FLS Intra-Week Update: A Big Top Is Forming and Big Paradigm Shift

Note: The following is an excerpt from an intra-week update to Find Leading Stocks Members.
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​​Market Update: A Big Top Is Forming
The market is forming a major top and unless we see another bullish monetary or fiscal bazooka show up that sends stocks to new highs – we are likely headed into a bear market. I don’t make these statements lightly but this is an aging bull market and it will eventually end. Before I go any further, to be clear, if support is defended, and the market can hit new highs, then this big top will be negated. If not, look out below. Here is what I’m seeing:
 
Big Paradigm Shift
The BIG PARADIGM shift that happened on Tuesday was the market stopped reacting blindly bullish (if that’s even a phrase) to the Fed. Remember, it is not the news that matters, but how the market reacts to the news. In a bull market, the reaction is overwhelmingly bullish and in a bear market the reaction is overwhelmingly bearish. Meaning, in a bull market, the market rallies on both “bullish” and “bearish” news and, in a bear market, the opposite is true. For the last ten years, we have been steadily rallying and the reaction has almost always been bullish. For the first time in ages, that dynamic changed & that needs to be respected. 
 
Big Tops
The second major part to my thesis is that bull markets do not last forever and big tops take time to form. Stepping back, 2018 is turning into one very large top. Take a look at these charts and I’ll let you decide (see below). I annotated them earlier today on a coaching session (send an email to website@chartyourtrade.com if you want Adam to coach you) with a longstanding FLS member.  Clearly, we can see big topping patterns forming and that is not a good sign- especially 10 years in to the longest bull market in history. It’s funny because no one has the courage to call a top. Since everyone is so jaded with the relentless bull market we have experienced over the last decade. If I’m wrong and the market soars from here, so be it. But until then, the bearish writing is on the wall. 
 
Nasdaq 100:
 
Russell 2000:
 
Dow Jones Industrial Average:
 
S&P 500:
 
Latest bounce:
I was wrong last week. I thought the market would rally into  year-end & then roll over like it did back in late 2015 and then fell in the first two months of 2016. The market plunged on Tuesday after failing at the declining 50 and 200 DMA lines and that is a bearish sign. The market is acting poorly and I will adopt a bearish stance until all the major indices get back above their respective 50 and 200 DMA lines. Furthermore, if  they take out October’s low and then Feb’s low, we will fall into a bear market. 
 
I Welcome A Bear Market:
By the way, I welcome a bear market with open arms. Why? Because it will “reset” the clock and we can step in a clean up. I have learned how to navigate bear markets with grace and will show you how to preserve both your mental and physical capital (while nearly everyone else on the Street gets slaughtered). Then, when the “pain” is at a maximum, and the bear market bottoms, we step in and clean up.  As always, I want to see where the market closes tomorrow and will have a full report for you this weekend. 
 

FLS Setups Review: The Santa Claus Rally is Back On!

This post is a review of the performance of the 10 Elite Stock Setups that were sent to Advanced Stock Reports subscribers on Friday, November 23, 2018. Each setup comes complete with annotated charts highlighting the advanced entry point and support level(s), as well as all of the necessary fundamental information.

What a wild week we just had on Wall Street! After last week, it didn’t look like we were going to have any type of Santa Claus rally this year, but the market did a complete turnaround this week, and I was “fortunate” enough to be stuck on the couch with a front-row seat all week long.

As I continue to recover from my Achilles surgery, I have had a significant amount of time to reflect on the way that Adam’s FLS Playbook has improved my approach to trading over the past year.

The biggest change is that I no longer find myself rooting for the markets to move in either direction. I simply observe the current conditions knowing that we will have a rational plan of attack no matter what happens in a given week.

That means that I didn’t panic when things looked bad last week, and it also means that I didn’t overreact when things got better in a hurry this week.

While the general market was chugging higher, we saw eight of our ten FLS Stock Setups clear Adam’s entry points this week. Let’s take a quick run through each of them to review what happened.

