Major averages finished flat to lower on higher volume, closing near the top of their respective ranges. Weakness in AAPL contributed to the overall weakness in techs. Leading stocks especially in technology came under some distribution once again.
Futures are jumping on news Republicans are close to fulfilling their tax reform promise. The Republican-dominated Senate narrowly approved a budget blueprint for the next fiscal year. The budget will allow the deficit to rise by $1.5 trillion over 20 years. The upper chamber will now have to reconcile its version with the version that the House passed earlier this month. If the two sides can reach an agreement, Republicans will have the ability to pass tax reform without any support from the Democrats. Said one analyst, “The Trump trade has been reignited, so it seems. Tax reform is definitely back on—if it was ever off, thanks to the Senate approving of the Republican-backed budget Thursday night. This is a major step toward tax cuts as it allows the GOP to pass legislation without the need for any Democrat help.”
Focus List Notes:
FEYE violated its 20-dema two days ago, and ran into resistance at the line on Wednesday. The 20-dema had served as the tightest selling guide, but with that having gone by the way side the 50-dma now serves as the maximum selling guide for any position taken as a result of the September 7th buyable gap-up (BGU). Earnings are also expected on November 1.
NFLX held support at the 20-dema yesterday as volume declined to -4% below-average. This was a constructive pullback, and brought the stock into a lower-risk entry position. The stock close 1.8% above its 20-dema, which would keep it in buyable range using the 20-dema or the prior 189.95 breakout point as your selling guide.
Unless you are swing trading, we would refrain from taking fresh positions in any Focus List names that are expected to report earnings within the next two weeks. In addition to FEYE, this would include ANET, BABA, TTWO, VRTX, and WTW. Most of these names are holding near-term support as they have mostly chopped sideways over the past several days and weeks.
Market Lab Report - Premarket Pulse 10/20/17
|20 Oct 2017 09:26 ET
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