Major averages jumped on slightly higher but below average volume, closing at the top of their trading ranges, after Federal Reserve Chair Janet Yellen spoke of a brightening economy and a potential slowing of rate hikes saying that "...the federal funds rate would not have to rise all that much further to get to a neutral policy stance", a somewhat Goldilocks soft landing scenario where the target federal funds rate would remain below levels that prevailed in prior decades.
However, it seems highly unlikely that the global sovereign debt crisis would come to such a fortuitous and peaceful end. Rather, it seems that certain important metrics have been showing a resistance to economic recovery despite the massive inflows from money printing, now commonly known as QE. Nevertheless, the market liked what it heard so gapped higher at the open, then remained strong for the rest of the trading day.
The Fed will have to grapple with a soft economy as well as inflation data which remain below their 2% target. The implied probability of a December rate hike declined to 52.0% from 58.9% on Tuesday, according to the fed funds futures market. Meanwhile, the Bank of Canada hiked rates for the first time in seven years.
Focus List Notes:
APPN posted a new all-time closing high on a trendline base breakout that also came on a pocket pivot volume signature. It was last buyable on the pullback to the 10-dma that occurred on Tuesday, per our notes sent out Tuesday morning.
LITE is pulling into its 20-dema as volume declined to -30% below average yesterday. That is not low enough for a "voodoo" day, but we would watch for volume to continue to dry up on any pullback that inches closer to the 10-dma or pulls back further to the 20-dema which is just 0.4% below today's close.
NFLX was added back to the Focus List after posting a roundabout type of pocket pivot as it came up through its 50-dma yesterday. The 50-dma should be used as a tight selling guide in case the stock fails quickly. Note that earnings are expected to be reported next Tuesday after the close.
NOW broke out to new highs on light volume yesterday, but was last buyable along the 20-dema per our notes on Monday morning.
TTWO was last buyable along the 20-dema per our notes on Tuesday morning. The stock has since pushed higher and is now approaching the prior 80.54 high on the left side of a potential new base.
YEXT was added to the Focus List yesterday after posting a pocket pivot at the 10-dma. The stock closed right at its 50-dma, but is withing buying range anywhere between the 10-dma and the 50-dma, using the 10-dma as a selling guide.
Z was removed from the list after being on the list for one day. After posting what was a constructive pocket pivot as it found support at its 50-dma on Tuesday, the stock broke sharply below the 50-dma on very heavy selling volume.
Market Lab Report - Premarket Pulse 7-13-17
|Published:||13 Jul 2017 09:18 ET|
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