Market Lab Report - Premarket Pulse 5/25/16
Major averages climbed yesterday throughout the day on higher volume after the European Central Bank made comments regarding the potential for further monetary easing. Both the S&P 500 and NASDAQ Composite finished firmly above their respective 50-day moving averages on higher volume.
The recent Hulbert piece on bear markets seems to miss the point. The majors have not corrected at least 20% so there has been no bear market. That said, a major market top could be forming that started in mid-2015. But QE could push the majors into new high ground, which would make this bull one of the longest bull markets in history. That said, it would be foolish to call it an aging bull more prone to a major correction since QE distorts and manipulates markets, and the printed money has to find a home somewhere. Plus markets can rise (and fall) much further than most ever expect.
Futures are trading higher by almost half a percent on oil supply news showing inventories fell by a larger-than-expected amount, pushing oil up to a 7-month high. Further, a Greek bailout deal is in place which has also pushed European markets higher.
Medical device maker Boston Scientific (BSX) had a pocket pivot. Earnings and sales are accelerating, group rank 23. BSX gapped higher on its prior earnings report.
Small molecule drug maker Medivation (MDVN) nearly had a pocket pivot. It deserves mention since it has traded in a tight band, and has had three gaps higher from its lows. Earnings have powered higher and sales are accelerating, pretax margin 27.95%, ROE 25.7%.
As we discussed over the weekend, the short side of the market will only be effective in the event of a market break to lower lows. Yesterday's positive technical action puts the short side on the back burner. In fact, two of our short-sale targets, Microsoft (MSFT) and Mobileye (MBLY), each flashed a roundabout type of pocket pivot which would de facto take them off the table as short-sale targets. This action also provides strong market feedback that yesterday's market turn may have legs.
This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.