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Market Lab Report - Premarket Pulse 6/1/17

Major averages finished almost breakeven after trading lower for much of the day. Volume was higher and above average, a good sign of supporting action.

While the "neverending" bull market is now in its one hundredth month making it the second longest bull market in history, that is not a valid reason in and of itself of why the bull market is more vulnerable now than it was when it was younger. An aging bull is no more vulnerable to a correction than a younger bull as statistical evidence has shown.

Bubbles of varying sizes can grow to enormous proportions before blowing apart. The 1990s bull run ending in the dot.com boom and bust is one of many examples. It was the longest bull market lasting 117 months from Nov 1990 to Mar 2000, three years beyond Alan Greenspan's infamous "irrational exuberance" speech given in 1997, and also representing the most dramatic ascent ever seen in the NASDAQ Composite.

The more relevant questions are whether Trump's economically favorable policies will pass as well as the following issues which are inextricably linked: rising interest rates, the sovereign debt bubble, and the elephant in the room known as quantitative easing, or QE.

Clues have often surfaced in the form of price/volume action in leading stocks ahead of major corrections though predicting the magnitude of any correction is futile. Instead, obeying your stops will bring you to safety, and may also allow for short sales of stocks in the right set ups should they emerge.

Focus List Review

BABA, JD, and BZUN are all now trading below their 10-dmas setting up a possible test of support at their respective 20-demas.

CC held support yesterday at its 50-dma on heavy selling volume. The company completed a $500 million note offering on Tuesday, taking advantage of current low interest rates. This may present a highly opportunistic buy opportunity at the 50-dma, using it as a tight selling guide if the trade busts.

COHR again tested the 240 price level successfully and rallied to close nearly unchanged and just above the 10-dma. This remains in a buyable position, although alert traders have had several opportunities to pick up shares closer to the 240 level per our previous notes on the stock.

FB reversed on a breakout attempt yesterday. Watch closely to see how the stock acts as it potentially tests support at the 20-dema.

LITE is testing the 10-dma, putting it in a lower-risk entry position.

MOMO traded heavy volume today as it held at its 50-dma. This could present a highly opportunistic entry point here while using the 50-dma as a tight selling guide.

NFLX is holding tight following last Thursday's gap-up pocket pivot breakout, and remains buyable here using the 10-dma as a selling guide.

NOW should be watched for any pullbacks to the 10-dma that might offer potentially lower-risk entries.

SNAP is holding above its 20-dema as it consolidates last Thursday's sharp upside move. Volume came in at -58% below average yesterday, putting the stock in a lower-risk "voodoo" entry position at the 20-dema, while using it as a tight selling guide.

WIX has moved just below its 50-dma but is holding above the 70.70 low in its current five-week base. It has also undercut one other low in the base at 73.05, setting up an undercut & rally move from that point yesterday after the stock closed at 73.70.

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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