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Market Lab Report - Premarket Pulse 2/17/17

Published : February 17 2017 at 9:23 ET

Major averages closed near breakeven to slightly off on mixed volume yesterday after trading lower earlier in the day. As said, some digestion of gains can be expected as distance between the averages and their respective 10-day moving averages increased.

QTNA pulled right down to its 10-day before bouncing. Volume was lower than the prior days. This stock tends to trade a bit erratically so it's a good example of a stock where selling into strength works well, otherwise one has to set their stops a bit looser, which might be beyond some investors' risk tolerance levels.

NVDA got support at its 50-day moving average. This will be a good test to see if the stock has topped or if it can form another base before hitting new highs.

SQ had a high volume reversal the other day which was a signal to either sell or keep stops very tight. Yesterday, it definitively broke down below its 50-day line.

FCX closed below its 50-day line. These types of "stuff" stocks often trade in wider price bands so one may have to keep stops a bit looser to avoid getting stopped out. Alternatively, selling into strength can work.

BABA is very near support which is just below the low of its buyable gap up day. Other leading Chinese names are in uptrends.

FB is finding support at its 10-week line.

Stocks testing support should be expected to hold. If not, then use the nearest support level, e.g., 10-day or 50-day moving average as a tight stop in the event this morning's minor futures gap-down develops into something more severe. The market has been up steadily throughout the past few weeks and is vulnerable to a pullback, so keeping risk to a minimum on your long entries is critical. In addition, selling into prior strength and thereby having some cash/buying power in your pocket is generally helpful in maintaining an even, opportunistic psychology when a pullback finally comes.


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