Portfolio Update
A few questions are coming in after our update was sent. Just to clarify, the ROKU and BABA buy orders from the weekend report were never hit and are canceled. Additionally, the protective sell stop in GOOGL is raised to 1054.56, which was yesterday’s close. So if GOOGL trades at or below that level it will become a market order and GOOGL will be sold. We don’t normally do that but this market action is far from “normal.”
Market Update:
For now, the market is trading between the longer-term 200 DMA line (support) and the near term 50 DMA line (resistance). Those are the two near-term important areas to watch. Until one of those levels is taken out, we have to expect this wide/sloppy action to continue. Based on the fact that the market is counter-intuitive in nature (I’ve found, “what will fool most people” is a pretty good litmus test to what the market will do next), odds are we rally and hit new highs shortly. Why? Because almost no one out there thinks that will happen. Ray Dalio’s firm took a big short position and now he see’s a sign of recession (here).
Clearly, Friday’s low, off the 200 DMA line, set the stage for a near-term bounce (which was highlighted in the weekend report) and the market bounced very nicely on Monday. (For our aggressive strategy, we did some buying Friday afternoon and the stops are now moved up to breakeven). Now the fun part, will the bounce continue or roll over and fail. In the last two days, the Dow vaulted over 1,200 points and the market is now pulling back (futures are pointing to a lower open) to digest that move (which is normal providing the pullback is shallow).
Where Does That Leave Us?
As long as Friday’s lows hold–the market will move sideways to higher. Conversely, if Friday’s lows are taken out, we are headed lower (next step 15-20% decline, if not more). When the market is this erratic, we take it one day at a time and we have found it best to scale back if you are not comfortable with your exposure.
FLS Portfolio:
The service bought GOOGL yesterday and thankfully, we navigated this little melt-down rather well. Here is a snapshot of the portfolio as of Monday’s close:
Positions:
The service owns:
ADBE +73.14%,
CAT +44.00%, ISRG +26.72%, RMD +19.16%,
MELI +25.13%, GOOGL +0.25%
The service will exit:
ADBE @ 165.47, CAT @ 133.71, ISRG @ 359.64,
RMD @ 87.07, MELI @ 310.94, GOOGL 1054.56
Working Orders:
There are no new working orders today.
