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Market Lab Report - Premarket Pulse 6/9/17

Major averages rose on higher volume. Small caps, financials, and semiconductors led the way. The reason behind the big move in financials is the House has the votes to pass CHOICE Act that would replace Dodd-Frank banking reforms.

The trifecta of news items concerning the UK election, FBI director Comey's testimony, and the ECB meeting on interest rates turned out to be much ado about nothing in terms of their impact on US markets as leading stocks continue to forge their way higher. 

That said, UK Prime Minister Theresa May's Conservative Party lost its parliamentary majority which came as a surprise. This means a hung Parliament which reduces the odds of the UK leaving the EU as Brexit could be revoked or a new referendum vote could occur. Despite this, May has made it clear that she will not be stepping down from her post. 

Since the US presidential elections, corrections have been one-day wonders. March 21 was one example when fears arose that Trump's tax reform may not pass due to his healthcare bill being rejected. May 17 was another example when the issue of impeachment hit the headlines.

Other than those two examples, markets have sailed on higher since the US presidential elections. This is partly due to high expectations of Trump's pro-economic policies but also due to QE. Even though the US ended QE in late 2014, QE remains at full tilt due to global central banks such as the ECB which merely indicated yesterday that it had no plans to further reduce rates, which really says nothing except that they can continue to print money at their current pace. Other central banks also continue to print at full speed including Bank of England and Bank of Japan. This is troublesome as asset prices continue to rise without the accompanying economic growth which suggests a QE-induced bubble. And the price of commodities including oil seem to be rolling over again suggesting a lack of demand.

Focus List Review

AAOI is in a short four-day flag formation and sitting right at its 10-dma. This could be a lower-risk entry using the 10-dma as a selling guide.

BABA has a buyable gap-up move yesterday with an intraday low of 135.21. Pullbacks closer to that level would offer lower-risk entries.

BOX found support at its 20-dema which is constructive, The stock is in a buyable position using the 20-dema as a selling guide.

CC is sitting at its 50-dma with volume declining. This puts it in a lower-risk entry position using the recent lows of last week or the 50-dma as a selling guides.

FB moved to new highs on 10% above-average volume. This remains in a buyable position using the 10-dma as a tight selling guide.

MOMO gapped up in sympathy to BABA but reversed back to the downside before finding suport at its 50-dma on heavy volume. It also recovered back above its 10-dma and 20-dema, which is constructive and indicative of supporting action. This could be tested on the long side here using the 20-dema as very tight selling guide, or the 10-dma/50-dma as wider selling guides, depending on one's risk-preference.

NFLX is in a very tih range as it racks along its 10-dma with volume drying up. This remains in a buyable position using the 20-dema as a selling guide.

TTD has pulled into its 10-dma with volume drying up to -31% below aveage. This could be considered a lower-risk add point using the 10-dma as a selling guide for any stock purchased at these levels.

VEEV found support at its 10-dma with volume declining again. This remains buyable on pullbacks to the lows of the two-week range around 63-64.


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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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