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Market Lab Report - Premarket Pulse 1/14/16

Major averages could barely manage a bounce after gapping up at the open yesterday as they the S&P 500 staged an outside reversal on higher volume. The NASDAQ came close to a full outside reversal, but staged a massive reversal regardless. Oil and junk bonds continued their slide. The Russell 2000 is now more than 20% off its peak, or in bear market territory, as its divergence from the S&P 500 and NASDAQ Composite widens. Even though we are only two weeks into the new year, the market is down more than 11% so far this year.

Nevertheless, a short-lived bounce could materialize at any time so keep stops tight on any short positions. NFLX broke hard yesterday and is approaching its 200-day moving average, which would constitute a reasonable short-term downside price target, particularly with earnings due next Tuesday. TSLA has undercut the 202 low of mid-October as it approaches the 195 low of late August. Either could be viewed as a short-term downside price objective. AAPL remains within range of its 92 low of August 24th, which could serve as a reasonable downside target as well. So far it has been unable to regain the $100 Century Mark, which could serve as an upside trailing stop.

The Chinese' Shanghai Composite Index was up nearly 2% overnight. Indeed, China is due for a bounce but keep in mind downtrends as well as uptrends can last longer than one expects. With yesterday's weakness in the US markets, European stocks are down nearly 2% at the time of this writing. But Europe follows the lead of US stocks so should the US market stage a bounce, this would likely help European stocks recover some of their losses.

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (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. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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