Citrix Systems, Inc. – Triggered

CTXS moved higher with the general market on Monday and Tuesday before erupting through its entry point on Wednesday. However, things got a little tougher on Thursday and it fell back below the entry point on Friday.

The stock is currently sitting well above its 50-day and 200-day moving averages, and it is still just slightly below Adam’s entry point.

Wright Medical Group NV – Did Not Trigger

One of the few stocks that didn’t have a stellar week was WMGI, which failed to even come close to Adam’s entry point. After struggling to post a positive day on Wednesday, it gave up its 50-day moving average on Thursday and failed to retake it on Friday.

Express Scripts, Inc. – Triggered

ESRX was one of the strongest of our stock setups this week as it triggered Adam’s entry point on Monday and went on to post a gain in each of the five trading days this week. The stock is currently sitting well above its 50-day and 200-day lines and has already logged a significant profit from the entry point.

Live Nation Entertainment, Inc. – Triggered

LYV was one of our more interesting stocks to watch this week as it triggered Adam’s entry point after struggling a bit earlier in the week. It started off with a positive day on Monday, but things got rocky on Tuesday before the stock posted a huge day on Wednesday closing right at the entry point.

After continuing higher on Thursday, LYV backed off a bit on Friday. However, it is still sitting right above the entry point and is well above its significant moving averages.

VMware Inc. – Triggered

Even on a huge week for the general market, I still thought that VMW was a longshot at best to trigger its entry point. But after working hard to gain significant ground throughout the week, that is exactly what it did on Friday.

The stock started out the week with a modest gain on Monday and then gave those gains right back on Tuesday. But after massive up days on Wednesday and Thursday, VMW jumped above the entry point on Friday and didn’t look back.

Sprouts Farmers Market Inc. – Did Not Trigger

SFM was another stock that wasn’t able to find much traction this week and did not find its way anywhere close to Adam’s entry point.

Everything looked good when the stock was able to retake its 50-day moving average on Monday, but it would spend the rest of the week trying to recover from a big loss on Tuesday and it finished the week just below that 50-day line.

Cigna Corp. – Triggered

Much like we saw from ESRX, CI posted five straight days of positive action as it blew right through Adam’s entry point and never even thought about looking back. It currently sits well above the entry point, as well as both of its significant moving averages.

CDW Corp. – Triggered

CDW posted a similar chart to what we saw from the majority of growth stocks this week with a positive day on Monday, a slight pullback on Tuesday, and a monster move to the upside on Wednesday that triggered the entry point.

The stock then continued higher on Thursday and Friday, and it now sits well above its 50-day and 200-day moving averages.

Service Corp. – Triggered

SCI followed a similar path to what we saw from CDW and was able to move up through Adam’s entry point on Thursday after closing just below it after a big gain on Wednesday. It then continued higher on Friday to create some breathing room above the entry point.

Pfizer, Inc. – Triggered

PFE was another stock that posted five straight days of gains this week while shooting right through Adam’s entry point. Are we noticing a trend with stocks in the medical field this week?

With eight out of ten stocks crossing above their entry points, this was obviously a very good week for the market. We will be curious to see if this positive energy continues into next week.

Make sure you subscribe to Adam’s Finding Leading Stocks newsletter to get this weekend’s updated list of stock setups, as well as his FLS Playbook that breaks down what our model portfolio is going to be doing in the week ahead.

FLS Setups Review: Emergency Room Trading

This post is a review of the performance of the 10 Elite Stock Setups that were sent to Advanced Stock Reports subscribers on Saturday, November 3, 2018. Each setup comes complete with annotated charts highlighting the advanced entry point and support level(s), as well as all of the necessary fundamental information. 

It was another terrible week in the market, but I was a little too busy dealing with my own issue to even notice. Fortunately, the FLS system was there to take care of me even when I couldn’t take care of myself.

It started on Monday night when I did a quick review of my charts and headed off to my weekly pickup basketball league. Everything was going great there, and I was playing well until I suffered a non-contact injury to my right ankle. That was the beginning of the end.

