The Big Picture

 
The Big Picture Outline
 
- Broad Market Outlook
- Sector Rotation
- New Big Picture Idea
- Updated Big Picture Idea's
(click on each chart for a bigger version)
 
Broad Market Outlook
 

The melt up to new all time highs continues as the major news out of Davos, all major banks and talking heads have been higher, higher, higher.

 
Now this news is good for us, however we have to understand the reasons behind it and take a peek behind the curtain. When Dalio comes out and says that you will look stupid to be in bonds and foolish to miss out on this equity rally.
 
It makes sense looking at the big picture, as rates rise, it will hurt bonds, if it hurts bond holder some will sell. If they sell, where will they go? Most likely to stocks and the more people buying stocks, equals higher prices.  
 
For the guy with $150 Billion dollars worth of stock, he has millions and millions of new buyers entering the market that he can sell stock to.
 
Sector wise, we did a great job being prepared for the Consumer Staples breakout, WMT up almost 10%, KO up 9 days in a row, as well as the sector as a whole up around 5%. Which for now, its up stops and hold.
 
The other major sector that is setting up is Telecom (VOX) that we will go over in detail as we dive into sector rotation. While most major markets are all very extended on a shorter term basis. Regardless of this fact, if a name is setting up, do not let the SPY or any other market or sector keep you out of an A+ set up. If the name has been flagging for 2 days, its not an A+ set up. Leave the cowboy hat at home.
 
 
SPY 300+ 12 Month Price Target 
 
The magnet to SPY 300 continues, as we post in the chat earlier this week with virtually every major bank touting the SPY 3,000 and an optimistic outlook for the year ahead, we should be seeing it soon. 
 
Remember we trade stocks not the SPY, as the market continues its run, this is the time to clean up, take your trades and don't let the markets high keep you out of an A+ set up.
 

Just when everyone is in the rug gets pulled and the Wall of Worry talk will quickly turn to the Slope of Hope talk, as you have seen in other stocks and sectors. There are still plenty of people on the side lines missing this rally, its when they get in that the run is over.

 
Nasdaq 8400+ 12 Month Target
 
The Nasdaq finally showing it wanted to break above this upper range of resistance than should eventually become support for the market. Anything above 6700 is worth a hold.
 
MDY Mid Cap Stocks 400+ 12 Month Target
 
Mid Cap stocks punching up through new highs, anything vs $340 is fair game.
 
IWM Small Caps 200+ 12 Month Target
 
 
Small caps showing just a little bit of indecision up here, we can see how $144 was resistance and now is showing us it is acting as support. Anything above than line in the sand is worth a hold.  
 
 
VGK Europe ETF  $82+ 12 Month Target
 
Europe continues its breakout after it cleared its major $60 level with confidence. We should see an eventual move back to highs in time. For now anything above $56 is fair game. 
 
VWO Emerging Markets +$58 12 Month Target

 

The Emerging Markets and Europe were left for dead after 2008 and are finally started to join the party, if you have any emerging market etf's or mutual funds in your 401k this past year they were your best performers and you might want to take some profits, dont. This is the time to be patient and up your (mental stops). Should see a retest of $58 sooner than later and anything vs $42 is worth a hold.

 
EWJ Japan +$85 12 Month Target
 
Japan has been dead money for almost 20 years, however the chart is showing its hand at $66. As tough as that $66 buy is going to be, it will be a must. We have seen this set up time and time again, hard to put on in the moment, in highlight the smartest buy.
 
 
Sector Rotation
 
VCR Consumer Discretionary
 
The longer the consolation the longer the breakout as we can see in the Consumer Discretionary sector. Sector wise this is where tighter stops come into play because whats hot today tends to turn it tomorrows old news. $168 to keep it really tight, $164 if you have a bigger appetite for risk as a place to exit when the tide turns.
 
VIS Industrial Sector

 

After stocks or sectors flag and flag, we tend to see the more top right they become, the smaller and smaller the consolations or flags as more people chase whats hot. For us that's fine, just have to keep the stops tight to avoid the rug pulls. GD, RTN, LMT legit rockets, for VIS the line in the sand is $148. Ride the rocket as long as you can on the way up. 

