Market Lab Report - Premarket Pulse 4/20/16
Major averages finished mixed yesterday on mixed volume. Volume was higher on the NASDAQ Composite which finished lower thus added yet another distribution day onto the count. Both the S&P 500 and Dow are approaching old highs which can serve as resistance as was evident throughout much of 2015. The question is whether QE is powerful enough to help continue this uptrend which is the longest, sharpest uptrend without even a minor correction (> 3%) since late 2011/early 2012. The number of headwinds continues to build but some of the capital generated by QE tends to go into equities so that continues to push the markets higher.
Yesterday commodity-related stocks, the proverbial "stuff stocks" of 2006-2008, such as oils, railroads, truckers, precious metals, industrial metals like steel and copper, and fertilizers were strong. Among the precious metals, silver was notable as it gapped up sharply and posted its highest-high since May of last year.
Futures are mildly higher despite oil trading lower by a couple percent as the oil strike in Kuwait may be ending. Also, the latest stockpile data from the API showed a larger than expected build in crude inventories (+3.10 million barrels; consensus 1.60 million). Additional stockpile data from the Department of Energy will be reported at 10:30 ET, and is expected to show that crude inventories increased by 2.40 million barrels. On the bullish side, the Bank of Japan said they stand ready to inject additional QE as needed.
Chinese provider of language training courses EDU had a buyable gap up on a strong earnings report. Earnings and sales strongly accelerating, group rank 60. We reported on EDU's pocket pivot on 4-13-16.
Machine manufacturing company JBT had a buyable gap up. ROE 45%, accelerating sales, institutional sponsorship has grown over the last 4 quarters, group rank 11. JBT tends to trade higher after its earnings reports. JBT reports earnings after the close on April 26. Still, this is a thinner name so caution is warranted.
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