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FLS Pre-Market Update: Selling In Tech Land… 12/05/2017

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​Market Update: Selling In Tech Land

 
Two weeks ago, I said, tech stocks were extremely extended and way over due to pullback. Little did I know the pullback would be this severe. Remember, we have seen this before (most recently June 9th) and after a few weeks, tech stocks recovered and surged to new highs. Right now, it is important to see if the selling is contained to tech stocks or if it spills over into other important areas of the market. So far, it is primarily in tech stocks which leads me to believe this is another pullback within this very strong bull market. I would be remiss not to note, that for the first time this year, volatility is starting to pick up again. In the last week alone, we have seen triple digit intra-day moves in the Dow almost everyday since last Monday. That hasn’t happened in ages. Normally, increased volatility -after a big move- is a sign of fatigue and a near term top. But this market has defied conventional wisdom for years and continues to grind higher. That said, the market deserves the bullish benefit of the doubt until we see any heavy selling spill over into other areas of the market. Finally, we are approaching end of the quarter and end of the year which typically  has a nice upward bias. Therefore, I’m watching closely to see a nice year-end bounce follow this little sell-off in tech land. 
 
Taxes & Tech Stocks: 
Since the Senate passed the tax bill, I have received a lot of questions about what it means for tech stocks. Bottom line, it reduces the tax rate down to 20% which is a huge positive. The only negative is that it removes some of the tax breaks related to intellectual property and capital spending which tech stocks love to use. In case you are interested, here’s more Bloomberg: The law of unintended consequences hit tech stocks as the tax bill passed by the Senate on Saturday may have unwittingly created a situation where planned tax breaks related to intellectual property and capital spending could be rendered worthless. The bill keeps the existing alternative minimum tax for corporations at 20 percent on par with the new headline rate. That means companies will not be able to use other tax breaks to lower their effective rate. The proposed legislation itself now moves on to the conference committee which will negotiate a final bill between the House and GOP Senators. 
 
FLS Portfolio:
The FLS portfolio continues acting well. On Monday, the service sold NFLX and NVDA for a gain of +5.81% and +12.09%, respectively. Currently, the service is sitting on lofty gains and the protective stops were recently moved up over the weekend to protect our positions. Here is a snapshot of the portfolio as of Monday’s close:
 

Positions:

The service owns:  ADBE +51.62%, BABA +73.22%, CAT +32.02%, ISRG +17.34%, RMD +7.55%, 
MNST +13.04%, MELI -1.03%
 

The service will exit: ADBE @ 164.32, BABA @ 166.67, CAT @ 133.57, ISRG @ 349.57, RMD @ 81.37, MNST @ 56.04, MELI @ 257.96

 
Working Orders:
 
 
 

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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Picture of Adam Sarhan

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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