Market Update: Netflix and Facebook Suffer From The Law Of Large Numbers
Before yesterday’s close, FB was trading at a new record high. After the close, it reported earnings and instantly lost 20% of its value! Last week, NFLX gapped down hard after reporting numbers. That’s why I pay attention and respect risk at all times. I’ve been trading markets since the 90’s and have seen just about everything you could imagine- and then some. The “and then some part” is why paying attention to risk is so important in this business. In statistics, there is a concept called: The Law Of Large Numbers and that applies to NFLX and FB. The law states: “The law of large numbers, in probability and statistics, states that as a sample size grows, its mean gets closer to the average of the whole population. In a financial context, the law of large numbers indicates that a large entity that is growing rapidly cannot maintain that growth pace forever.” [Keep in mind, eventually this will happen to the broader economy and market. Remember, recessions and bear markets do happen. It is perfectly normal and healthy. It is just a matter of when, not if.]
NFLX and FB may turn around again, but for now, they simply need more time to pass before the bulls show up again. Clearly, FB will drag the QQQ lower today but we still have a lot of other big earnings coming out over the next few weeks. As always, I want to see where the market closes tomorrow and will have a full report for you this weekend.
FLS Portfolio:
The FLS portfolio continues acting well. Here is a snapshot as of Wednesday’s close:
Positions:
- The service owns:
ADBE +136.90%, ISRG +70.63%,
QQQ +11.00%, SQ +44.77%, AAPL +2.91%
- The service will exit:
ADBE @ 207.12, ISRG @ 393.47,
QQQ @164.71, SQ @ 53.56, AAPL @183.32
Working Order
| Order | Symbol | Buy Stop | Sell Stop | % Change |
| Open | DBX | 33.83 | 31.07 | -8.16% |
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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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.
CONFIDENTIALITY NOTICE
This electronic message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential and/or exempt from disclosure under applicable laws. If the reader of this message and/or its accompanying attachment(s) is not the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you receive this communication in error, please notify us by your e-mail reply feature, delete the original message and all copies thereof from your system, and destroy all hardcopies of the message and its accompanying attachment(s).
