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Market Lab Report - Premarket Pulse 5/25/17

Major averages rose on mixed volume. The S&P 500 and NASDAQ Composite have reversed the one-day damage done by the Trump impeachment news. 

As expected, Federal Reserve officials were in broad agreement at their meeting on May 2-3 to shrink the balance sheet instead of asset sales- in slow, ever-increasing, stages. US stocks will be the beneficiary whether the Fed shrinks the balance sheet slowly or not.

In their discussion of interest-rate policy, most Fed officials said it would "soon" be time to raise rates again, a signal that the majority on the central bank remain resolute about hiking rates at their next meeting in June. CME FedWatch puts the odds at 83% of a rate hike in June.

This signals confidence that the Fed overall feels the economy remains okay despite the warning signs. The discussion of the outlook showed widening divisions among Fed officials, with "several" seeing a possible need to start raising rates at a faster pace, while a few others thought a slower pace was more advisable.

In any case, with QE continuing in fairly full measure by global central banks including the European Central Bank and Bank of Japan, it would be unsurprising to see a continuation of shallow market floors that mitigate any meaningful market corrections. Together with the shrinking balance sheet ($426 billion due in 2018 and $350 billion due in 2019), the aging US stock market bull could get shot of adrenaline as the sovereign debt crisis bubble fuels a stock market bubble.

Futures are up on a continuation of yesterday's bullish sentiment toward the Fed minutes. OPEC also decided to extend its production cut agreement by nine months to March 2018.

Focus List Review

AAOI is holding in a tight formation following Monday's pocket pivot of the 10-dma. This would offer a lower-risk entry for adding to an existing position, using the 10-dma as a selling guide for that portion of the position.

BABA has pulled into its 10-dma with volume drying up to -22% below-average.

BZUN is holding at its 10-dma, but is in a slightly extended overall position and may need more time to set-up given the prior sharp price run-up.

COHR is holding just above the prior 240 intrady low of its early May buyable gap-up, putting it in a lower-risk entry position using the 240 level as a selling guide. Alternatively, its 20-ema could also be used as it catches up with price.

FB pushed up and off its 20-dema on above-average volume after spending three days setting up in tight fashion along the 20-dema, which was constructive action. This puts the stock in a lower-risk entry position using the 20-dema as a selling guide.

LITE has pulled back to the top of its base on volume that was -58% below average, puttnig it in a lower-risk entry position using he 20-dema as a maximum selling guide.

MOMO has continued to get hit with heavy selling volume and is now on the verge testing its 50-dma. This would serve as a maximum selling guide for those still holding the stock, but in our view Tuesday's action was enough to back away, at least in the short-term, and give the stock some time to stabilize.

NFLX is holding tight along is 10-dma with volume drying up to -51% below average. This is a lower-risk entry position using the 20-dema as a selling guide.

SNAP continues to hold up well along the 20 price level as volume dries up. This is in a lower-risk entry position using the prior 19.73 low as a maximum selling guide.

TSLA undercut the prior 305.31 intraday low in the pattern, setting up an undercut & rally situation that puts the stock in a buyable position using the 305.31 low as a tight selling guide.

VEEV is expected to report earnings today after the close.

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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. ©2018 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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