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Market Lab Report - Premarket Pulse 8/25/17

Major averages finished lower on slightly higher volume. The NASDAQ Composite closed roughly midbar, sitting just under its 50-day moving average. The number of distribution days in the major indices has been pronounced. The Russell 2000 is now under its 200-day line. The situation remains in flux with QE in the mix as to whether the market will find one of its shallow floors then push on a string higher, or actually have a more meaningful correction beyond 3% for the first time this year.

The annual Jackson Hole meeting concludes today. Investors await speeches from the world's two most influential central bankers, Fed Chair Janet Yellen and European Central Bank President Mario Draghi, at 10:00 ET and 15:00 ET, respectively.

The market will be looking for clues as to the outlook for monetary policy by Yellen, though expect nothing materially new from the recently published Fed minutes. Globally, central banks continue to print at record levels, so it remains in question whether Draghi will make more than just an indication that they plan to wind down the 60 billion euros a month in purchases which have kept interest rates at historically low levels. So far, no actual action has been taken on behalf of any major central bank to reduce their respective levels of QE, thus US markets have continued to find the shallowest of floors so far in 2017, while pushing the market to new highs on a string. Nevertheless, when the major averages are off more than even half a percent, leading stocks are typically down far more thus playing a strong defense by keeping stops tight has been key.

Focus List Notes:

Four of the five stocks currently remaining on the Focus List are not in lower-risk entry positions. ANET, APPN, BABA, and TTWO have remained more or less impervious to the market action over the past several days.

NFLX remains in an unresolved position along its 50-dma, but stalled and reversed today at its 20-dema before closing down on the day. Buying the stock here along the 50-dma is a lower-risk proposition, but as we've repeated in prior notes, a clean breach of the 50-dma would bring this into play as a short-sale target.

Short-Sale Notes:

TSLA remains above its 50-dma as it continues to ride a small wave of news, the latest of which is that the company will introduce an electric semi-truck. We would continue to look for a reversal back below the 50-dma as a fresh short-sale trigger.

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