Market Lab Report - Premarket Pulse 8/20/15
Most Federal Reserve officials thought economic conditions needed for a rate hike were “approaching”, thus making a September rate hike a possibility. “Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point,” according to the minutes.
Those in favor of a rate hike said an appreciable delay in a tightening monetary policy would spark inflation or financial instability. By contrast, only a minority of Fed officials counseled patience, noting that there were no grounds to think inflation would move back to the 2% annual target, particularly because of the strong dollar and recent drop in crude oil prices.
So while this Fed-speak implies more Fed members are pushing for a rate hike since the economy is "apparently" showing enough improvement to warrant such a hike, it ultimately depends on the strength of the recovery which is still quite suspect, and therefore allows the Fed to further postpone any rate increase on the basis of a stagnant economy.
Commodities/oils continue to plummet at a pace not seen since late 2008 shortly before the crash.
Short-sale target Tesla Motors (TSLA) reversed yesterday right at the 50-day moving average. Near-term we look for a downside objective of 232.74, the low of seven trading days ago. In a prolonged market decline, however, the stock could go much lower. The 50-day moving average plus 2-3% of upside porosity remains the primary guide for an upside stop on any short position taken yesterday morning when our SSS report on the stock was released.
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