Market Lab Report - Premarket Pulse 6/7/16
Major averages rose yesterday on lower, below average volume as they make their way toward new highs. The S&P 500 and Dow Jones Industrials both sit just roughly 1% from blue sky.
Federal Reserve Chair Janet Yellen on Monday said she expects the U.S. economy will continue to improve and expects further gradual increases in interest rates will “probably” be appropriate, though mentioned the economy faces a number of challenges.
“I continue to believe that it will be appropriate to gradually reduce the degree of monetary policy accommodation, provided that labor market conditions strengthen further and inflation continues to make progress toward our 2% objective,” Yellen said in a speech to the World Affairs Council of Philadelphia.
Of course, she's been and will continue to walk the tightrope between tightening and not tightening as the Fed is a political body.
Yellen offered no clues on the timing of Fed action in her remarks, but the weak May jobs report has certainly pushed any rate hikes further out. The meeting in September is the month when Fed futures put the odds of a rate hike above 50%.
Semiconductor company Maxlinear (MXL) had a continuation pocket pivot off its 10-day moving average. We reported on the buyable gap up and a subsequent pocket pivot in MXL in recent reports. Earnings and sales are skyrocketing, pretax margin 23.8%, ROE 38.9%, group rank 74.
Cement manufacturer Eagle Materials (EXP) had a pocket pivot off its 10-day moving average. EXP is a cousin to VMC which had a pocket pivot in April which has done reasonably well since we reported on it on April 13. VMC itself is currently pulling back to its 20-day moving average on declining volume. EXP had pulled back to its 20-day moving average before pushing higher off of the line yesterday.
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