• Market Insight

FLS – A Closer Look At Earnings Season 04/19/2016

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​​​​​​​​​​​Market Update:​
Stocks rallied hard over the past few days, led by a very strong rally in a slew of commodity stocks. Energy (XLE, XOP, OIH), Materials (XLB), Transports (IYT), Industrials (XLI), Steel (SLX), Gold/Silver (GDX/GDXJ) continue to lead the market as the US dollar continues to fall (UUP). Since the Feb 11th low, the biggest winning theme has been junk rallying off the bottom, not new leadership. In the short term, the market feels a little top heavy/tired after a big run. Intermediate and longer term the environment remains strong. 
 
A Closer Look at Earnings:
We are now entering the thick of earnings season- so far, big money has been flowing into the the big banks (even with crummy numbers) and out of tech stocks which are under performing. It is still very early in earnings season and we want to see how commodity stocks will react to numbers. Remember, for us, the reaction is far more important than the actual numbers. Why? because the market is a forward looking mechanism while the numbers tell you what already happened. Here’s a list of good and bad reactions for your review:
 
Leaders Already Reported
  1. DPZ- sitting on 10 DMA and near new high
  2. FDX- acts fine
  3. ULTA -sitting on 10 dma line 
  4. STZ- sitting on 10 DMA – 
  5. AYI- extended – edging out to new high
  6. INFY- big gap on earnings
  7. HAS- big gap up on earnings
  8. BMI – big gap up on earnings
  9. TTS – big gap up on earnings
Bad reactions to earnings
  1. JNPR (warned)
  2. STX – big gap down on earnings
  3. SMCI- big gap down after lowering guidance
  4. XXIA- big gap down after lowering guidance
  5. NFLX – big gap down after earnings
  6. IBM – big gap down after earnings
  7. ILMN – big gap down after earnings
 
​

FLS Portfolio

We are comfortable with our exposure right now and will look to buy more on constructive action in the near future as we make our way through earnings season. As of this writing, 3:22pm EST,
 
A. The service owns: QQQ +10.97%, XLV +0.60%
B. The service will exit: QQQ @ 106.37, XLV @ 68.57
 
Working Orders:
There are no new working orders today
 
 
 
 
​

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 Sarhan Capital is strictly prohibited.

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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.

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