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Market Lab Report - Premarket Pulse 8/17/17

Major averages finished slightly higher on higher volume. Both the S&P 500 and NASDAQ Composite closed slightly lower than midbar in their trading ranges, but are sitting near support as their 10- and 20-day lines converge,

The FOMC minutes said the U.S. economy has shown further improvement since they met in late July. Hiring has improved, layoffs remain extraordinarily low and retail sales have surged, suggesting consumers are still optimistic. Inflation may take longer to pick up than originally thought, noting that it expects inflation to remain somewhat below the Fed's 2.0% target on a 12-month basis.

The Fed also appears less settled on the timing of its next increase in interest rates. The bank had signaled it would raise its benchmark fed-funds rate one more time this year, but the surprising slowdown in inflation has forced officials to reconsider. Fed officials did not specify when they would like to begin shrinking the Fed's balance sheet, deferring the decision to an upcoming meeting. The Fed knows that too hawkish a stance in the midst of the fragile recovery could unravel markets. The possibility of a December rate hike stands at an implied probability of 46.8%.

Focus List Notes:

With futures down this morning, entering new long positions here would be inadvisable unless we see the general market stabilize during the day. Otherwise, we would refrain from taking new positions in the face of a market sell-off given the context of the general market action over the past 2 weeks.

APPN has pulled back to its 20-dema with volume drying up to -76% below average. This would put it in a lower-risk entry position using the 20-dema as a very tight selling guide.

BABA beat estimates handily after reporting earnings this morning, and is gapping up about 5-6% in pre-open trade. This could result in a buyable gap-up move once the stock sets a clear intraday low.

BZUN posted a pocket pivot and a flag breakout yesterday on heavy buying volume. Earnings are expected next week, however.

NFLX has tested its 50-dma, and did so successfully yesterday as it showed minor supporting action. Buying here would necessitate using the 50-dma as a tight selling guide.

Short-Sale Notes:

TSLA remains in shortable range using the 170 price level as a guide for an upside stop.


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