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Market Lab Report - Premarket Pulse 9/21/16

Major averages closed nearly flat yesterday on lower volume at the low end of their respective trading ranges. This tentative action came as no surprise ahead of today's Federal Reserve decision on interest rates at 2:15 pm ET and Bank of Japan's (BOJ) pre-market fiscal policy decision.

The BOJ kept key interest rates at a negative 0.1% but caught markets by surprise by introducing a new commitment to keeping the yield on Japanese 10-year bonds at zero, dubbed "yield-curve control". The BOJ is trying to create a steeper yield curve, which fights against their seemingly losing battle with deflation. This decision came following an internal review that their existing forms of quantitative easing (QE) failed to achieve 2% inflation in a promised two-year time frame.

A steeper yield curve offers an incentive for banks to make loans, customers to borrow and the economy to strengthen. It’s an antidote to its negative interest rate program, in place since January, which has hampered profits of their financial institutions. Indeed, financial structures were not meant to operate at negative rates. Perhaps other countries that have adopted negative rates will look to shifting their QE programs into something more constructive.

Futures rallied on the news. Several names on the VoSI Focus List are holding up in constructive fashion, with some tightening up within their structures. This includes AMZN, FB, TWLO, TEAM, BIIB, EW, GRUB, MELI, MOMO, NVRO, and VEEV. Others should be watched for pullbacks to areas of potential support, such as ACIA and PI, for example.

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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