Tag Archives: market lab report

Market Lab Report – Premarket Pulse 2/12/16

Major averages finished lower but staged an upside reversal off lows on higher, above average volume. The S&P 500 undercut its prior major low of 1812 finishing midbar while the NASDAQ Composite finished closer to the top of its trading range. Though the downtrend remains intact, such high volume partial reversal days can signal a temporary low to allow for sharp bear market bounces where renewed short-sale opportunities will surface. That said, any bounce may be shorter-lived than expected as the put-to-call ratio has spiked a number of times recently along with bearish advisers persistently outnumbering bullish ones, yet the market continues to fall underscoring the inherent weakness in the averages. Thursday’s rally was triggered after crude oil traded near a 13-year low but then rallied after OPEC discussed the possibility of cutting production. Such talks are not uncommon but so far have not resulted in any firm conclusions on production cuts. Futures are up almost 1% as oil jumps roughly 5% on continued speculation of production cuts by OPEC suppliers. The Market Direction Model (MDM) went to cash yesterday so all MDM-related positions should have been sold.Â

Market Lab Report – Premarket Pulse 2/11/16

Major averages finished mixed on mixed volume at the low end of their respective trading ranges. All the major indexes reversed off their opening gap-up highs to close near the lows of their intraday trading ranges, with the NASDAQ trading heavier volume. The Market Direction Model remains on a sell signal which was first issued on February 2nd. While markets were disappointed in Federal Reserve Chairwoman Janet Yellen’s somewhat hawkish stance on Wednesday regarding the future direction of interest rates, she conceded Wednesday that negative interest rates are a possibility but that any legal issues would need to be cleared up. Still, she didnât think any serious legal roadblocks existed. Several of Europeâs central banks have cut key interest rates below zero and kept them there for more than a year but it has done nothing to help spur growth. And now Japan is trying it. The idea is that negative rates would push banks to lend thus spurring economic growth. But forcing banks to make loans seems unwise, so the banks may just pass the negative rates onto its customers instead. Negative rates smack of desperation as the Fed paints itself into a tighter and tighter corner. The Fed can choose to be dovish and eventually push rates into negative territory, or they can be hawkish and lean on higher rates in the future. Either way, markets seem displeased. Futures are off about -1.5% at the time of this writing.

Market Lab Report – Premarket Pulse 2/10/16

It was a volatile day as major averages finally closed roughly midbar on lower but above average volume after sharply rising then falling twice as oil and junk bonds continued their slide. The attempt at finding a low was logical given that the NASDAQ Composite had finally undercut its August 24th low, the last of the major indexes to do so. The market’s recent bounce off of the mid-January lows was the weakest in years, underscoring the downtrend. In addition, signs of recession are looming as S&P 500 stocks are looking to post two quarters in a row of declining earnings since 2007-08. Federal Reserve Chairwoman Janet Yellen, in remarks released before the start of her appearance before Congress this morning at 10:00 a.m. Eastern time, sounded a bit more cautious about the outlook for the U.S. economy but did not back away from expectations for additional, gradual, interest-rate hikes. “Ongoing employment gains and faster wage growth should support the growth of real incomes and therefore consumer spending, and global economic growth should pick up over time, supported by highly accommodative monetary policies abroad,â Yellen said. Yellen remained quiet about the U.S. central bankâs own forecast, made in December, that it would raise interest rates four times in 2016, but stressed the Fed was not in automatic tightening mode. âMonetary policy is by no means on a preset course,â Yellen said. Indeed, the Fed seems to be taking a wait-and-see approach. This comes as no surprise as Yellen must walk a tightrope between the prospect of hiking rates vs. a recessionary global economy which would likely pull the U.S. economy down with it. Futures were up strongly prior to her testimony then backed off somewhat. Her testimony may be perceived as too hawkish as some were hoping she would discuss the possibility of negative interest rates. Oil is trading lower and the overall stock market downtrends remain intact, so watch for potential short-sale set ups as they emerge in the coming days. Avago Broadcom (AVGO), discussed in a Short-Sale Set-up (SSS) report sent out this past Friday before the open, is approaching the first downside price target at the 117.17 low of January 20th. Over the past two days it has undercut the January 27th low at 120.09. One can either look to take profits on the undercut of the 1/27 low, or simply use the 200-day line at 129.31 as a trailing stop for any position taken at the 50-day line near 136 last Friday when we first reported on the stock.