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Market Lab Report - Premarket Pulse 9/18/15

Major averages churned and and stalled yesterday on higher volume. The NASDAQ Composite blew through its 200-day moving average on the upside and kissed its 50-day moving average which then served as resistance, sending the index back below its 200-day line to close near break even. The S&P 500 closed in the red, near the low end of its trading range, in contrast to the last four Fed meetings where it closed near the top of its trading range.

The reaction was a function of uncertainty on behalf of the markets to the Federal Reserve's decision to leave rates unchanged by a 9-to-1 vote as they felt the global economy remains fragile. Nevertheless, the Fed's dot plot forecast an interest rate of 0.4% by the end of the year, suggesting they would hike either in October or December. That said, they lowered their interest-rate forecast for the longer run which implies they think the U.S. economy is less capable of withstanding monetary policy tightening. The Fed is forecasting a federal funds rate of 0.4% for 2015, 1.4% in 2016, 2.6% in 2017 and 3.4% in 2018, which all are lower than the central bank saw in June. They are also predicting less inflation. and do not see it reaching their 2% target until 2018. On unemployment, the Fed got more optimistic, lowering its projections for 2015, 2016, 2017 and the longer term.

European markets are down 1-2+% at the time of this writing on growing concerns about the problematic global economy as it was a big reason why the Fed decided to hold off on hiking rates. CME FedWatch now puts the odds of a rate hike when the Fed meets again in October at just 16%.

Small-molecule therapeutic developer Anacor Pharmaceuticals (ANAC) had a pocket pivot off its 50dma. Sales are soaring over the last 2 quarters, group rank 25.

Arthritic disease drug maker Horizon Pharma (HZNP had a pocket pivot after a constructive consolidation. Earnings and sales are soaring, pretax margin 27.5%, ROE 35.7%, group rank 26.

Healthcare staffing company AMN Healthcare Services (AHS) had a pocket pivot. Earnings and sales are strongly accelerating, group rank 64. AHS gapped higher after its recent earnings report.

Caution is advised on the long side of this market given yesterday's index reaction to the Fed policy announcement and the fact that the NASDAQ reached a logical point of overhead resistance after an extended rally from the lows of late August.

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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