Market Insight

FLS Pre-Market Update: Earnings Season Begins And Conviction Leaders List… 04/12/2018

Market Update: Earnings Season Begins

The market is still “up” on the week but that could change in an instant. Right now, the major indices are trading between the 50 DMA line and the 200 DMA line. By definition, the next move wins, meaning if we break above the 50 DMA line, then odds favor the market rallies and then moves up to retest the 2018 high. Separately, if we break down below support (200 DMA line then Feb’s low), odds favor we test the 20% level which defines a bear market. Fundamentally, the action is healthy and earnings are expected to grow handsomely. The market is pausing to digest all the recent volatility and wait for clarity with respect to earnings. So far, steady as she goes.

Earnings Season:

Delta Airlines and a few of the big banks are set to kick off earnings season today and tomorrow. Then we enter the thick of it over the next several weeks. The WSJ has an interesting article this morning about Earnings Season – read here. So far, it is interesting to note that the recent decline in the market has caused the forward P/E ratio for the S&P 500 to fall to the lowest level since 2014. Here is an excerpt from the article: “That doesn’t mean stocks are a screaming bargain. But the 12-month forward price/earnings ratio on the S&P 500 has fallen from a 16-year high of 18.6 times adjusted earnings at the end of January to 16.4 times at Tuesday’s close, putting it back to where it stood in 2014, according to Thomson Reuters IBES.”

FLS Portfolio:

Thankfully, we held off from add new positions to the portfolio in recent weeks and, in the process, avoided a lot of losses as the market continues to frustrate both the bulls and the bears. Here is a snapshot of the FLS portfolio as of Wednesday’s close:

Positions:

A. The service owns:
ADBE +101.31%, ISRG +30.72%,
MELI +19.72%

B. The service will exit:
ADBE @ 201.56, ISRG @ 379.77,
MELI @ 319.77

Working Orders:

There are no new working orders today.
If the market holds up, we will look to do some buying in the days/weeks ahead.

Conviction Leaders List:

If the market decides to rally from here there are a lot of good looking setups in the market. Here is a note that I sent to a portfolio manager yesterday:

Nice “handle” forming on QQQ chart…

Few more setups:

BIG CAP SETUPS OFF 50DMA

WDAY

TGT

MSFT

INTU

Small & Mid Cap Setups off 50DMA:

TCF

COMM

TDC

YELP

All Caps/Other Good setups

AVAV

TPL

CRSP

ATHN

LMT, NOC, RTN

BPMC

LITE

WUBA

CSGP

TEAM

CBAY

LGND

PAYC

CHH

MEOH (broke out)

QURE

OKTA

————————————————

Also seeing that GLD— GOLD/Silver Setting up

Also bunch of gold stocks NEM,

———————————————–

BIG CAP Conviction Leaders List/SETUPS
(SORTED BY STRONGEST YTD % CHANGE)

ADBE
EW
DPS
GDDY
TPR
EL
NTAP
MSI
SCCO
CPRT
RTN
HUM
ETFC
ZTS
APC
CLR
COP
HES
SPGI
NOC
XYL
FE
NDAQ
MPC
INTC
CBRE
ADM
OKE
MSFT
INTU
TJX
VLO
PGR
MON
CTXS
NOV
ECL
VRSN
NEM
YUM

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 50 Park Investments 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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