Market Lab Report - Premarket Pulse 5/12/16

Published : May 12 2016 at 8:24 ET

Major averages gave back yesterday most of what they made the prior day on mixed volume. Such market noise can no doubt be frustrating and can trigger fail-safes on both the Market Direction Model (MDM) and VIX Volatility Model (VVM) timing strategies. While the MDM remains on a sell signal, the market at this juncture struggles to find direction, caught between a large number of distribution days, scant quality leadership, defensive names outperforming, and QE which often creates shallow floors.

Shorter term trading remains mildly profitable but many leading names are not making much sustained progress as we showed last weekend on our actionable Pocket Pivot Review (PPR) and Buyable Gap Ups (BGU) report update. Patience is key as more sizable gains can be achieved once a profitable market window of opportunity opens. Risk control in both stocks and timing strategies is also essential as demonstrated by the VVM which sometimes must sit through a series of small losses to pave the way for the larger gains.

Futures are higher by more than 0.5% at the time of this writing as the price of oil continues higher. A drop in supply is predicted for later this year by the International Energy Agency.

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