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Market Lab Report - Premarket Pulse 10/28/16

Published : October 28 2016 at 9:16 ET

Major averages fell yesterday on higher, above average volume on indications that rate hikes may be coming sooner than later. The NASDAQ Composite reversed badly after an initial morning gap-up move to close further below its 50-day moving average. The small cap Russell 2000 has been the worst performer as this listless, go-nowhere, mosh pit of a market is turning into a risk-off, down-trending market, at least for now.

Interest rates were on the move after Bank of Japan Governor Kuroda said that the yield curve is moving in line with the central bank's expectations and that large-scale asset purchases may not be needed in the future. Further, the first post-Brexit vote advance GDP reading out of the UK came in better than expected (+0.5% quarter-over-quarter vs. expected 0.3%), diminishing hopes for further policy stimulus from the Bank of England.

The "forces" that be such as the alleged Plunge Protection Team are designed to prevent markets from blowing apart by keeping corrections to a minimum, especially ahead of the November 8 elections. Naturally, the last thing the status quo wants is a major market correction prior to November 8 since that could tilt the odds against the incumbent party taking office since people do vote with their pocketbooks.

In earnings news, GOOG reported favorably, BIDU somewhat neutrally, while AMZN came in light. GOOG and BIDU are up slightly at the pre-open while AMZN is down. Third quarter U.S. GDP came in at 2.9%, above expectations, mostly based on a late summer surge in soybean exports.


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