Tag Archives: market lab report

MLR – PMP 3/10/15

âMajor averages rose yesterday on lower volume. The bounce so far has thus been weak as institutional support was lacking in yesterday’s trade. The increasing number of distribution days is of concern though the number of actionable leading names in the last several days has been pronounced. As we wrote yesterday the potential for further downside existed in the fact that the NASDAQ was still well above the top of its prior range breakout point while the S&P 500 was approaching its 50-day moving average. This morning futures are down sharply as this possibility becomes more of a reality in real-time. The question is whether the economy is truly improving as some of these reports have arguably produced questionable statistics, especially when it comes to unemployment and inflation. That said, psychology drives markets, so the bulls could argue as long as the Fed continues to print money, the bull market will continue. The bears could argue the current bull market is now 6 years old which is equivalent to an aging bull, plus the Fed has acknowledged rates may have to rise as the economy improves, though Yellen is a known dove thus will err on the side of caution before the Fed raises rates. With all these cross currents, it is imperative to watch your stocks, keep stops tight, take your profits when you have them in context with the overall chart, and stay fluid as these markets can change on a dime. Retailer Ulta Salon (ULTA) had a pocket pivot. It announces earnings after the close on March 12. Earnings and sales have been consistent, ROE 22.8%, group rank 33. Photonic IC maker Infineon (INFN) had a pocket pivot. Earnings are soaring, sales are accelerating, institutional sponsorship has grown 3 quarters in a row, group rank 21. Keep in mind that such buy signals in the form of pocket pivots do not imply automatic buys, but during a market correction can help identify stronger stocks that could outperform if and once the market finds a bottom and begins a new rally phase. For now, most of these pocket pivots should be made note of as stocks to play on a buy watch list.

MLR – PMP 3/9/15

Major averages fell Friday on higher volume, marking another distribution day. A stronger-than-expected jobs report sent Treasury yields soaring. Unemployment fell to 5.5%, theoretically considered to be a “full employment” level, while wage growth, however, remained sluggish. The reality however, remains one of Orwellian proportions as the economy is touted as being strong, and jobs growth “robust” with a “full employment” unemployment rate allegedly being achieved, yet interest rates remain near 0%, an unprecedented, contradictory, and paradoxical occurrence in any supposed economic recovery. The S&P 500 has broken through support at the top of its prior two-month price range, negating its prior breakout to new highs, and is now testing its 50-day moving average, while the NASDAQ is holding well above its own recent range breakout. If the S&P 500 cannot hold support at the 50-day moving average, then this creates a situation where we could see the NASDAQ move lower towards its prior range breakout point in the 4810-4815 area while the S&P 500 slices through its 50-day line. Investors should know clearly where their exit points are if the situation continues to deteriorate. Investors are increasingly nervous the Fed will have to raise rates sooner than later on the basis of stronger economic data. Of course, 5.5% may be quite off the actual mark of where the real unemployment rate lies, but it nevertheless is what the Fed goes by, thus could prompt tightening. That said, the global economy remains on the ropes, and since there is a high degree of correlation between major economies, the Federal Reserve Chairwoman Yellen may keep rates low for longer than the market can guess as she is perceived to be quite dovish.

MLR – PMP 3/6/15

Major averages rose on lighter volume. The US economy continues to sag as first-time jobless claims and factory orders both came in under expectations. The European Central Bank made a formal announcement that it would begin its quantitative easing program Monday. This was met with yawns for the most part as QE in its various forms from various central banks have been part of the landscape since 2009. Markets thus tiptoed higher on light volume as they have done many times before. Nevertheless, QE has kept this bull market going since 2009, and we have yet to see a correction just beyond 10% since late 2012, and beyond 20% since late 2011. We had a few new actionable names: Pocket pivots: Medical system designer Illumina (ILMN) – earnings are accelerating, pretax margin 28.6%, ROE 27.2%, group rank 50. Drug developer Regeneron Pharmaceuticals (REGN) – pretax margin 41.7%, ROE 52.3%, group rank 1. Buyable gap ups: Drug developer Mallinckrodt Public (MNK) – earnings and sales are strongly accelerating, group rank 5. MNK gapped up on news it would be acquiring Ikaria.