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Market Lab Report - Premarket Pulse 10/13/17

Major averages fell on higher volume. After the relatively sharp run-up the prior week, the majors have had trouble continuing their move higher though this allows the moving averages to catch up. A digestion of the prior week's gains is unsurprising.

The CPI increased 0.5% vs. est 0.6% in September while core CPI, which excludes food and energy, rose 0.1% vs. est 0.2%. On a year-over-year basis, total CPI and core CPI are up 2.2% and 1.7%, respectively.

Both Citigroup (C) and JPMorgan (JPM) had high volume reversals after reporting earnings. Today's earnings announcements from Bank of America (BAC) and Wells Fargo (WFC) are also looking questionable. After reporting earnings, WFC is sliding after reporting tepid growth while BAC is roughly even at the time of this writing.

Focus List Notes:

ANET dipped below its 10-dma yesterday on increased volume. The stock has tried to move higher over the past week but has been unable to sustain new highs. It may simply continue to base ahead of earnings in early November.

BABA was hit with increased but still below-average selling volume as it comes in to test its 10-dma. Yesterday's volume exceeded the very light volume seen over the past few days as the stock moved to new highs. New highs on light volume is generally a sign of slackening demand for the stock.

FEYE was unable to hold its 10-dma, which is not surprising given how extended it is from its early September BGU. It is now testing the 20-dema, which would serve as a maximum trailing selling guide for any position taken on the original BGU.

NFLX remains within buying range of its recent cup-with-handle base breakout, but we would not be looking to take fresh position in the stock ahead of Monday' expected earnings report.

TTWO is pulling back into its 10-dma as volume declined to -49% below-average yesterday. This would put the stock in a lower-risk entry here using the 10-dma as a tight selling guide. Keep in mind, however, that the stock has had an extended run since its August 3 BGU.

VRTX continues to hold tight along its 50-dma, but volume has increased to above-average over the past two days as the stock has closed slightly to the downside. With earnings expected on October 24th, we would not be looking to take a position in the stock ahead of earnings.

WTW is back at the confluence of its 10-dma, 20-dema, and 50-dma with volume declining to -51% yesterday, a "voodoo" pullback. This is the third test of the moving average confluence over the past two weeks, and technically puts the stock in a lower-risk entry position using the three moving averages as tight selling guides.

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