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Market Lab Report – Premarket Pulse 9/17/15

The major market indexes continue to grind their way higher in a reaction rally that has continued since “Capitulation Monday” at the end of August. Volume was higher, so the action remains constructive as more leading stocks join in the rally, including names like Under Armour (UA), which broke out on heavy volume. The NASDAQ Composite sits just a breath away from its 200-day moving average. The Federal Reserve releases their monthly policy announcement today at at 2 p.m. EDT, which could create some volatility today, but the bottom line is whether or how today’s decision kills or sustains the current market rally attempt off of the late August lows. Most pundits believe the Fed will do nothing, while CME FedWatch puts the odds at 23%.

Market Lab Report – Premarket Pulse 9/16/15

Major averages rose yesterday on slightly higher but below average volume ahead of tomorrow’s decision on whether to hike interest rates when the Federal Reserve concludes its two-day meeting. While the economy has been showing signs of improvement, concerns of the slowing global economy especially in China remain at the forefront. Should the Fed decide to hike rates sometime this year, it would be the first time in nine years. If the markets reacts badly, the Fed could then do as they did in the 1930s when the government had to unwind massive debt burdens thus eased for a prolonged period a la QE4 after a premature rate hike. On  the other hand, should the market react well, it could be a sign of a truly recovering economy as the stock market tends to lead the economy. But that is a big IF as that would imply the economic reports have been distortion free. CME FedWatch now puts the odds of a rate hike at 25% in September and 41% in October. Meanwhile, a number of pocket pivots surfaced: Medical device maker Abiomed (ABMD) had a pocket pivot. Earnings are skyrocketing and sales are strongly accelerating, group rank 14. ABMD gapped up on its prior earnings report. Building materials manufacturer U.S. Gypsum (USG) had a pocket pivot off its 50-day moving averagedxc. Earnings are robust, ROE 29.9%, group rank 6. USG gapped up on its prior earnings report. Breakfast cereal manufacturer Post Holdings (POST) had a pocket pivot, and is one of the very few stocks showing the ability to buck the major market’s action. Earnings have turned around, sales are soaring, institutional sponsorship has grown over the last 7 quarters. group rank 19. POST gapped higher on its recent earnings report. Cloud-based human capital management software maker Paycom (PAYC) had a pocket pivot. Earnings and sales are robust, ROE 24.1%, group rank 42. PAYC gapped higher on its recent earnings report.

Market Lab Report – Premarket Pulse 9/15/15

Major averages fell on an overall uneventful day as investors await the Federal Reserve’s decision on a possible rate hike this Thursday. Volume was lower partly due to the start of Rosh Hashanah, the Jewish New Year. The markets are wedging higher suggesting a retest of lows over the next several days could be in the cards. In particular, the NASDAQ Composite is forming an “ascending wedge” formation, and a high-volume breach of the lower boundaries of this wedge at around 4757 would be a bearish development to keep an eye out for. Meanwhile, China’s stock market was down once again on concerns of its slowing economy. It too could retest lows as it remains in a steep downtrend which in turn would act as a drag on US markets. A cautious approach is advised.