Market Lab Report – Premarket Pulse 10/29/15

By | October 29, 2015

Scalper1 News

Major averages finished strongly higher yesterday on higher volume after selling off just after the Fed released their statement. The Federal Reserve concluded its two-day meeting leaving rates unchanged but kept the door open for a rate hike in December. The problem is that the economy has slowed over the past six weeks, and Fed Chair Yellen is dovish. Indeed, the third quarter GDP number was just reported at 1.5% compared to the 3.9% in the second quarter, whereby futures rallied mildly on the news from their depressed levels, as they are still off about half a percent. Nevertheless, the Fed must maintain their stance that rates could be hiked in December as they had originally said there would be a rate hike by the end of the year. That said, at this point, central banks must generally move in unison when it comes to quantitative easing since economies worldwide are fragile thus have little room to move. For example, a good portion of the UK economy depends on exports to the Eurozone. If the UK raises rates while the ECB prints more money, the exchange rate will soar and exporters will get stung which will impact the UK economy. On the other hand, while the US is not as dependent on exports, its corporate profits are dependent on overseas earnings, thus puts pressure on the US Fed to keep rates steady, though a token 25 basis point hike for political reasons to keep to their “word” would not be a complete surprise. After the Fed’s statement, CME FedWatch pegs the odds of a rate hike in December at 43%, up from 35%. The eurozone economy is about $13 trillion, just a few trillion shy of the US economy, so with the ECB recently adding even more “ease” to its easy money policy, central banks are not likely to hike rates any time soon, especially given the weakness in the Eurozone’s economy. So while US and UK central bank officials may warn of impending rate hikes, this is most likely political jawboning. Expect rates to stay near zero well beyond what central bank officials say. Inphi (IPHI) had a buyable gap up on a strong earnings report. This comes after the pocket pivot report we sent out on October 15. Earnings and sales continue to soar, group rank 41. Apple (AAPL) had a pocket pivot/buyable gap up on a strong earnings report. Its base is rounding out as it approaches its 200dma. Pretax margin 31%, ROE 46.3%, earnings and sales are robust. Integrated IT management service company Tyler Technologies (TYL) had a pocket pivot. Pretax margin 23.6%, ROE 25.4%, group rank 4. It’s prior pocket pivot four days ago closed in the lower half on a strong day so was invalid. Today’s pivot makes this stock actionable. Beauty store retailer Ulta Salon Cosmetics and Fragrances (ULTA) had a pocket pivot. ROE 22.7%, earnings and sales have been strong and steady. Web-based payroll management software company Ultimate Software Group (ULTI) had a pocket pivot/buyable gap up on a strong earnings report. ROE 26.9%, earnings and sales are accelerating, institutional sponsorship has grown over the last 9 quarters, group rank 20. Scalper1 News

Scalper1 News