Market Lab Report - Premarket Pulse 7/12/16
The major averages finished higher yesterday, closing mid-bar on lower volume showing institutions were not actively participating in the breakout to the new closing all-time highs set by the S&P 500.
That said, the majors went largely sideways in 2015, scraping near new highs on subdued volume while volatility remained subdued, helping 1x ETF XIV form a nice uptrend.
With central banks printing QE en masse, a similar situation could occur even should reluctant markets remain unwilling to shift into an uptrend. We also cant ignore the possibility that the markets, after forming a long base since early 2015, could very well push off into an uptrend of sorts, helped along by QE.
Indeed, the recent launch off Brexit lows almost straight to new highs suggests that while the market may back and fill before going higher, global banks will do what they have pledged regarding further monetary easing and maintaining liquidity in the face of the Brexit aftermath.
Keep in mind the QE wildcard has invalidated numerous methods that once were useful. It is best to remain focused on price/volume action of major indices and leading stocks. As of now, with the majors having shot straight up from post-Brexit lows, and a few leading stocks showing signs of life, while some backing-and-filling could occur, the path of least resistance for now is up.
Futures are up about half a percent on an Alcoa (AA) earnings beat.
Electrical contract manufacturer Fabrinet (FN) had a pocket pivot. Earnings and sales are accelerating, institutional sponsorship has grown over the last 5 quarters, group rank 21. FN gapped higher on its prior earnings report.
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