Tag Archives: market lab report

Market Lab Report – Premarket Pulse 1/25/16

Major averages rose Friday on lower volume. A bounce was due given the spike in the put-call ratio a few days prior plus the oversold situation, but its sustainability remains in question given the state of the global economy. Peak-to-trough, the S&P 500 fell -15.1% and the NASDAQ Composite -17.5%. A rally in oil stocks, thanks to a bounce in beaten-down crude oil prices, helped bolster the rally, while utilities chimed in with their own group strength. This argues for a more defensive posture by investors, despite the sharp market bounce off last Tuesday’s intraday lows. After last week’s two day bounce in oil and junk bonds, both are heading lower once again as the downtrends remain intact. As a consequence, futures are down almost half a percent at the time of this writing. Cash remains king.

Market Lab Report – Premarket Pulse 1/22/16

Major averages rose tepidly yesterday on lower volume, finishing roughly midbar. While contrarian arguments suggest a bounce as the put-call ratio has spiked and bearish advisors outnumber bullish ones, defensive stock industry groups have shown strength while the small cap Russell 2000 continues to show weakness, a sign of a risk-off market. Timing a bottom in an unhealthy environment is like trying to catch a falling knife, as the saying goes. We are in such an environment. Thus the timing models are quick to test the waters and quick to reverse back to cash in this period of elevated volatility. The market remains caught in a gap-up, gap-down news driven situation. Indeed, futures are up around 2% at the time of this writing as oil prices bounce more than 5%. The media is saying the bounce in oil is due to the stance the ECB took yesterday at 8:30 am EST on the possibility of additional monetary easing when they next meet in March. Of course, the media will always try to find a reason for any big move in the market but begs the question why, after the ECB suggested additional easing, the market was unable to sustain its stronger bounce in yesterday’s trade. Perhaps institutions are as confused as ever, thus uncertainty reigns making for more rip-tides in this environment of elevated volatility. Sometimes the sidelines are the best place to be until the smoke clears. Over in Japan, the Nikkei got a boost after an aide to Prime Minister Shinzo Abe said Thursday that “conditions for additional easing have fallen into place.” The Bank of Japan will meet on Jan. 28-29, and some expect the central bank’s asset-purchasing program could be increased. 

Market Lab Report – Premarket Pulse 1/21/16

Major averages attempted another bounce, this time on huge volume. The NASDAQ Composite finished close to breakeven while the S&P 500 was down about 1%. Both had long lower tails improving the odds of a temporary bottom. Both also retested prior lows with the S&P 500 retesting its October 2014 low. The rally was catalyzed by Fed futures which suggest, given the calamity in global markets, that the Fed is far less likely to hike rates more than once in 2016. US futures were pulled down overnight by China’s markets which have yet to find a floor. While the US Federal Reserve maintains its “no more QE” policy, the odds of central banks around the world taking additional quantitative easing measures is on the rise. China’s central bank earlier this week made its most aggressive cash injection in four years into the country’s financial system. And today, The European Central Bank’s president Mario Draghi, after keeping interest rates steady, said the ECB will review and ‘possibly reconsider’ its policy stance on rates at its next meeting on March 10 as global market turmoil raises downside risks. After being down earlier this morning, futures are now up at the time of this writing on Draghi’s announcement. Expect more volatility ahead.