VHT Healthcare Sector 
 
Healthcare still ripping higher as the Industrial and Consumer Dis have shown us these sectors can really run. Stop at the weekly low $168 for now as it starts to get parabolic. 
 
 VGT Tech Sector
 
Tech continuing higher after a two month consolation, same smaller flag near highers, new line in the sand is $176.
 
VFH Financial Sector 
 
VFH has gone around the measured move of this flag that we have traded time and time again, there are still plenty of names in this sector setting up so take them as they come however keep those stops tight. If already in, risk is around $1 off highs so if we start to see $74 get tested could see a retest of this prior $71 resistance level.
 
 VDE Energy Sector
 
We caught a decent move in XOM as the energy sector started to wake back up and break above this macro wedge, however the sector has some what fell off our radar after the quick moves some of the major players had (SLB HAL CVX) while XOM being the largest had the slowest move. For these names they will need some time to digest the major moves they've had.
 
VOX Telcom
 
Telcom is setting up near a major inflection point as you can see this major downtrend line for over a year. This past week I have been adding up through $92 and $93. Stock wise VZ is setting up near a major level ($55), T's major levels are $39 and $41, and TMUS started to poke its head above its $64 level with a major level at $68. Among these major players, TMUS does not pay a dividend and should be the one to lead/show its hand first.
 
In this sector among the other more dividend paying focused sectors these tend to be very hard breakout stocks to buy and more of support/ buying into pain stocks. As these dividend paying stocks pull in there yield increases which is when the people hunting for yield come in and support the name.
 
People who are focus on income tend to be much older, think retirees. Also remember that these old people tend to have more money than the kid with $10k in his account buying the breakout.
 
Have to remember when a stock pays a dividend, most people are not "as" nervous to puke into pain because most will rationalize that they are being paid to hold. That does not mean that these stock still cannot get destroyed and if you have ever gone "yield hunting" you learned that lesson the hard way. As I have many, many times.
 
Yield Hunting is when you are looking for stocks will high dividend yields. Which are cheaper stocks, if a $50 stock pays out a 5% dividend a year ($2.50)  like VZ goes through a rough patch and drops to $25 that $2.50 dividend is now a 10% yield. Novice investors will hunt for these out sized dividends and sometimes it works out, however more often than not when you hunt for yield, the company end's up cutting the payout (causing the stock to plummet even further).
 
In recent times, GE was a prime example of yield hunting, it was paying out just under $1 a year, ($.96) and cut the dividend in half, to $.48 a year. When GE was falling off a cliff and was at $18 the dividend yield was 5.5% causing some to buy GE as they were hunting for yield, than the company came out and cut the dividend in half. The yield went from 5.5% to 2.25% overnight. The stock has still sold off 11% more since than and as a result the yield is now up to 3%. Remember as the stock falls, the dividend yield increases. As you chase yield, you tend to chase a falling stock. 
 
Dividends should be looked at the sprinkles on the ice cream sundae, never buy a stock simply because it pays a dividend.
 
For normal sectors (outside MLP's and REIT's) the average dividend yield is around 1-2%, while a high payer is in the 4-5%, than you get into MLP's that can be 5-10% and REIT's most are in the 5-15% range. Remember the higher the dividend usually the less growth is left in the stock for much appreciation on the share price.
 
VDC Consumer Staples
 
Great close for the consumer staples sector this week that we have been focusing on, WMT continues to grind to $110 as we noted in last weeks newsletter. KO is up for the 9th day in a row, and Consumer Staples are still a hold as it continues to show us this is the time to be patient.
 
 
 
VPU Utility Sector
 
Utilities have started to show a little footing down here, it recently broke a major trend line however some buyers have came back in. As the broad based euphoria continues, its time to take notice, when your ordering a bagel and a 65 year old is telling his buddy how he lost $5,000 in bitcoins and is now buying 2,000 shares of SQ saying its the future yet making $.80 in it as a day trade, red flags are waving. Started to add to VPU up through $112 and $113 vs $110. Always protect your downside.  
 
VNQ REIT Sector
 
REIT's continue to roll over as we can see the bounce it had could not be sustained. A break of $78 should see a quick move to $76 major support is around $72. Sector still an avoid for now until the dust settles.
The New Big Picture Set Up
 
  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.
 
