Market Lab Report - Premarket Pulse 10/5/16

Published : October 5 2016 at 8:16 ET

Major averages had a choppy session finishing lower on higher volume. Leading stocks continue to hold their ground with some have recently offered buyable pullbacks as noted in recent reports while others such as some Chinese names, two of which are Focus List stocks MOMO and WB, and webinar discussed VIPS, are moving higher. ACIA, another Focus List stock, found support at its 50-day moving average and bounced over 10% higher in after-hours trade yesterday after raising guidance again. ACIA has yet to price a $450 million dollar secondary stock offering, however.

Gold had one of its worst one day drops due to new 31-year lows in the British pound against the US dollar as the British government set March as the deadline for exiting the EU. According to one analyst, “Traders are buying the equity market with both hands, especially over in the U.K.” as the British pound declines.

As gold approaches its 200-day moving average, it may bounce before actually touching its 200-day as traders are anticipatory. Also note that after this initial bounce, gold often ignores the moving averages as many cross currents guide its price.

Over the long run, gold's move off the lows in December is most likely far from over as central banks remain headstrong on continuing their easy money policies. Capital therefore finds a home in hard assets such as stocks, real estate, and precious metals. Instruments such as bitcoin must become more liquid before such vehicles become viable on an institutional level though the market capitalization of the cryptocurrency space is just over $10 billion. Given the rate of growth, this could easily 10-fold then 10-fold again in the coming years.


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