Market Update:
Today was the first real down day since the election. To be clear, the damage was widespread and not ugly. We do want to note that one down day doesn’t kill a trend but, as we have been telling you for weeks, the market is WAY OVERDUE for a nice healthy 1-5% pullback. Our longstanding clients know that we do not talk politics (there’s ZERO upside for us and ONLY downside- so there’s literally no reason to put on that trade), but we do state facts. Trump decided to tackle Obamacare first, instead of economic issues. At this point, he’s having difficulty getting that passed. So the market is “worried” that he will face more roadblocks when he tries to push his pro-growth economic agenda through congress.
The “reasons” why the market is pulling back literally doesn’t matter we deal with WHAT is happening, not WHY something is happening. Right now, the Russell 2000 is the weakest out of the popular indices. That’s worrisome because it led on the way up. Transports (IYT) are also breaking down and that’s not a “good” sign. Additionally, the financials (XLF), steel (SLX), materials (XLB), Industrials (XLI), all broke down below near term support. Clearly, the market is getting MUCH WEAKER and this is not a healthy sign in the near term. The next levels to watch for the major indices is their respective 50 DMA lines. If that level breaks we have to expect a deeper pullback/correction to follow. Defense is king until further notice.
FLS Portfolio:
Thankfully, the FLS portfolio continues acting well. The service raised its stops over the weekend. Here is a snap shot of the portfolio as of Tuesday’s close:
The service owns: ICE +4.29%, ADBE +12.58%, BABA +7.34%, HAS -0.58%
The service will exit: ICE @ 58.07, ADBE @ 117.22, BABA @ 100.77, HAS @ 97.17
Working Orders:
| Status | Order | Ticker | Buy Stop | Protective Sell Stop | Risk From Entry |
| Open | Buy | GDXJ | 38.58 | 37.71 | -2.26% |
| Open | Buy | DPZ | 187.38 | 178.39 | -4.80% |
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.