Shake had a great call on the support buy in ALNY in last weeks Shake Down, now we are keeping an eye on $136 for a tighter entry than the Big Picture Entry through $140. On the tighter $136 add the risk is around $4 vs $132, the real out however is vs $120.
 
Entry 140.01
Stop $119.89
Big Picture Target $280+
 
 
The Big Picture's Updated
 
  WDAY $200+ 12 Month Price Target
WDAY is setting up for a 3rd attempt at $116 that has been setting up since 2014, so far it has show us that it wants to hold the line above $100 which is a great sign. For now that is the real out, however were not in the game of risking $16 points on an entry in a $100 stock that's bad lands. For now to trade it right we will have to give it time to set up since this name is a dirty one, even keeping it tight vs the prior lows is around $8 risk.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
WDAY triggered, stop upped vs weekly low.
 
Triggered $116.01
Stop $111.89 upped
Big Picture Target $200+
 
 
  CYOU FAILED
CYOU was a name we were watching through $41 however the buyers just were not ready to break that level in it just yet. Currently we have been seeing this $37 area become somewhat of a battle ground and getting extremely tight. The real out is vs $35 and a tighter out is around $1 risk vs $36. This is a very thin name that has been in this range for almost a year, up through $37 can give us a low risk entry for higher prices if the buyers are ready.
 
CYOU failed, and now I am 0/2 on this name Big Picture wise, this failed trade resulted in a 2.7% loss to the proper out, however most of us were able to get out, down through $36.50 for a much smaller loss. Last earnings were zero fun in this name and with there next earnings around the corner, might be the same. Still need to keep some eyes on it, like LJPC as the tide eventually has to turn, even if that's months down the road.
 
 
Triggered $37.01
Stopped out $35.89
Big Picture Set Up Failed
 KO $60+ 12 Month Price Target
KO has been flagging for quite some time around this $46.50/$47 area with consumer staples like KO flagging near highs other than WMT $100, this is probably one of the best places to be in this space. KO took out its major $44 level that was its high for 20 god damn years. Big picture wise through this area vs $44 is showing us it is risk worth putting on. Remember it took this name 20 god damn years to get back to this price, this name will require zen like patience, put the risk on, set your stop and let it work.
 
KO up 9 days in a row with the biggest gain on day 9, similar song and dance we have seen before, as people chase the end of short term moves, will keep a stop vs the LOD to try and squeeze as much out of this most as possible if it wants to continue higher.
 
Triggered $46.51
Stop $47.69 Upped
Big Picture Target $60+
 
 
  PFE $50+ 12 Month Price Target
 
PFE is more in the value camp in the healthcare sector than the fast bio's were use to, however we are starting to see some rotation to these value names near major level like INTC that was good for a 26% move in a month through $38. PFE is setting up around this $37.50 area it recently made an attempt for it however didnt have the juice. For now will be keeping an eye as it pulls in vs $35. Given its a slow name and each penny counts. I will be looking to buy $37 vs $35.
 
 Monster 5% move day 1 in PFE in a name that is typically a very boring name, this has been its biggest intra move since 2016. Probably a pretty good sign? Now if its able to reverse this move, probably a horrible sign, stop upped vs $37 figure for now.
 
Entry $37.41
Stop $36.89 Upped
Big Picture Target $50+ 
 
 The Big Picture WVE $80+ 12 Month Price Target
WVE is a recent new issue biotech, as we have seen this name has been a beast this past month and showing its hand that $40 is still the major level (2nd time retesting it) where we can expect the sellers who were trapped from the first go around to take stock off for as close to break even as possible.
 
These new issues are sneaky and so are the bios. How tough was the ENTA (bio) buy was or even ROKU on Friday how tough it would have been to buy $52 instead of up through $48.50.
 
Ideally we would like to see it pull into the low $30s than turn back up through $40 however Santa doesn't always bring us our favorite setups. For now we will have to keep an eye on $40 and be ready to click the button if it wants to go sooner.
 
Took a small paper cut in WVE, had to buy $40 as it was the 3rd major time at that level however after the run it had was not expecting fire works after a 25% bounce off recent lows. WVE looks primed for a shakeout and now if it can hold up half of this $32-$40 range should a good sign.
 
