Market Insight

The Bulls Better Show Up Soon 05/03/2016

Market Update:

The bulls have to show up soon otherwise we are heading much lower because we have seen this pattern play out before. Most recently, the market broke out of a bullish double bottom pattern in Aug-Oct. Then it moved sideways for most of Nov and all of December before falling hard in Jan-Feb. Then we saw another double bottom pattern form and a huge rally ensue from Feb-April 20th. Since then, the market has drifted lower as it pauses to digest that strong rally. So far the pullback is ok but it feels top heavy. The bulls need to step in soon and defend the market otherwise, sellers will likely emerge in droves.

Stepping back, the market is still building a long base and continues moving sideways since last year’s record high. The fact that it can’t breakout to new highs speaks volumes and when you take a closer look at the leading areas (Defensive stocks, Food, Beverage, Utilities, Commods, etc) it suggests we are late stage and forming a large topping pattern. The one MAJOR bullish wild card remains more easy money from global central banks. Eventually markets will disconnect. Until then, we are very happy to maintain a cautious stance and be extremely selective. In fact, that has helped us win – by not losing. The environment is very difficult for both the bulls and the bears. Thankfully, we are blessed with a great (and very smart) audience and a day doesn’t go buy with a few emails coming in about one thing or another. The fact that nearly every major hedge fund in the world is down or having a CRUMMY Year tells you everything you need to know about the current environment. Steve Cohen, one of the greatest hedge fund managers of our time, was down -8% in Feb alone and is still down to flat on the year – here.

Patience Will Be Rewarded:

I’ve seen difficult periods occur several times in the past and what I can tell you for sure is that they always pass and are followed by great periods of success. Our patience will be rewarded. The only question is when, not if. Remember, markets are not going anywhere. They will always be there and capital comes in two forms: Mental Capital and Physical Capital. I believe the former brings more of the latter.

FLS Portfolio

If the bullish pixie dust show up again, we will be ready to act. As of this writing (2:47pm EST),

A. The service owns: HACK -3.12%
B. The service will exit: HACK @ 23.09

Working Orders:

Status	Order	Ticker	Buy Stop	Protective Sell Stop	Risk From Entry
Open	Buy	SLX	30.77	29.14	-5.30%

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 futre 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 Sarhan Capital 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.