Bill (Gates), we noticed some trouble, now obviously nothing actually happened however there were a few tense moments, at one point Kris was about to throw the guy overboard after his phone fell in the water. I eventually did (throw him overboard) which is still one of my highlights of the trip. We dropped everyone off on the beach and I stayed back with the hobo to go get our golf cart at the other end of the island, my buddy Skender stayed back with me, the captain said I could drive the boat(raft), so as he stood up to let me take over the controls, I ripped the steering wheel and sent him flying over the side of the boat, the look on this hobo's face as he fell off the side fully dressed will forever be locked in my head. He was quick or maybe the boat was just that slow that he was able to hold onto the back of the boat, so we had to pull him back on board instead of leaving him in the ocean.
All in all, the trip was a great success and having a smaller group it was much easier to move around, explore and share real experiences. As much fun as the huge group trips are, its hard to get those 1 on 1 connections with some much going on. I have not even began to think of the next trip however it will most likely be some time in the end of July. If you are interested in coming, let me know, as I would like to keep it like this trip of half a dozen members.
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