Tag Archives: market lab report

Market Lab Report – Premarket Pulse 4/22/16

Major averages fell yesterday on mixed volume, higher on the S&P 500, but despite yesterday’s lower volume on the NASDAQ Composite, it has had a number of distribution days over the past 20 days. On a technical basis, the Dow and S&P 500 may experience temporary reversals in the days ahead as they approach old highs. Weak economic news out of Europe and a series of earnings misses by juggernauts GOOG, MSFT, SBUX, GE, and CAT are weighing on futures. Areas of leadership, such as the airline stocks, came under sharp pressure yesterday, and big-stock NASDAQ names like NFLX and AAPL have broken down as they have breached major moving averages on volume over the past several days. The action indicates that investors should maintain a cautionary stance as they keep a close eye on their trailing stops while avoiding the urge to chase strength in names that continue to act well. It is best to wait for pullbacks into logical areas of support before initiating long positions as a method of limiting risk as much as possible in what is admittedly a tricky and difficult environment.

Market Lab Report – Premarket Pulse 4/21/16

Major averages finished roughly flat yesterday on higher volume. Volume was above average on the NASDAQ Composite and the highest volume day in over a month so could be considered a churning day of distribution. Leading stocks continue to lag though oil and other commodities continue higher. The rise in oil was due to the Department of Energy’s weekly stockpile report showing that crude inventories rose by 2.08 million barrels compared to the 2.40 million barrel consensus, plus speculation that OPEC producers would meet again to discuss possible production caps. Since QE started in earnest in early 2009, QE continues to manipulate markets higher overall while ultra-low to negative interest rates continue to distort markets. Nevertheless, the number of headwinds continues to mount as the markets have undergone two sharp corrections since last August. The current uptrend has yet to undergo even a minor > 3% correction, and is the longest, sharpest rally without a minor correction since late 2011/early 2012 when a new QE program took hold. Currently, the Fed has taken a dovish stance thus rate hikes should be postponed as long as the global economy remains in a rut. Other central banks continue their QE programs wherein the capital finds its way into equities, especially in the US market which is the tallest standing midget. But signs of exhaustion in this trend are quite clear. The S&P 500 and Dow are up against old highs which can serve as resistance as they did a number of times in 2015. And FANG-type big cap leaders have not been putting in leadership performance. Smaller cap and lower quality names have rallied sharply off lows but this has been more of an oversold, short covering reaction rather than a representation of true leadership. The European Central Bank said this morning it would leave rates unchanged. ECB President Draghi said rates would stay at current levels or go lower for the extended period. That said, yesterday’s commentary out of China cast some doubts on future easing measures from the People’s Bank of China which caused the selloff late in the day.

Market Lab Report – Premarket Pulse 4/20/16

Major averages finished mixed yesterday on mixed volume. Volume was higher on the NASDAQ Composite which finished lower thus added yet another distribution day onto the count. Both the S&P 500 and Dow are approaching old highs which can serve as resistance as was evident throughout much of 2015. The question is whether QE is powerful enough to help continue this uptrend which is the longest, sharpest uptrend without even a minor correction (> 3%) since late 2011/early 2012. The number of headwinds continues to build but some of the capital generated by QE tends to go into equities so that continues to push the markets higher. Yesterday commodity-related stocks, the proverbial “stuff stocks” of 2006-2008, such as oils, railroads, truckers, precious metals, industrial metals like steel and copper, and fertilizers were strong. Among the precious metals, silver was notable as it gapped up sharply and posted its highest-high since May of last year. Futures are mildly higher despite oil trading lower by a couple percent as the oil strike in Kuwait may be ending. Also, the latest stockpile data from the API showed a larger than expected build in crude inventories (+3.10 million barrels; consensus 1.60 million). Additional stockpile data from the Department of Energy will be reported at 10:30 ET, and is expected to show that crude inventories increased by 2.40 million barrels. On the bullish side, the Bank of Japan said they stand ready to inject additional QE as needed. Chinese provider of language training courses EDU had a buyable gap up on a strong earnings report. Earnings and sales strongly accelerating, group rank 60. We reported on EDU’s pocket pivot on 4-13-16. Machine manufacturing company JBT had a buyable gap up. ROE 45%, accelerating sales, institutional sponsorship has grown over the last 4 quarters, group rank 11. JBT tends to trade higher after its earnings reports. JBT reports earnings after the close on April 26. Still, this is a thinner name so caution is warranted.