I spent the better part of Tuesday discussing options with different doctors, and then had surgery to repair a completely torn Achilles tendon bright and early on Wednesday morning. I didn’t have the focus to even think about the market until after it closed early on Friday.

But through this difficult week, the FLS portfolio was there for me.

Things got really ugly, but thanks to the stop-loss order that I already had in place, I sold out of SQ and booked a solid profit while I was in the ER on Tuesday.

That’s the power of a system that doesn’t require you to be sitting in front of a computer while the market is open. That is the power of the FLS Model Portfolio.

And with that in mind, let’s take a quick look through Adam’s 10 elite stock setups from last week’s newsletter and see if anything was able to hold up better than I did this week.

T-Mobile US, Inc – Did Not Trigger

After a strong close last week, TMUS was in a great position to break through Adam’s entry point early in the week. But things didn’t go according to plan and the mobile phone provider fell along with the overall market on Monday and Tuesday.

On the bright side, things did bounce back a bit for TMUS at the end of the week with a positive day on Friday that saw it close just short of its 50-day moving average.

DexCom, Inc – Did Not Trigger

DXCM didn’t even come close to the entry point as it crashed right out of the gate on Monday morning. Things didn’t get any better on Tuesday either, and the small bounces on Wednesday and Friday didn’t do much to make up the ground that was lost on Monday.

The stock is currently sitting below its 50-day line, but is still well above its 200-day line, which means that things might not be as bad as they seem if you are able to look past the rough couple of days it had this week.

YUM! Brands, Inc – Did Not Trigger

We didn’t have a specific entry point listed for YUM this past weekend, but we can assume from the fact that it stumbled on each of the first three days of the week that it would not have triggered any reasonable buy point.

With that said, YUM is still sitting just below its 50-day line and could be in position for a nice recovery if some buyers come into the general market over the next few weeks.

Delta Air Lines, Inc – Did Not Trigger

It might not have reached Adam’s entry point, but DAL was actually one of the strongest stocks on our stock setups watchlist this week.

After falling along with the general market on Monday, the airline quickly bounced back on Tuesday and Wednesday, and then it continued even higher on Friday. That makes it one of the few stocks to post a gain this week and has it sitting right below Adam’s entry point.

Barrick Gold Corporation – Did Not Trigger

Another stock that held up well despite the rough overall market conditions this week was ABX, which almost eclipsed its entry point on Wednesday before falling again on Friday.

ABX is currently sitting above it’s 50-day moving average and is poised to jump up through the entry point if the market moved higher on Monday.

PayPal Holdings, Inc – Did Not Trigger

PYPL was another stock that got slaughtered to open the week and was never quite able to recover. Not only did it never flirt with Adam’s entry point, it now sits well below its 200-day moving average, which is never a good thing for any stock.

Stryker Corporation – Did Not Trigger

Different stock, same story. After closing the previous week just below Adam’s entry point, SYK fell right out of the gate on Monday and never even attempted to cross into buy range.

Not only did it not test the entry point, the stock also lost it’s 50-day and 200-day lines and was only able to recover a small portion of its weekly loss on Friday’s bounce-back day.

Darden Restaurants, Inc – Did Not Trigger

At this point, you can probably guess that none of our stock setups were able to trigger Adam’s entry points. However, on a week like the one we just had, all we are looking for is relative strength, and DRI showed plenty of that.

The stock was up when everything else was down on Monday, and it lost less than most leading stocks on Tuesday and Wednesday. It currently sits above it’s 50-day and 200-day lines and still has a shot at taking out Adam’s entry if things go well in the week ahead.

Oracle Corporation – Did Not Trigger

ORCL suffered the same fate as most of our stock setups this week. It fell hard on Monday and Tuesday and lost its 50-day moving average without ever testing Adam’s entry point. Then it was not able to retake that 50-day line on up days Wednesday and Friday.

Fiserv, Inc – Did Not Trigger

Here we go again. Another stock that didn’t trigger Adam’s entry point. And another stock that stumbled early in the week, lost its 50-day moving average and then failed to recover. Par for the course this week.

