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Market Lab Report - Premarket Pulse 8/25/16

Major averages fell on higher volume with the S&P 500 closing at its 20-day moving average. Certain Chinese stocks as well as a few other frothy names have had sharp pullbacks, not terribly surprising as this has been a market of taking profits when you have them in context with the chart. Of course, if your stock has not hit your sell stops, or made a big move where profit taking could be warranted, then there's no reason to sell.

The action in many of these hot IPOs, however, could represent a type of short-term speculative blow-off, hence could serve as a cautionary sign. At the very least, investors should recognize when a stock they are long is becoming well-extended to the upside and at least partial profits should be taken without letting greed overtake them. As these stocks, including names like TWLO, ACIA, and LN, for example, sell off hard into deep areas of potentail support, investors should be alert to possible lower-risk entry points developing in the process.

Raised nerves ahead of Yellen's speech this Friday could take the market down further since short, sharp corrections occur with frequency, though we have not had any correction of significance that has lasted more than a couple of days since the Brexit lows. Even though one could occur, CME FedWatch futures still show less than a 20% chance of a rate hike in September, and less than a 50% chance of a hike all the way out to February 2017.

So the ebb and flow of the markets may allow one to capitalize on pullbacks in the right stocks (use our Weekend Focus List as a guide) while a more substantial correction may assist on the short side or at least help keep one's powder dry before wading back into the markets on the long side.

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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