Re-Entry $40.01
Stop $31.89
Big Picture Target $80+ 
The Big Picture ENTA $84+ 12 Month Price Target
ENTA  is a biotech and somewhat of a newer issue that has only been trading for around 4 years. The later part makes it even more appealing, this chart reminds me of NBIX $56, ONCE $66 and KITE $95. All of those charts from the Big Picture  levels were good for $20+, $30+ and $50+respectively. ENTA is still just chopping around and can easily still shakeout its current short term support around $45. For now we just have to keep alerts and our eyes on that $52.
Up 50% in 8 weeks so far as it gets parabolic, stop upped $14 vs $73.89
 
 Triggered $52.01
Stop $73.89
Big Picture Target $84+ 
 
The Big Picture TIF $132+ 12 Month Price Target
 
This $97 level in TIF has been resistance for over 16 months now, recently this name has been more emotional than your ex when she finds out that you are dating someone new. $10+/- weekly swings are showing a clear sign that the emotions are high in this one. Just when all the weak hands puke $96ish is when we want to start eyeing it much closer. 
 
 
TIF is now back up to its prior highs of this $110, either it will want to be like CAT and take it out and grind higher, or SWKS itself and shake the tree, will have to try the $110 in this flag. However will proceed with caution.
 
Triggered $96.01
Stop $103.89
Big Picture Target $132+ 
 
The Big Picture ESPR $100+ 12 Month Price Target
ESPR has been a name we have been trading all year from Shakes first call through $36, when it wants to go you better strap on your fucking seat belts because it goes with no mercy ($30 to $50 in 2 weeks) however if you want the upside you have to expect the downside as well. Cant have your cake and eat it too. Recently this week we had a nice swing in it from $50 to $54 only to watch it continue to rage.
 
Going back to 2015 we can see this $57ish area has been a level for the stock, $56.73 $57.38, $56.55, $57.40, and $57.67 have all be the highest this name has been able to get since 2015. 
 
A break through $58 on strong volume could see this name back to the $100-$110 area within a year. Now this is a wide name, currently $42 is the real out, and given how dirty its been its really vs $40. However we don't want to give a name $17 of room. So for now its an "On The Radar Big Picture" idea because we will need a tighter stop than $17 lower.
 

 

 Talk about close, $70 was less than $.50 from getting shake out and has since bounced $5, if able to take any off into this dead cat bounce might be a smart move, because the next time down to $70 should be a much harder hold.
 
Triggered $58.01
Stop $69.89
Big Picture Target $100+
 
The Big Picture PCTY $70+ 12 Month Price Target 
 
PCTY is a somewhat new issue (pep how it traded when it first came out, same can be said for a majority of new issues) They need time to set up, and with thousands of stocks out there we can let them set up for years until there ripe for our picking. 
 
 
 
PCTY has not been easy however it is still respecting $48 as support, a strong break of $51 should see this name start to set up for a much bigger set up through $54.
 
Triggered $49.01
Stop $47.89
Big Picture Target $70+
 
The Big Picture LJPC  $50+ 12 Month Price Target
 
At this point most of us are at odds with LJPC trying to cat this move through $36 and has been wearing the gang out as a whole, which reminds me of COUP which also wore us all out until there was only one member left, Inside George whom caught the easy move as we all sat there with our dicks in our hands, case in point below.
 
 
 
As we can see in COUP, we tried $31, $3 pull in, we try it again $2 pull in, we try it again $1.50 pull in, ahh fuck it, pulls in a $1 and goes and Inside George catches the the 15% move with ease.
 
LJPC has not made it easy and with 10% intraday moves, you really need a set of balls to trade this one. How it has traded recently ($28 double bottom) reminds me of LITE ($50 double bottom in Oct than went to $66 before later smoking $50 and not looking back since.
 
For now that $28 double bottom is the real line in the sand, when/if that goes we should see much lower prices, for now $37/$38 are the new levels that need to break for a retest of all timers. Wild name so just remember what you are getting yourself into, in a name like this you need to be looking to make 20,30,40,50% if your only looking for a small chop its not worth your time.
 
Entry $36.01
Stop $27.89
Big Picture Target $50+
When everyone starts to look like a pro, Proceed with caution.....

1 comment

  • Fake ass negros

    Yo

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