This was not a fun week to be trying to make money on the long side of the market. I didn’t get to experience most of it in real time, but the carnage is still here either way.

Fortunately, we have the option to sit on the sidelines while this potential bear market works itself out. Keep your powder dry and we will be ready to spring into action when the conditions change for the better.

Make sure you subscribe to Adam’s Advanced Stock Reports to get this weekend’s updated list of stock setups, as well as his FLS Playbook that breaks down what our model portfolio is going to be doing in the week ahead.

FLS Setups Review: Blood on the Tracks

Painful. Brutally Honest. Emotionally Charged.

Those are all words that are commonly used to describe Bob Dylan’s “Blood on the Tracks’. But they could also be used to describe everything that happened in the stock market over the past few weeks. It has been a bloody stretch on tracks of Wall Street that has seen most of the growth names that we have grown accustomed to tracking stumble and fall.

Fortunately for those of us that subscribe to the Advanced Stock Reports, Adam has been preaching caution and patience while taking some solid profits in this difficult market environment. And sitting mostly on the sidelines during these past few weeks has helped us avoid the “Idiot Wind” with some “Shelter from the Storm.” 

Pfizer Inc – Did Not Trigger

PFE stumbled out of the gate Monday and would never come close to breaking through Adam’s entry point. After a second down day on Tuesday, it followed with a third one on Wednesday that sliced right through the 50-day moving average.

But things did get better for the drug maker later in the week. Positive days on both Thursday and Friday allowed PFE to retake its 50-day line. This puts it far ahead of many stocks in this choppy market environment, but still well short of our target entry point.

NetApp, Inc – Did Not Trigger

The positive finish we saw from PFE did not show up for NTAP, which also failed to challenge the entry point that Adam identified in last weekend’s Advanced Stock Report. Not only did NTAP struggle with the market early in the week, it completely fell off a cliff on Thursday and Friday gapping below its 200-day moving average.

This is a perfect example of why we always wait for a stock to prove itself by actually crossing an entry point instead of attempting to take an early position before the entry.

Visa Inc – Did Not Trigger

Keeping with the theme for the week thus far, V also fell short of even flirting with Adam’s entry point. It actually looked a lot like NTAP through the first three days of the week, but then managed to put in a strong up day on Thursday and retain at least some of those gains through Friday.

V is currently sitting well above its 200-day simple moving average, but it is still below our entry point, as well as its 50-day line.

Microsoft Corporation – Did Not Trigger

MSFT was yet another stock setup that would not come close to Adam’s entry point this week. It followed along with the market by posting a big loss on Monday followed by a slight pause on Tuesday before heading south again on Wednesday.

Like we saw from V, MSFT showed some life on Thursday and then continued even higher on Friday where it was able to make up even more ground heading back up towards its 50-day moving average.

Intuitive Surgical, Inc – Did Not Trigger

Yet another stock that failed to challenge the entry point that Adam identified for it was ISRG, which started out the week posting three straight losing days before recovering about half of those losses on Thursday and Friday.

As one of the stocks that Adam’s FLS Portfolio owned just recently, we are naturally inclined to root for this one. But it is important to differentiate our desire to see the stock perform well with a smart trading decision.

Adobe Inc – Did Not Trigger

After being the most profitable position in the FLS Portfolio for over a year, ADBE is back in the stock setups section and…stop me if you’ve heard this before…it failed to come close to its entry point this week.

ADBE demonstrated some wild price action throughout the week as it fell below its 200-day moving average on Monday, then again on Wednesday. The stock attempted to rally on Thursday, but was unable to retake its 200-day line and fell again on Friday.

Corning Incorporated – Did Not Trigger

Another stock, another complete failure to even challenge Adam’s entry point. After closing right at its 50-day line last Friday, GLW opened up the week by slicing through it on Monday. It then fell even more on Wednesday before making a poor attempt at a rally on Thursday and Friday.

Waste Management, Inc – Triggered

The one bright spot on our stock setups list this week was WM, which moved above, below, and then back above Adam’s entry point earlier in the week. After demonstrating the strength to hold its ground while the market was tumbling on Monday and Wednesday, WM shot up like a rocket when market conditions got a little better later in the week.

