Market Update
The long overdue pullback finally arrived on Thursday after the S&P 500 came within a few points of “retesting” Aug and September 2015’s low (attached). The S&P 500 actually turned higher for the week which is a strong defensive stance in the near term. Several former leaders (a.k.a. high beta stocks) bounced after big investors showed up and defended their longer term 200 DMA lines (FB, HD, NFLX, just to name a few). The market is way overdue to bounce and the key now is to analyze the health of the bounce to see it it lasts more than a few days. Earnings season is upon us so that is a good “reason” to rally. We want to see where the market closes tomorrow and will have our full report for you this weekend.
FLS Portfolio:
Thankfully, the FLS portfolio has made money in 2016 with the major averages down substantially. The FLS portfolio is safely in cash as the market continues trading all over the map. We received quite a few emails thanking us for being defensive and saving you a lot of money (and aggravation in the process). We can’t argue with anyone who wants to buy the bounce (with a close protective exit below today’s low) but we shall hold off and want to see more cards come out of the deck. Stepping back, we are still of the mind set that a new bear market is upon us an dwe will look to short strength in the near future, especially on an anemic bounce into the declining moving averages. On the other hand, if this is indeed A LOW and powerful leadership emerges- we will gladly probe the long side but we have to see a lot more evidence. There are no new working orders today.
