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Broad Market Outlook
With a week of relief, the bull market bounce reminded us that stocks do move in more then one direction. We are seeing years worth of trading in mere days. There are traders out there playing chess while most are playing checkers. Buying ZM was a chess move, worrying about what will be the low is a checkers move.
It funny the people (outside TE) who were selling at lows, are asking how to get back in after the bounce. The prior idea was flawed as was there current idea.
The broad markets and sectors are trading like momentum stocks right now, and we have to remember that buying on the 4th and 5th day up is the suckers buy.
Scanning individual names, there are endless lessons, names that dropped 70% in a month, only to bounce 200% off lows, names that sold off and reversed more then half of the down move in a week, or names that barely even moved outside there regular range.
Big ups to all the traders who made money this week, Jay Kennedy with his first comma day, Nick Neef with his best week ever, Tom Van Meter making $60k this week, Chatty with back to back comma days and the list goes on.
This is a time to wait for your meatball trades, avoid buying stocks just because others are. We are starting to become aware that we need to be looking to buy up on the first green day after a series of red days, not looking to buy after a series of green days.
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Macro Rotation Outlook
Dow Jones
We can see what is the new $50 range forming in the large caps, still hard to blindly buy 5th day up.
SPY
Markets and sectors are trading like bio small cap stocks, and we are never paid to buy them 4th day up.
Nasdaq
$8,000 continuing to act as resistance, we are quick to forget that the move from $8,000 to almost $10,000 was a gift no one was expecting so giving back that move was just gravy.
MDY Mid Cap
Near 50% hair cut has reset this sector back a few years. Wide $50 range, needs time to set up.
IWM Small Caps
We can see that the buyers held that $96 level nicely for now, as the small caps try to get some legs down here for an eventually move up through $120.
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Sector Rotation
Sensitive - sectors that have moderate correlations to overall market conditions.
VGT Tech
Wide $40 point range in the tech sector where the prior $220 level is still acting as resistance.
VDE Energy
Life support for this sector for some time, needs some rehab before we want to start limping in.
VIS Industrial
After a week of a near vertical bonce, the market tends to do a great job of making the next week even harder.
VOX Telecom
We saw after a 40% drop, buyers held that $66 area, next area to keep an eye on will be this $80, however we are not getting paid to chase.
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Cyclical - sectors that are more sensitive overall market conditions.
VAW Materials
For now we can see a clear range between $80 and $100, very easy to want to buy $100, very hard to want to buy $81.
VCR Consumer Discretionary
Discretionary's bouncing into the prior gap fill area, still super wide action, in time we will be adding up through this level, just not right now.
VFH Financials
First bounce in the banks after a 50% drop this month.
VNQ REIT
First real bounce in the REIT space, after getting cut in half in a month.
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Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
Staples, still showing us lower lows and lower highs, no reason why we still cant test or break down below $120.
VHT Healthcare
Healthcare reversing quite a decent chunk of the overall drop, very hard to buy $164 and not expect to ever see red again, just like a swing, its hard to expect to make money buying on the 5th day up.
IBB Bio Tech
Bio's reversed more then half of the overall drop in a mere week, good example of why it tends to pay to wait and let the dust settle vs trying to panic out with everyone else.
VPU Utilities
We can see utilities snapped back more then half of the overall drop in a mere week of trading, we should expect this new $30+ point range to continue to form.
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The New Big Picture Set Up
BABA
With virtually 99/100 names so stretched off of lows, its hard to find a set up worth taking. Which has given myself time to think of my bucket list stocks. What 4 to 5 companies would I want to own in any type of market?
AAPL AMZN BABA and BRK.B
Would be my 4, market rally, recession, depression, world ending, world not ending, anything I can think of. I am not going to blindly just buy them because you can buy the best companies in the world yet if your price is off, it can still be a horrible investment.
For BABA, most people here in the US, do not fully understand BABA, they understand Amzn, yet forget that BABA is a huge part of most items that we buy via Amazon prime, BABA is shipping the masks to people selling the masks on Amazon.
As much as I like BABA, I still cannot just buy $200 vs $170, so for now these 4 are on the top of my list to get back into.
