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Market Lab Report - Premarket Pulse 6/2/16

Major averages clawed back from early losses to finish slightly higher on lower, below average volume.

Global markets are relatively quiet suggesting that U.S. markets may also have a quiet day ahead of tomorrow's monthly jobs report. A strong report will push the odds in favor of a rate hike. The markets may respond bullishly if they believe this is a sign of a recovering economy, otherwise they may stumble as rate hike worries mount. U.S futures are moving lower ahead of the open as crude oil prices come off of their recent highs.

Bill Gross of Janus issued his monthly missive suggesting, as he has in the past, that we are in unchartered waters. He says risk/reward has never been higher for both stocks and bonds. But while this is true, we would suggest QE could continue to push stocks higher as "Don't fight the Fed" has turned into "Don't fight the Feds".

That said, while markets may continue onwards and upwards, the likelihood of them doing this at higher levels of volatility, ie, with sharp pullbacks, can be expected. We would therefore agree with Gross's point that buying volatility at the right time, ie, shorting the right stocks in the right positions, and using the VIX Volatility Model's BUY signals when it anticipates elevated levels of volatility would be prudent. Indeed, short positions can profit handsomely in rapid fashion, and the fast 15%+ gains the VVM has demonstrated a number of times in real-time (see report archives) since its beta was launched last August are testament to this. Thus the 15+% profit taking rule on its buy signals was put in place.

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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