Market Update:
The market remains DEEPLY oversold and is way overdue to bounce. The fact that the market can’t bounce (or hasn’t been able to bounce – yet) illustrates how weak the bulls are right now. Oil prices plunged below $30 a barrel today (after being up in the morning) for the first time in 12 years. This clearly illustrates that global growth remains weak and defense remain king as we enter earnings season. We do want to note that expectations are VERY low for earnings so we wouldn’t be surprised to see the market bounce a little from here. Most of the big banks report this week and then we enter the heart of earnings season over the next few weeks. As always, in addition to paying attention to the news, we focus more on how the market (and individual) stocks react to the news. At this point, we want to be patient and analyze the health of the “bounce.” We also want to note that the Russell 2000 is officially in bear market territory (down more than 20% from its high) which bodes poorly for the other indices. Earlier today, GaryK pointed out that the Russell 2000 is back to levels not seen since mid- 2013! and ditto for the NYSE (attached)!
FLS Portfolio:
Thankfully, the FLS portfolio is safe in cash as the market continues trading all over the map. We received quite a few emails thanking us for being defensive and saving you a lot of money (and aggravation in the process). We will look to short strength in the near future, especially on anemic bounces into declining moving averages. If powerful leadership emerges- we will gladly probe the long side but we have to see a lot more evidence. There are no new working orders today.
