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Market Lab Report - Premarket Pulse 4/6/16

Major averages fell on higher volume. The most recent Fed meeting minutes are due out today at 2 pm ET. The main thrust of the minutes will probably be lathered by Fed Chair Janet Yellen's dovish tone, despite any dissenting views.

Will the earnings season upon us make a huge difference in terms of market direction? In the last two earnings reporting seasons, the markets displayed a bit of schizophrenic behavior, tanking in January '16, but then trending higher in October '15. It seems the larger issues at play remain the tug-o-war between easy money polices at major central banks which propel markets higher vs. the recessionary ills of the global economy which push markets lower. Indeed, these two issues were behind the major moves in October '15 and January '16.

Meanwhile, it is imperative that investors not become overly enamored with strong price action and instead seek to sell into strength. The example of Silicon Motion (SIMO), which we first put on as a pocket pivot on March 1st at 33.98, reached a peak of 39.98 last Thursday for a total gain of over 17%. Despite the strong upside move last Thursday on heavy buying volume, that turned out to be a climactic short-term peak, and the stock has since declined and given up over half of those gains. This illustrates why investors should seek to sell into 10% or greater upside moves when they have them.

Maintaining tight stops and looking to take 10-15% or better gains when they present themselves is the only way to make progress in this difficult market. We continue to advise investors to abide by this approach.

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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