From a trading perspective, mid-July looked like another opportunity to take long positions but the majority of those ideas quickly faded. Sometimes what looks like a sure thing turns out to be the wrong analysis. The indexes continue to hold near highs, but the foundation is starting to crack. That doesn't mean that the market has to have a complete fallout, but spending some time consolidating the gains since November would be welcomed. For now waiting for better risk/reward opportunities is where I reside.
A call came in to the office today and it was regarding Foot Locker (FL). An acquaintance of ours was not the least bit happy because a portion of their portfolio had been allocated towards this stock. As the story unfolded, they explained that FL had been presented to them as an opportunity based on the fundamental picture. The price had dropped and based on the in house analyst opinion, Foot Locker offered a good entry. The broker/dealer for said client also runs private equity funds. Conflict of interest....probably, but who is to say. The point is that the technical picture had been deteriorating for some time, but after the initial drop in mid-May, Foot Locker should have been a no go. Don't let an analyst cloud your judgement, always take the fundamental information being presented against the technical pattern of the stock. If they are in conflict, avoid the urge to take the advice.
It's likely the trading arm of that broker/dealer will be out smoking fine cigars and drinking the best bourbons because their long position had been effectively moved to the retail client. Don't be the one that gives them reason to celebrate.
-1.15% MTD | +17.03% YTD
So far for the month of August the portfolio is off about 1.15%. During July a few positions were taken, but they weren't able to move out above consolidation points like we'd seen earlier in the year. That type of behavior is generally an indication to tread lightly. BABA and IPGP were removed for solid profits, while EMKR and few others were taken off at losses. Had all the positions remained, the portfolio would be down slightly more than the present value.
As of today 265 stocks are passing the main screen which is down from a peak of 338 on July 25th. The Watchlist is presently sitting around 20 stocks, but even the majority of those are struggling to maintain constructive patterns. It's likely that by Monday the list could be even smaller. Below are a few that continue to display strong technical patterns.