Lg-Cap Portfolio Entering Chevron, Medtronic. Exiting Short General Dynamics, Bank of America, Citi Group

While the market continues to probe its prior highs rotations continue to show more bullish activity by participants. We came into the week Short GD and a couple Financials, BAC and C. Their bid remained unimpeded and they are now back into their prior trading ranges. That was our line in the sand and now we must honor the price action. While I "feel" banks are still in trouble technically, the bullish action leaves me no choice but to move to the sidelines and see what develops. For my timeframe these are not ready for Long positions, but as Shorts they remain too risky to proceed for now. This could certainly change so we will keep an eye on the space to see how they handle "apparent" overhead supply. For now we throw in the towel.

Exit Short BAC

Exit Short C

Exit Short GD

As stated above none of these names are out of the woods in terms of overhead resistance, but for our timeframe and risk management these cannot be justified as Short holdings at the current time. All have proven the basic shift of trend that I look for which is a higher low and higher high. I don't Short uptrends.


Speaking of rotations, flows continue into Energy and the once lagging Healthcare sectors. We are entering both Chevron (CVX) and Medtronic (MDT) this week.

Enter Long CVX

I have been neutral/bearish on CVX for quite some time. It was a no-touch as it began its implosion in late 2014 and then was trapped under substantial supply for the better part of the last year. Recently however the stock has been acting well as it was not rejected at the 95-100 level like it was in November of '15.

The past 5 weeks the stock entered its resistance band and consolidated tightly. This showed a lack of sellers and that buyers were gaining control. This week we saw a significant surge through this key inflection level. I have stated many times in the past 10 months that I wanted nothing to do with CVX below $100. This week it convincingly broke through the psychological barrier and the action has turned decidedly bullish.

One thing to always remember, its not really important what you think should happen. I thought CVX was in big trouble as long as it held below $95. But when the market proves your theory wrong and price does the opposite of what you expect, the moves that come can be strong.

The setup here is simple: as long as Chevron remains above the prior resistance level and recent swing low at $92.25 we want to be Long this name. They will report earnings this week so some added volatility will be present, but our risk is clearly defined and the trend is now in our favor.

Enter Long MDT

Medtronic has been on my watchlist since the October rally. It was testing its all-time highs and looked poised to breakout. But after the sharp rally from the September low a rest period was needed.

The stock has now closed at a new weekly closing high and has done so after a tight 4-month sideways digestion. The launch pad is now in place to send MDT higher and we have a clean entry signal.

Stops will be placed below the recent pivot low at $73.40 which would suggest a failed breakout and trend invalidation should it breakdown from there.

Our Lg-Cap Portfolio is now 55% Long: GE FB AEP PCG PM UNH SHW PEP MSFT CVX MDT
and 45% Cash

Utilities got smacked this week but trends remain in place long-term

AEP

PCG

Rates and rate sensitive names got freaky this week, likely due to the pending Fed decision on interest rates next week. The Federal Reserve will announce their rate policy for April this coming Wednesday so expect some volatility around the event. Its widely expected that there will be no change which would seem to be bullish for Utilities, Bonds, and other high yielding assets. Keep that announcement on your radar and lets see how the market responds to any policy deviation. 

Thanks for reading

-ZT