The overall market conditions are still a bit too volatile to be diving into a new purchase right now, but WM is showing the type of relative strength that should earn it a solid place on everyone’s watchlist.

The Boeing Company – Did Not Trigger

BA showed a lot of strength last week as it retook its 50-day line and marched higher. But rather than continue up through the entry point that Adam identified for us, it posted five straight down days this week and lost its 50-day and 200-day lines in the process.

Booking Holdings Inc – Did Not Trigger

You’re probably getting the hang of this by now, but just in case you aren’t, BKNG wasn’t able to find its way above Adam’s entry point this week. It followed the same pattern we saw from a number of other stocks with rough days on Monday and Wednesday, and then things got even worse on Thursday and Friday.

Gary Kaltbaum regularly says that nothing good can happen to a stock that is living below its 200-day moving average, and that is exactly where BNKG is going to be hanging out until it can make its way higher.

This was definitely a rough week for our elite stock setups, it was also a terrible week for the general market. By exercising the caution and patience that Adam continues to stress in his weekly newsletter, we already have the upper hand during these challenging times.

Make sure you subscribe to Adam’s Advanced Stock Reports to get this weekend’s updated list of stock setups, as well as his FLS Playbook that breaks down what our model portfolio is going to be doing in the week ahead.

Week-In-Review: Another Down Week On Wall Street

Another Down Week On Wall Street:

Stocks fell last week as investors digested a flurry of market, economic, and earnings data. The big macro fear that continues to weigh on markets is a slowing global economy. We have already seen economic data soften across the globe and several big countries recently reported lousy GDP numbers. Even the US is beginning to show signs of slowing down after two strong years. The recent economic weakness has hurt stocks and has played a big role in sending energy prices into a bear market. Crude oil plunged into bear market territory and that typically does not happen in a strong economy. Another big concern for investors occurred when shares of Apple sliced below its longer term 200 DMA line. Apple has been under pressure in recent weeks as investors are now concerned that sales of iPhones have peaked. Finally, several big retailers reported earnings last week and most retail stocks fell. If the economy is slowing down, there is a big chance earnings will follow. If that happens, that will bode poorly for the stocks. On a bullish note, Thursday appears to be a near-term low and the market is forming a bullish head and shoulders continuation pattern.

Monday-Wednesday Action:

On Monday, stocks tanked over 600 points as sellers showed up from a two week hiatus. Apple’s stocks was hit hard, falling all the way to the 200 DMA line after a key supplier cut guidance. Apple’s stock has been under heavy selling pressure after its latest earnings report. The company told the Street that it would stop publishing the number of iPhone units and that spooked many people. Since then, a slew of companies have slashed their outlook for the stock. On Tuesday, the market vacillated between positive and negative territory as the market struggled for direction. Crude oil, which is currently in a bear market, plunged over 7% on Tuesday as the selling intensified. Stocks fell on Wednesday dragged lower by tech stocks and financials. Shares of Apple fell again, breaking below the longer-term 200 DMA line, for the first time since April 2018. 

Thursday & Friday Action:

Stocks opened lower but closed higher on Thursday which could become a near-term low for the market. On Thursday, billionaire investor Ray Dalio said the world is long stocks and that will mean trouble in the next bear market. A few hours later, billionaire investor Paul Tudor Jones said we are in a global debt bubble and that we are headed for some ‘scary moments.’ Stocks ended mixed on Friday as tech shares continued to under-perform.

Market Outlook: Stocks Under Pressure

The market is weak as the major indices struggle for direction. Stepping back volatility has picked up and that normally is not a good sign- especially after a 10 year bull market. At the end of September, I noted that the Russell 2000 broke below important support and said it should be watched closely. One week later, we saw a big sell-off on Wall Street as rates spiked. Right now, the next big levels of support to watch are October’s low and then February’s low. Meanwhile resistance is the 50 and 200 DMA lines, then 2018’s high.  As always, keep your losses small and never argue with the tape.

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