Tag Archives: market lab report

Market Lab Report – Premarket Pulse 3/16/16

Major averages finished quietly lower yesterday and near the top of their respective trading ranges on mixed volume. This comes ahead of the Federal Reserve’s policy announcement at 2 p.m. EDT today following the conclusion of their two-day meeting. The Fed has become increasingly dovish with regard to any interest rate hikes this year as the global economy remains stagnant. That said, they have said they remain open to the possibility of rate hikes later this year depending on improving economic conditions. The Bank of Japan left its policy rate unchanged at -0.1% while downgrading its economic outlook. Given that its economy has not improved despite negative interest rates, it calls into question what tools central banks have to stoke their respective economies. The market’s future direction may hinge upon the Fed policy announcement, so investors should remain alert to any change of trend. For now the Market Direction Model remains on a buy signal pending any evidence to the contrary.

Market Lab Report – Premarket Pulse 3/15/16

Major averages finished roughly flat yesterday on lower volume ahead of the central bank policy meetings scheduled this week. These include policy announcements fro the Bank of Japan, Bank of England, Swiss National Bank, and Federal Reserve which concludes its 2-day meeting this Wednesday. Naturally, the Fed will try to double-talk the markets higher, thus the uptrend could very well continue. They are not expected to hike rates at this meeting. CME FedWatch futures puts the odds at 27%. Further, given the global economic woes, they may have to postpone any rate hikes until 2017, let alone switching gears and pushing rates negative. Our own view is that the Fed will indeed stand pat. Futures are currently lower as oil is off almost 3% or $36.20 a barrel.

Market Lab Report – Premarket Pulse 3/14/16

Major averages continued their moves higher Friday on lower volume. Both the S&P 500 and Dow closed above their respective 200-day moving averages. As the bounce continues, the saying “Don’t fight the fed” certainly applies as central banks around the planet gang tackle their respective middle classes, penalizing savers with naught to negative rates of interest. Central banks seem to think such low rates will force banks to lend and entice people to borrow, but they fail to see that lower rates rob savers of income, destroys pension and insurance funds, and leverages debt to dangerous levels. Indeed the sovereign debt crisis is upon us. People will not borrow or spend, and businesses will not hire or expand when they have no confidence in the future. You cannot stimulate the economy with lower rates while crushing it with taxes. Nevertheless, as the printing presses roll on, hard assets and equities are the winners. Indeed, capital seems to have rotated back into cyclical groups which were out of favor earlier this year. Still, defensive groups and junk off bottom names are also participating in this rally, not a sign of healthy internals.  One interesting note was the ECB said it will start buying debt issued by companies as well as governments. While this would normally be good news since corporations have to pay back their debt unlike government, the debt they will buy will be riskier debt of entities that are in trouble. So it will be sending good money after bad. Despite these cross-current the Market Direction Model has remained on a buy signal since March 1st, and a number of new pocket pivots that we’ve reported on recently are making progress. Ultimately it is the action of individual stocks that investors must rely upon if progress is to be made.