Market Lab Report - Premarket Pulse 8/24/16
Major averages rose yesterday on mixed, below average volume and closed on the low end of their trading ranges. While nervousness grows ahead of Fed Chair Janet Yellen's Jackson Hole speech this Friday, stock continue to act well including IPOs which tend to carry greater risk. The Russell 2000 has also outperformed the other indices since Brexit lows in June. The uptrend for now remains intact as the market continues to display risk-on behavior.
3-D printing company Three D Systems (DDD) had a pocket pivot on Monday after volume dried up (VDU). The stock had been trading in a tight sideways manner adding to its constructive pattern. It gapped higher on its prior earnings report as earnings started to accelerate after a number of slowing quarters. These bottom-fishing pocket pivots (BFPPs) can work well on a time-value basis for brief holding periods though DDD could repeat the price action it had early this year when it obeyed its 10-day moving average for a number of weeks. The stock is pulling into its 10-day moving average, which puts it in a lower-risk entry position following Monday's pocket pivot.
Medical injectable product developer Eagle Pharmaceutical (EGRX) had a pocket pivot. EGRX gapped higher on its prior earnings report. Earnings and sales consequently shot higher in its latest quarter. Institutional sponsorship has consistently grown since the company went public 10 quarters ago.
Electric car maker Tesla Motos (TSLA) had a pocket pivot. This is meant to be a short-lasting trade so take your profits when you have them. The 10-day line at 224.76 serves as a tight reference for a selling guide. TSLA did indeed broach this level but by just 0.5% before recovering. It is trading at 226.71 at the time of this writing.
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