Tag Archives: market lab report

MLR – PMP 12/10/14

Major averages closed mixed on mixed volume, though opened sharply lower after China announced it cut down on risky debt by banning the use of low-grade corporate debt. The new rule is designed to prevent risks from building up further as a result of high debt leverage in the market, and caused Chinese stocks and bonds to tank. The benchmark Shanghai index plummeted 5.4% to record its biggest fall since 2009. That said, U.S. markets managed to claw their way back to nearly breakeven or, in the case of the NASDAQ Composite, finish higher by 0.54%. The more volatile small cap Russell 2000 finished higher by 1.96%. Still, leading stocks continue to lag, and the bounce seemed logical given that several short-sale target stocks, such as TSLA, TWTR, and NFLX, for example, had undercut their near-term downside price targets. Pharma company Akorn (AKRX) had a pocket pivot yesterday . Earnings are strongly accelerating, pretax margin 31.5%, ROE 27.1%, group rank 5. Furniture retailer Restoration Holdings (RH) had a pocket pivot yesterday. Earnings are robust, group rank 51. RH is just coming out of a midbar handle. RH reports earnings after today’s close. On an administrative note, members can follow Gil Morales on our Twitter page at @vsinvesting for real-time observations and comments.

MLR – PMP 12/9/14

Major averages fell yesterday on higher volume. Weak econnomic data out of China spurs on the possibility that additional easy money policies are possible to follow China’s recent lowering of interest rates. This counters the recent U.S. unemployment report whose strength may be called into question as it has been believed that some of the figures are distorted. Oil plumbed new multi-year lows as U.S. production continues to surge thanks to fracking technologies that free up oil trapped in shale formations. For 2015, the EIA expects U.S. crude oil production to set a record since before the first OPEC oil embargo in 1973. Lower oil prices can be good for the global economy. Futures are sharply lower this morning as China shocks markets by banning the use of low-grade corporate debt as collateral to borrow cash. Years of slower growth are expected out of China, underscoring what the Fed knows about the problematic global economy, so they will have to jawbone to keep interest rates low, and perhaps keep the possibility of further quantitative easing on the table. Short-sale target Tesla Motors (TSLA), which we first suggested as a short around the 250 price area, has been down seven days in a row and is set to gap down further this morning. The May low at 177.22 remains our longer-term price target as the stock has already undercut both October lows at 217.32. Short-sale target Workday (WDAY) has continued to move lower following its shortable gap-down move which suggested as being shortable in the 87-88 price area. WDAY closed yesterday at 81.96. Our near-term downside price target for the stock is the October low at 75.23.

MLR – PMP 12/8/14

Major averages rose mildly on higher volume. Friday brought the monthly jobs report which came in well above estimates in both jobs added and in wage growth which was a bullish sign for the labor market. Nevertheless, institutions seemed reluctant to push major averages appreciably higher. Perhaps they are more concerned about any new quantitative easing being delayed thus markets remain tentative. There was also another Hindenburg Omen signal Friday, making it four signals in the last five days. That said, this Omen has a spotty track record especially in this QE environnment. TSLA continues to break down. We discussed it in detail as a possible short in our webinars in late November. Other stocks such as TWTR and NFLX also falling further.Â