Market Insight

FLS Pre-Market Update: Back In The Trading Range… 04/26/2018

Market Update: Trading Range Resumes

Stocks fell hard on Tuesday sending the Dow, S&P 500 and Nasdaq back down below their declining 50 DMA lines. All things being equal, that is not a “healthy” sign. But things are rarely “equal.” Now the major indices are back below their 50 DMA lines, they are back in that stubborn sideways trading range (50 DMA line is resistance and 200 DMA line is support). Yesterday’s action was encouraging because, right on cue, the bulls showed up and defended the 200 DMA line. For now, that is the next important level of support to watch. If that level breaks, then Feb’s low becomes the more important area of support that needs to be defended.

Bullish Case:

On the other hand, since everyone is so bearish and the market is counter-intuitive in nature, if the bulls manage to defend support, then odds favor the market bounces from here. In another somewhat positive divergence, the small-cap Russell 2000 is outperforming its peers on a relative basis and that could turn into a bullish sign.

This erratic sideways/sloppy action is frustrating for both the bulls and the bears, thankfully we have held off on any new buys in recent weeks and, in the process, have preserved both our psychical and mental capital. Once this trading range ends, a new clean trend will show up (either up or down) and when it does we will be more than ready to ride it.

Earnings Galore:

Finally, earnings continue to come in stronger than expected but the stocks are selling off. It started with the big banks, then more recently we saw several big blue chip stocks open higher but end lower in the last 72 hours. Remember, the reaction to the earnings is more important than the actual news itself because the reaction tells you what large institutions are actually doing with their money. FB is up nicely in the pre-market, after the bell AMZN, MSFT, and a bunch of other high profile stocks report. Let’s see where the market closes tomorrow and as always I will have a full report for you this weekend. For now, patience is king.

FLS Portfolio:

We are happy with our current exposure and will be adding more risk, only if the market can start to rally. Our (concentrated) portfolio is acting well. Here is a snapshot of the FLS portfolio as of Wednesday’s close:

Positions:

A. The service owns:
ADBE +95.63%, ISRG +38.91%

B. The service will exit:
ADBE @ 201.56, ISRG @ 379.77

Working Orders:

Order	Symbol	Buy Stop	Sell Stop	% Change
Open	QQQ	164.71	161.36	-2.03%
Open	SFLY	84.82	79.79	-5.93%

Disclaimer:
This analysis contains information from resources believed to be reliable but are not guaranteed as to accuracy or wholeness as of the date of this publication. Past performance is not necessarily indicative of future results. There is always a risk of loss in trading and investing. Opinions articulated are subject to change without notice. This analysis and any opinions expressed are intended for educational purposes only and should NOT BE interpreted as a call for engagement in any transaction involving the purchase or sale of any security or investment product or service. The risk of loss in investing and or trading can be substantial, and traders/investors should carefully consider the inherent risks of such an investment in light of their financial condition. The author, firm, associates, or the firm’s clients may have a position in any of the investments mentioned and their positions are subject to change without notice. Any reproduction or retransmission of any portion of this report without the express written consent of 50 Park Investments is strictly prohibited.

Here are more articles you may like

Adam Sarhan

Host Of The #SmartMoneyCircle Podcast, Founder and CEO of 50 Park Investments. Adam provides weekly market updates to ChartYourTrade.com readers. He is a FORBES Contributor and is a frequent guest on all the major financial media outlets.

Claim Your Free Guide Today

Give us your email and we will give you the tools to change your life.

FREE 7 DAY EMAIL COURSE

Learn about Early Entry Points & much more...

Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.

Charts and Data are courtesy of MarketSmith Incorporated. Join MarketSmith here.