FLS Playbook Update: Sellers Remain In Control 07.09.15

[su_heading style=”modern-2-dark” size=”20″] Market Update [/su_heading]

In the short term, the action in the major indices remains very sloppy as nearly all rallies continue to be faded (big institutions are selling rallies, not buying dips). The fact that Tuesday’s rally immediately failed and then today’s rally failed almost immediately after the open is not ideal. At the open, the Dow vaulted 250 pts and started sliding and only closed up +32. This action clearly illustrates the point.

The “good” news is that even with all the selling, craziness going on in Greece and China, the S&P 500 is “only” down 4% from its record high. There is also a ton of bearishness out there and very few bulls up here – even with the market only 4% off its record high and the Fed keeping rates at zero. That means, the long term action remains ok (for now) and technically we are still in a bull market (which means surprises in bull markets tend to be on the upside). To be clear, if this week’s lows are breached, we expect another leg lower to commence.

Markets Are Forecasting A Recession:
We also find it “worrisome” to see markets across the globe are forecasting a another recession. The transports are in correction territory down 13.77% from their recent highs and every single major commodity in the world (except for cocoa and cattle futures) are down over the past 12 months and most of them in bear markets (defined by a decline of >20% from a recent high). That is bearish action and forecasts another recession or at the very least, a serious slowdown in economic activity. The fact that almost every major commodity in the world is in a bear market (Gold, Silver, Crude Oil, Gasoline, Corn, Wheat, Soybeans, Coffee, Sugar, etc) typically is a bearish, not bullish, sign for equities. The one saving grace (so far) is that the Fed has rates pegged at zero and that has been helping stocks…for now. Of course, earnings season is front and center so we will be paying a lot of attn to how individual stocks and the major indices react to earnings over the next few weeks. We want to see where the market closes tomorrow and as always will have a full report for you this weekend.

[su_heading style=”modern-2-dark” size=”20″] Portfolio Update [/su_heading]

Thankfully, the FLS portfolio is acting well considering how poor the major indices are performing. Here is a snapshot as of Thur’s close EST:

[su_heading style=”modern-1-dark” size=”18″] Positions [/su_heading]

1. The service owns:  TSLA +26.01%, NFLX +16.31%, XLF -2.09%, DPZ +2.03%, MTH +4.19% AMZN -1.05%

2. The service will exit:  TSLA @ 245.77, NFLX @ 611.67,  XLF @24.03, DPZ @ 111.14, MTH @ 46.05, AMZN @414.55

[su_heading style=”modern-1-dark” size=”18″] Working Buy Orders [/su_heading]

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