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Market Lab Report - Premarket Pulse 3/28/17

Published : March 28 2017 at 8:49 ET

The major market indexes all gapped down to or just below their 50-day moving averages where they found support. The S&P 500 and Dow Jones Industrials Indexes closed down on higher volume, while the NASDAQ Composite diverged, closing up on lighter volume. The lower prices after the open were seen as possible bargains and some names had strong finishes, but the situation still remains tentative.

The American Health Care Act was expected to boost the potency of the GOP's proposed tax reform by reallocating nearly $1 trillion dollars from Obamacare to the cause. After the healthcare bill was pulled Friday, the GOP now turns its attention to tax reform and the border adjustment tax though conflict seems unavoidable. House Ways and Means Committee Chairman Kevin Brady has said a border adjustment tax is "a given" with any tax reform plan while Freedom Caucus Chairman Mark Meadows is opposed to the measure.

A penalty at the border would be a negative for retailers as many of their products are manufactured overseas and then imported into the US. The GOP was unable to compromise on health care reform which has fostered the notion that differences on the controversial border tax may also become an issue.

Focus List Update

While the ability of the indexes to hold their 50-day moving averages is constructive, it still boils down to what individual stocks are doing. Investors must be alert to pullbacks to areas of potential support as lower-risk entry opportunities.

AMZN found support at its 50-dma yesterday. That would have been a lower-risk entry point for those alert to it.

CC held tight at its 10-dma yesterday. Still in a lower-risk entry position.

FB found support at the 20-dema as selling volume dried up on the day.

MKSI found support at its 50-dma yesterday, putting it in a lower-risk buy position.

NFLX found support at its 50-dma.

NTES is sitting right at its 10-dma and 20-dema with volume coming in at below average. This puts it in a lower-risk entry position using the two short moving averages as tight selling guides.

QTNA posted a voodoo day at its 50-day moving average, which makes it buyable right here using the 50-dma as a tight selling guide.

SINA held tight at the 10-dma with volume declining. This remains in a buy position using the 10-dma as a tight selling guide.

SQ had a pocket pivot as it had an outside reversal, a nicely bullish pattern.

TTD found support yesterday at its 50-dma.

VEEV posted a pocket pivot as it bounced off of its 10-dma yesterday on very strong volume that was 123% above-average though is somewhat extended. As we suggest, pocket pivots should not be bought if extended but used as a guide to buy constructive weakness that occurs after the pocket pivot.


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