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Market Lab Report - Premarket Pulse 4/1/19 - Our Stocks Lift Off Despite Choppy Markets

Choppy Markets Then Resumption of Uptrend?

The market is starting to act sloppier since its straight up from lows move in December. As we have said, this can be expected, especially given the potential 3 steps forward 2 steps backward nature of this market that wrestles with slowing global economies, reduced GDP projections, and an ongoing limitless QE. Indeed, Stephen Moore, Trump's new Fed Board appointee, is calling for an immediate 1/2% rate cut. Fed Futures are currently projecting odds of 67.5% of a rate cut by the end of this year. The strategy, of course, is to insure a strong market which will secure Trump’s re-election. Pre-election years are traditionally strong for stock markets since securing re-election by propping markets is a standard strategy. 

Thus the views of a slower, choppier, market going forward with lower returns may be postponed until next year, with 2019 a period of continued easy monetary policies at home and abroad. Indeed, the majors have been in a straight-up-from-bottom rally since December. Some with impressive long term track records have continued to call this period of QE since 2009 an inflation megatrend where fiat continues to be devalued across the board with the consequence of higher stock and bond markets. 

Indeed, the very long term monthly charts of the S&P 500 and 20-year+ Treasury Bond ETF TLT since QE began in 2009 show this to be the case.

Thus the repeated calls of major market tops have so far been in vain. Instead, it is always better to watch market action in real-time and stay fluid with ever-changing conditions which do produce short-term weakness or strength. Our arsenal of buying, selling, and shorting strategies has kept opportunities to profit active regardless of what the market serves up. 

Here are some examples from stocks on which we have reported over the last few weeks:

=After gapping higher, Chinese stock MOMO was trading quietly near its 50-dma where risk was reduced then moved higher off its 50-dma on Friday. 

=CYBR had gotten support at its 20-dema thus the closer one buys to its 20-dema, the lower the risk. It has since moved higher.

=MIME had traded quietly along its 20-dema after gapping higher in February. It’s a sign of strength that it still has the gap higher going for it due to a strong earnings report as it digests prior sharp gains. 

=PANW also gapped higher on strong earnings and has since been digesting its recent sharp gains made so far this year. It too has gotten support at its 20-dema. 

=VIAV had received support at its 50-dma after gapping higher on strong earnings in February. 

As we have advocated, it pays to remain opportunistic in this market by buying at low risk entry points. If your risk is 2-3% on a trade, and you make an average of 6-9%, you can be wrong 3 times for every time you're right and still break even. Voodoo and undercut & rally patterns offer some of the best risk/reward set ups. Obviously, we screen/vet our stocks using various proprietary indicators on fundamentals and technicals so our hit rate especially on winners even in this market can be into the solid double digits.
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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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