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Market Lab Report - Premarket Pulse 10/24/17

Major averages sold off on mixed volume marking yet another distribution day for the NASDAQ Composite. Distribution day clusters can suggest further downside, much as we saw in June and late July for the index.

A number of megacap technology stocks will be reporting earnings in the coming days such as AMZN, FB, and GOOGL.

CAT is gapping higher by 6.9% in pre-market action after reporting better-than-expected earnings and revenues and issuing above-consensus guidance. Similarly, MMM is up 3.3% after also beating both top and bottom line estimates and issuing upbeat earnings guidance. Both names are components on the Dow Industrials. Biotechs on the other hand have been weak as BIIB is lower by 2.6% despite reporting better-than-expected profits and sales.

Focus List Notes:

BABA closed below its 50-dma on higher selling volume that was -6% below-average. The 50-dma can be used as a maximum selling guide for those more conservative with tighter stops. That said, a violation of the 50-day invokes the  Seven-Week Rule. If BABA trades below yesterday's low, it will have violated its 50-dma so should be sold.

FEYE had previously violated its 20-dma, which served as our tightest selling guide for any position bought on the September 7 buyable gap-up. It appears on track to test the 50-dma.

NFLX held support at its 20-dema yesterday, on increased but below-average selling volume. A breach of the 20-dema could potentially turn the stock into a late-stage failed-base (LSFB) short-sale set-up.


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