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Broad Market Outlook
The party ended last week for now. It's now time to take the foot off the gas pedal. This is when the impatient trader will give back months of hard work in lazy idea's. Avoid the "cute" trades, the ones that you could barely explain until after the trade starts to work in your favor. The "I spotted a buyer on the 15 min chart trade" no ya didn't you were just bored.
We are seeing h's in all the broad markets, and most sectors, for myself, it will be freeing up cash and taking small paper cuts if needed. Other then winning trades that are showing us, they don't care. YETI and AMZN are two that ring a bell.
We had 4 full months of nothing but higher highs, a 10% pull back would be extremely healthy. Embrace it, please do not complain as the market is not going to go up every day for the next 50 years.
This is time to make your shopping list, and have it ready for when the market is down and everyone is scared to buy. We can continue to say to be ready to buy up after a 10% drop, however most want to be chatty near highs and quiet as church mouses at lows.
Spend the first half of tomorrow morning scanning the DOW 30 or any of your top 30 stocks. I want you to tell me or the group what month last year was it the best time to buy said stock, and after you do 20,30 of them, you will notice a similar trend.
Macro Rotation Outlook
Large caps starting to roll over as well, if you scan these top 30, there has been some absolutely nuts moves in most of these names.
Spy h'ing over into some baby support, could it hold there and bounce a bit? Sure, one could hope for that to happen, however a move back to 300 would be much more realistic in my opinion.
h starting to begin.
MDY Mid Cap Stocks
Mid caps will be an avoid until the dust settles.
IWM Small Caps
Small caps got close to retesting those prior highs however there little legs just didn't have the strength.
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Sensitive - sectors that have moderate correlations to overall market conditions.
Tech looking like it is about to switch from the higher highs and higher lows train to the lower highs and lower lows train.
Energy is retesting the 2019 low, as the example was shown in Alpha, reminds us a lot like telecom last year, where it had to flush the lows before a real change of trend would happen.
Could easily see this flush down to $60 before a change in trend.
Added some on the break of the mickey flag, however didn't have the juice, took it off as it starts to roll back over.
If we can get back into the mid 80's I will look to add back to this sector.
Cyclical - sectors that are more sensitive overall market conditions.
Materials lagged in the up swing and are now leading on the down swing, next spot to keep an eye on will be this 120.
VCR Consumer Discretionary
VCR is becoming an AMZN proxy, the gap up was purely off AMZN 10% gap up on earnings.
The mickey mouse flag could not hold itself up as it starts to h over.
REIT's retesting the prior highs, if you peep the 10 year rolling over back to lows, its not much of a surprise that the REIT sector is still cooking.
Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
IBB Bio Tech
An avoid for now until we see a move back up through 118.
VPU hitting new highs is a red flag as we are starting to see the market roll over.
The New Big Picture Set Up
We were given a big gift with this AMZN, from $20 points from being shaken out, to catching this gap up to the $2000 level well ahead of what we thought it would take.
Now could AMZN fill the gap to the downside back to $1900? Of course, just given the action on Friday, it would only take 2 days for that to really happen. For myself, the break-even stop stays the same, and the goal is to be able to hold this until at least next quarter and reassess.