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Market Lab Report - Premarket Pulse 7/5/17

Major averages finished mixed with both the S&P 500 and NASDAQ Composite finishing at the low end of their trading ranges. Volume was lighter due to Monday's shortened pre-holiday session though taken in context with the half-session, down volumes on a number of technology names were higher than the prior day as they continue to lag the general market. It is a clue that somewhat aggressive selling occurred on a day which is supposed to be a light, uneventful trading day. Further, this is the first time since December that the NASDAQ Composite, NASDAQ-100, and Semiconductor SOX indices have all traded definitely below their respective 50-dmas for more than a day. 

The FOMC minutes from the June 13-14 meeting will be released this afternoon at 14:00 ET.  Details on the timing and scope of the Fed's plan to pare its balance sheet will be of particular interest to the market, especially in light of weak productivity and GDP data as well as persistently weak inflation readings. In addition, investors will be interested to hear the Fed's perspective on global central banks which have started to suggest the possibility of also dialing down their respective QE stimulus programs.

Currently, the feds funds futures market projects that the next rate hike will occur at the December FOMC meeting with an implied probability of 57.5%.

Focus List Notes:

Stocks on the list were hit hard on Monday, despite what was being touted as a "phenomenal start to the second half of 2017" as the Dow pushed to new highs. But that move to new highs was cut short as the Dow gave up nearly half of its gains by the close. What was supposed to be a quiet, short, pre-holiday trading session gave investors a nice fireworks show of its own.

Big-stock NASDAQ names and tech leaders of all stripes broke down sharply, including several on the Focus List, including AMZN, FB, NVDA, SQ, NFLX, TRVG, and TSLA. All of these have been removed from the list, and we may see others come off the list in the coming days, depending on how things play out.

AAOI, ANET, and LITE are all showing signs of weakness as they stalled and reversed to give up their initial gains on Monday.

Chinese names on the list, BABA and BZUN, held up reasonably well, but in a continued market correction, or at least a continued NASDAQ correction, these may simply be the next shoes to drop.  

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