Market Lab Report - Premarket Pulse 6/15/16
Major averages closed lower on higher volume but managed to recover much of the day's losses as QE-based capital leaves the UK and European markets and finds its way into US markets. The UK and European stock markets have lost around 7-8% in the last 4 days as the Brexit vote nears.
Yesterday's intraday rally off the lows found its impetus in the NASDAQ Composite Index, which found support at its 200-day moving average. The S&P 500 meanwhile undercut its 50-day moving average but was able to rally back up to a point just under the line by the close. From a technical perspective the bounce was logical given a four-day sell-off from last week's highs, and the situation remains fluid.
The Fed concludes its two-day meeting today at 2 pm ET. The market will focus on what Fed Chair Yellen says regarding rate hikes and "Brexit". Analysts believe any economic instability that results from "Brexit" would most likely put Yellen in a more dovish position, thus further postponing any rate hikes. Still, a number of Fed members have taken a hawkish position as of late and suggested that another rate hike is due sooner than later.
Ultimately, this jawboning will not boost the global economy, so central banks have painted themselves into a corner thus believe they have no choice but to continue to lower rates by fueling the QE pump. Germany's 10-year bund went to a negative yield yesterday for the first time in history.
Should the market find its feet we believe members should be mindful of stocks on our current Pocket Pivot and Buyable Gap-Up watch list that are trading at or near potential areas of support, such as UBNT, EBIX, BSX, MXL, ULTA, ISRG, FN, JBT, NVDA, VMC, EXP, and WB.
On the short side, in the event of a resumed market sell-off, we believe GOOGL, AAPL, and NFLX are in vulnerable positions just below their 20-day moving averages, which would also serve as guides for upside stops.
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