Market Lab Report - Premarket Pulse 8/17/16
Major averages fell yesterday on higher but below average volume.
July CPI came in flat, which was in-line with the Briefing.com consensus. Separately, core CPI rose 0.1% in July (Briefing.com consensus +0.2%), which pressured year-over-year core CPI to 2.2% from 2.3% in the prior month. The inflation reading led to a modest uptick in rate hike expectations after New York Fed President and FOMC voter William Dudley said the right time for a rate hike is approaching.
Dudley recently stated that a September rate hike remains in the realm of possibilities. The fed funds futures market currently estimates the implied probability of a rate hike at the September meeting at 12.0%, rising from Monday's estimate of 9.0%. It won't be until early 2017 that the probability of a rate hike rises to more than 50%.
The FOMC Minutes from the July meeting are out today at 2 pm ET.
Biotech giant Biogen Idec (BIIB) had an extended pocket pivot on 8-2-20 after gapping higher twice prior, once due to strong earnings. It has since retraced in a constructive manner which we call a volume dry-up (VDU) where price range narrows while volume remains quiet. We sent a report yesterday when it had just shown strength so became actionable around the 316 price level. It is currently still trading in its tight, consolidating pattern.
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