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Market Lab Report - Premarket Pulse 10/26/16

Published : October 26 2016 at 9:17 ET

Major averages fell yesterday on higher, below average volume, marking the fifth distribution day for the NASDAQ Composite and further underscoring that at least the short-term trend in this market is more likely down than up. All majors continue to lag the NASDAQ Composite and NASDAQ 100 Indexes.

Nevertheless, QE has a pernicious way of pushing markets higher in listless fashion as they scrape along old highs but make little progress. Meanwhile, VIX Volatility Model instruments such as XIV can make healthy gains despite a sideways market as shown especially in 2015. 

Futures are lower by roughly half a percent on the earnings report by AAPL as they reported contracting margins and a year-over-year decline in sales which has the stock trading down a few percent prior to the market open. Global markets are also responding in the red as AAPL stock is arguably a barometer of sorts for global economic health, coming on the heels of yesterday's report from Caterpillar (CAT).

CAT lowered guidance, citing the fact that much machinery, from bulldozers to railroad engines, lies idle, creating a strong market for used machinery and impacting CAT's sales negatively. In addition, we have seen economic bellwethers like railroader Union Pacific (UNP) and big-stock industrial Three M Company (MMM) fall recently on weak earnings and outlooks. All of this could be pointing towards a continuing global economic slide, and whether central banks have any meaningful "bullets" left in their QE guns.


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