Market Lab Report - Premarket Pulse 9/13/16
Major averages rebounded yesterday on lower volume after Friday's hawkish viewpoints were reversed to some extent by a Fed member. To some extent the reflex bounce was "logical" after the NASDAQ had undercut an early August low on the morning gap-down open.
Yesterday, Atlanta Fed President (non-FOMC voter) Dennis Lockhart indicated that incoming data warrants a serious discussion regarding a potential interest rate hike. Minneapolis Fed President, and non-FOMC voter, Neel Kashkari made somewhat dovish remarks that there doesn't appear to be any huge urgency in acting, but that he continues to pay close attention to incoming inflation data. Federal Reserve Gov. Lael Brainard also called for prudence in raising interest rates. Brainard is known to be in the dovish camp.
As a result, the fed funds futures markets signaled that the implied probability of a rate hike at the September meeting fell to 11% from 19% earlier Monday morning. It is not until the December meeting that fed funds futures place the odds of a rate hike at roughly 50/50.
We have mentioned the following stocks in prior reports: WB, MOMO, and NTES
They have been on our Focus List as ones to watch for buying on constructive pullbacks. On Monday, each pulled back to its respective 20-day moving average then had a pocket pivot off that moving average.
A few other stocks on our Focus List had pullbacks to support at their 20-day moving averages and then bounced, such as ACIA, BABA, LN, and TWLO, for example. In each case, investors would have been smart to sell into prior strength which would put them in a better position to buy back on such pullbacks although it requires some intestinal fortitude. This is the "Ugly Duckling" at work in this market, where stocks will bounce off of support levels when things look their ugliest.
Futures are down sharply again this morning as the "whip and the saw" begin to dominate the action ahead of next week's Fed meeting.
This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.