Tag Archives: market lab report

Market Lab Report – Review of Pocket Pivots for the Week of March 14-18, 2016

This has been a good week for pocket pivots that we’ve identified and reported on in terms of upside follow-through. Please note that Five Below (FIVE) did not qualify as a pocket pivot per our report of 3/17 as it did not close at least break even on that day. The company also is expected to report earnings on Tuesday so can still be watched given that it is holding up in a tight consolidation. Maxlinear (MXL) GM – Following Wednesday’s pocket pivot MXL gave buyers a shot at a lower-risk entry on Thursday when it briefly pulled into the 10-day line early in the day. This is the sort of pullback following a pocket pivot that you want to keep an eye on. The pocket pivot also coincided with a clean new-high base breakout, and the stock follow-through on Friday with further upside. Dr. K – The current base showcased two powerful upside moves on two strong earnings reports, thus increasing the odds the stock will outperform the general market should the uptrend in the market continue. Indeed, it has well outperform the S&P 500.  Universal Forest Products (UFPI) GM – UFPI has blasted higher following Thursday’s pocket pivot as volume ballooned. From here only a pullback back into the rising 10-day moving average at 79.45 would offer your lowest-risk entry points. Dr. K – While the uptrend in the general market has been much due to defensive names, some rotation into cyclical names has been observed. The industry group rank of UFPI is a strong 5 out of 202 groups. Ebix (EBIX) GM – Another nice follow-through after a pocket pivot is seen here in EBIX. I also liked the initial position of this pocket pivot on Thursday as the stock had pulled back into its green 20-day exponential moving average. When it was able to poke its head back above the black 10-day moving average it cleared as a bona fide pocket pivot. Note that Friday’s action also qualified as a second pocket pivot given that the stock moved up and off of the 10-day moving average on very heavy volume. Dr. K – Each time this stock has reported earnings over the last several earnings reports, it has moved higher, thus it is unsurprising that it was one of the first stocks to hit new highs on March 1. The constructive pullback allowed an optimal entry point into the stock. 

Market Lab Report – Premarket Pulse 3/18/16

Major averages rose yesterday on higher volume as the central bank easy-money script continues to play out. Overall the action remains bullish. Oil rose past $40 a barrel. The correlation between oil and the stock market since the start of the year has been pronounced. A couple of new pocket pivots arose though much of the rally has been from junk-off-bottom and defensive names so buying on pullbacks and keeping stops tight should be a standard approach in helping to keep risk to a minimum. Pocket pivots: Internet-based IT software maker Ebix (EBIX) – pretax margin 32.6%, accelerating earnings. Stock made a strong move after its most recent earnings report. It has had a constructive, low volume pullback. Building products manufacturer Universal Forest Products (UFPI) – earnings are strongly accelerating, institutional sponsorship has grown over the past 4 quarters, group rank 6. This is a pocket pivot breakout so can be bought on a constructive pullback closer to its 10dma.

Market Lab Report – Premarket Pulse 3/17/16

Major averages rose on higher volume with the S&P 500 closing above its 200-day moving average. The Federal Reserve on Wednesday indicated it only expects two interest rate increases in 2016 instead of four. In a statement, the central bank said “global economic and financial developments continue to pose risks” to the U.S. The Fed trimmed its estimate of GDP growth in 2016 to 2.2% from 2.4%. And inflation as measured by headline PCE is now expected to rise to 1.2% by year end, down from a prior 1.6% call. The vote was 9 to 1, with Kansas City Fed President Esther George dissenting. She wanted a quarter-point increase in rates. This reduction in anticipated rate hikes gives the Fed room to further reduce the number later this year to no rate hikes, or they may even introduce negative rates, should the global economy remain stagnant. Of course, central banks are failing to see that such actions are not helping, or more likely, they are buying time by propping up the price of hard assets and equities as they have done since 2009. GLD and Silver Wheaton (SLW) had continuation pocket pivots as the Fed’s dovish response weakened the dollar thus strengthened gold and silver. Eroding confidence also contributed to the rising price of gold. A pronounced divergence exists between Dow Jones Utilities and major indices such as the S&P 500 between 12/4/15 when Dow Utilities started on its uptrend while the S&P 500 trended lower. The major indices eventually bounced but Utilities continued higher as well. Indeed, a number of utility stocks have been hitting our screens. So while this uptrend has been mostly a junk-off-the-bottom and defensive name led rally, it is somewhat similar to the QE-manipulated rallies we had in 2009. Thus, central banks which sit with a considerable amount of power, especially when in alignment, can push markets much higher than anyone expects, despite the worsening fundamental backdrop. Futures are lower this morning as the tug-of-war between easy money and slowing global growth continues. Semiconductor Maxlinear (MXL) had a pocket pivot breakout. It can be bought on a constructive pullback closer to its 10-day moving average. Earnings and sales are skyrocketing, pretax margin 23.8%, ROE 38.9%, group rank 29.