Tag Archives: market lab report

Market Lab Report – Premarket Pulse 10/12/15

Major averages rose Friday on lower volume with the NASDAQ Composite closing just below its 50-day moving average which served as mild resistance. Over in China, the Shanghai market was up 3.29% on plans for additional quantitative easing. While the global economy is weak, economic reports claim the US is doing better. Nevertheless, the Federal Reserve may deploy negative interest rates should economic conditions worsen over the next year or two to the point of recession, an option that was rejected during the darkest days of the financial crisis post 2008. “Some of the experiences [in Europe] suggest maybe can we use negative interest rates and the costs aren’t as great as you anticipate,” said William Dudley, the president of the New York Fed. Indeed, events in Europe over the past few years have shown the benefits outweigh the risks. In Europe, the European Central Bank, the Swiss National Bank and the central banks of Denmark and Sweden have deployed negative rates to some small degree without catastrophe. So while negative rates would not be a total solution, it would be additional support. Thus the odds of a QE4 of some sort could occur should the weak global economy worsen and push economic growth in the US into recessionary levels.

Market Lab Report – Premarket Pulse 10/9/15

Major averages rose yesterday on lower volume with the S&P 500 breaking and closing above its 50-day moving average while the NASDAQ Composite closed about 1% away from its 50-day moving average. Fed minutes showed that turmoil in the stock market and economic concerns out of China kept a rate hike on hold. The Fed will wait until global economic conditions improve to hike rates. This is a change from the Fed’s earlier view that they would be able to hike rates before the end of the year as the US economy was showing strength while economic concerns regarding China would not much affect the US economy. CME FedWatch puts the odds of a rate hike at 5% in October and 38% in December. Markets rallied after yesterday’s release of the minutes as easy money policies tend to be bullish events. Nevertheless, the market had recently undergone a sharp correction as a result of serious concerns about the global economy. So the question is whether the current bounce has run its course or whether the easy money environment can push it higher. Regardless, pay close attention to what stocks are telling you. So far, there have been only a few stocks setting up on the long side this week despite the rallying markets with almost no actionable new names on the long side since Tuesday. Still, some of the recent stocks that we have alerted members via email are doing well such as EPAM, LGIH, and FLTX.  Both models are in cash at present though the Volatility Model will probably issue a buy signal close to the open. Dr. Kacher has worked into the Volatility Model a series of fail-safes tested out which appreciably improve the model’s risk/reward characteristics. For example, yesterday’s cash signal would have come sooner resulting in a minimal loss. Cloud-based commerce platform for businesses Shopify (SHOP) had a pocket pivot on a breakout from a cup-with-handle base. It had previously gapped higher on its prior earnings report. Note, the other day, it closed in the lower half of its trading range despite a strong market, thus invalidating its pocket pivot. Sales are growing strongly, group rank 21. Netflix (NFLX) had a massive-volume pocket pivot on an upside reversal after announcing a price increase for its services. NFLX is expected to announce earnings next Wednesday.

Market Lab Report – Premarket Pulse 10/8/15

Major averages finished higher yesterday on increased volume with the S&P 500 closing just under its 50-day moving average. The market initially gapped up sharply at the opening, with the Dow soaring over 170 points higher, but within an hour the markets had reversed back into negative territory. By the close, however, all the indexes had recovered on higher volume, indicating support off of the intraday lows. In fact, the NASDAQ made a higher-high since rallying off of the lows of last week. The market is at a tipping point as the recent follow through day was followed by a distribution day on the NASDAQ Composite two days after the follow through. This usually means a failed rally attempt even should the S&P 500 break above its 50-day moving average. That said, keep statistics in perspective as the world is still mired in quantitative easing which can distort historical “sure bets”. Futures are down around 0.5% at the time of this writing on further economic concerns out of China. China’s market had an extended holiday, and yesterday’s up day on the Shanghai after its long break was insufficiently strong. Context is always important. The Fed releases minutes at 2pm EST today.