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Market Lab Report – Premarket Pulse 7/9/15

Major averages fell yesterday on lower volume, some of this due to a four-hour NYSE trading halt, with both the S&P 500 and DJIA once again closing below their respective 200-day moving averages. The issues in Greece remain pending. China’s markets rocketed higher though this could amount to nothing more than a dead cat bounce as the Chinese government attempts to artificially prop up its markets. With heightened news driven volatility, gaps higher or lower at the open are the norm, so for now, the sidelines are not a bad place to be. Remember that successful investing is not about guessing at bottoms, but about identifying meaningful trends in stocks, so the difference between anyone who guessed at a bottom on Tuesday and anyone who guessed at a bottom on Wednesday is simple luck. With markets so oversold, a bounce in China was bound to come eventually, and of course this leads to a similar reaction in our markets. One can simply be patient and watch to see how things develop from here as stocks potentially try to set up again.

Market Lab Report – Premarket Pulse 7/8/15

Major averages rose on higher volume after trading lower for most of the day on uncertainties in Greece. The rally was brought on by hopeful headlines regarding more Eurozone meetings for the alleged purpose of sorting out Greece’s debt issue. The S&P 500 and DJIA traded under their respective 200dmas then managed to close well above it on a strong bounce. The IMF said the Fed should wait to move until it sees âclear signs of wage and price inflation.” The IMF doesnât see inflation as measured by the Fedâs favorite measure hitting 2% through 2017. This implies QE lasting much longer than expected, but then, Pimco’s former Bill Gross who ran the world’s largest bond fund gave similar expectations on the lifetime of QE. Thus this QE-fueled bull market could continue for far longer than expected. That said, futures are trading lower by more than 0.5% at the time of this writing as the Chinese stock markets continue to unravel. Nearly half of the countryâs listed companies have been suspended for trade. The Shanghai Composite Index SHCOMP lost another -5.90% bringing the total loss over the last month to almost 1/3 or 33% from its prior peak. Of course, the big Chinese bull that began last November rose more than 100% on the SHCOMP, so will have retraced all of its gains should it fall more than 50% from its prior peak. From here, the pace of selling could accelerate should margin debt issues aggravate the situation much as such issues did to cause the great crash of 1929. Over in Greece, the EU has now given Athens yet another deadline of this Sunday to reach an agreement with lenders or risk bankruptcy and a eurozone exit. Greek Prime Minister Alexis Tsipras said his government will present a detailed reform list in coming days. Medical device maker ABMD had another pocket pivot off its 50dma. Its close was essentially breakeven. Earnings are skyrocketing, group rank 33. ABMD gapped up on its last three earnings reports. Outsourced healthcare company TMH had a pocket pivot off its 10dma. Earnings and sales are accelerating, ROE 48.3%. Temporary labor staffing firm TBI had a pocket pivot through its 10dma. Earnings and sales are accelerating, group rank 56. Keep in mind that pocket pivot alerts are intended to flag stocks that are showing constructive action, regardless of the general market environment, but may not necessarily be actionable based on general market conditions. In the current environment stocks like these are candidates for one’s buy watch list and may become actionable IF the general market finds its feet and tries to rally once again.

Market Lab Report – Premarket Pulse 7/7/15

Major averages fell yesterday on higher volume. With problems unresolved in Greece, the US majors trading below their respective 50-day moving averages, the mounting number of distribution days, China’s plummeting stock market despite government efforts to prop it up, bullish sentiment in the American Association of Individual Investors at new lows, and spiking short interest, it’s no surprise pessimism rules the day. But the market lives to fool the majority, so while we could get another selloff, a near-term low could come at any time. That said, staying on the sidelines and/or keeping a very close eye on stops in this volatile period is prudent. We will continue to watch for profit opportunities as well since such can surface at the most unexpected times. The plunging price of oil is due to issues in Greece which could force Greece out of the Eurozone as well as a sharp slowdown in China, which has been an area of growth in recent years. The worries of further dominoes to fall could push the Eurozone into yet another recession which would reduce demand for oil. Further, agreement between the West and Iran over Iranâs nuclear program whose deadline is today would lift sanctions and enable the country to export oil once again which would have a marked impact on the supply of oil.