Tag Archives: market lab report

MLR – PMP 10-18-14

Major averages bounced yesterday on higher volume on oil bouncing and an interest rate friendly statement from the Federal Reserve. The Federal Reserve’s statement came as little surprise to markets which were trading higher prior to their press conference. The Federal Reserve predicted inflationary pressures will diminish further in 2015 because of falling oil prices, but the central bank sees little change in its long-term inflation outlook. The Fed predicted overall inflation as measured by the PCE index will have a core tendency of 1% to 1.6% next year instead of 1.6% to 1.9%. Yet core inflation, which strips out energy and food, is barely expected to show any change. The Fed estimates the central tendency of core inflation to be 1.5% to 1.8% in 2015 and 1.7% to 2% in 2016. The bank also made no change to its forecast for growth of 2.6% to 3% in 2015. Markets rallied on the news. Futures are up sharply this morning as the market appears set to follow-through on yesterday’s rally. This appears to be the start of the proverbial “Santa Claus rally” that may very well carry into year-end. Short-sale target Tesla Motors (TSLA) cleanly undercut the 199.25 minor low, which served as a near-term cover point and downside price target. In our view profits could have been taken at that point and the stock could be left alone to rally and perhaps set up at a later stage. Our longer-tem downside price target may not come to fruition until TSLA announces earnings. Short-sale target Workday (WDAY) is still showing a profit but in the event of a market rally it makes sense to cover shorts and let them play out as they bounce and rally with the market. As Gil Morales mentioned in the chat room on Tuesday, at that point he believed that the “heart of the watermelon” on the short side had already been taken out, which makes sense considering that we first highlighted TSLA as a short near the 250 price level. Yesterday’s action produced a pair of pocket pivots: Human resources company Trinet (TNET) – Earnings strongly accelerating, group rank 26. Medical care products company Insys (INSY) – Earnings and sales strong, pretax margin 39.1%, ROE 518%, group rank 2.

MLR – PMP 12-17-14

Major averages fell yesterday on higher volume wiping out earlier gains as both the NASDAQ and the S&P 500 have now dropped below their 50-day moving averages. Headwinds from Russia, China, and oil are making what is usually a relatively peaceful month quite turbulent. The federal reserve’s Yellen will be making a statement today and what it could mean for interest rates. Odds are she will do her best to sooth ailing markets which could bounce from currently oversold conditions. Expectations are that the Fed will confirm interest rate increases for next year, but with so many global cross-currents with the potential to “upset the cart” in the near-term, the Fed could soft pedal their language regarding future interest rate increases. We expect that today’s announcement will have a significant effect on where the market goes from here. Chinese online retail mobile “megacorp.” Alibaba (BABA) had a pocket pivot yesterday off the 50-day moving average. Sales are accelerating, pretax margin 54.3%, ROE 112.1%, group rank 48. Members should remember that we issue pocket pivot and other reports on the basis of an objective, identifiable technical condition (in this case a pocket pivot) that may or may not be actionable depending on the general market context. Leading stocks flashing pocket pivots during a market correction may not necessarily be actionable but do provide investors with a clue as to where the stronger stocks might lie, such that if the general market finds its feet and turns back to the upside a stock that had issued a pocket pivot a few days before may then become actionable. We do not provide hard buy or sell recommendations on individual stocks, only reports that identify an objective technical condition that may or may not be actionable depending on market context. Short-sale target Tesla Motors (TSLA) dipped below its prior199.25 “minor” low in its chart, which can be viewed as a short-term cover point if the general market is able to recover here, but otherwise we maintain our longer-tem downside price target at 177-178. Short-sale target Workday (WDAY) has continued to move lower and is approaching our 77 near-term downside price target.

MLR – PMP 12-16-14

Major averages fell yesterday on higher volume, marking another in what is now a cluster of distribution days around the peak. Oil hit new lows once again. A potential Russian currency crisis is brewing as Russia took a massive step toward protecting the ruble and defending its ailing economy. The countryâs central bank raised its key interest rate to 17% from 10.5%, effective today. Thatâs the biggest jump since the government defaulted on debt back in 1998. Wonkblogâs Matt OâBrien says itâs a desperate move, a âfinancial shock and awe,â that wonât stop things from getting a lot worse. âItâs a classic kind of emerging-markets crisis,â he wrote. âItâs only a small simplification, you see, to say that Russia doesnât so much have an economy as it has an oil-exporting business that subsidizes everything else. Thatâs why the combination of more supply from the United States, and less demand from Europe, China, and Japan has hit them particularly hard.â In U.S. economic news, the Empire State manufacturing index, fell to negative 3.6 in December from 10.2 in November, well below expectations of 12.0. This is the first negative reading since January 2013. Readings during the fourth quarter show a “significant downshift in activity” from levels seen in prior two quarters, the New York Fed said. We maintain our downside target of 77 for Workday (WDAY) and 177-178 for Tesla Motors (TSLA), our two current short-sale target stocks.