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Market Lab Report - Premarket Pulse 9/21/17

Major averages finished mixed on higher volume closing near the top end of their respective trading ranges. They initially fell sharply after the Fed made its announcement. The statement said that its balance sheet normalization process will begin in October at $10 billion per quarter. This would mark the first time in 9 years the Fed is taking such action. The Fed also signaled one more rate hike this year while keeping the fed funds target range at 1.00%-1.25%. That said, Yellen reiterated that they would reverse this move and increase the balance sheet if economic conditions deteriorated.

The Fed's so-called "dot plot" was unchanged from the one released in June, showing that the median FOMC member anticipates an additional rate hike in 2017 and three rate hikes in 2018.

Federal funds futures now show traders see the odds of a December rate hike at 67.8%, up from 57.7% on Tuesday and from 48.7% last week.

Focus List Notes:

AMZN failed earlier in the week after breaking below its 50-dma, and has been removed from the list.

APPN broke below its 20-dema on higher selling volume yesterday. In our view that was the maximum downside trailing stop for the stock. It has been removed from the list.

AVGO blew through its 50-dma on the downside yesterday on heavy selling volume. It has been removed from the list.

EA is holding along the confluence of its 10-dma and 20-dema but has been sluggish since posting a pocket pivot breakout over two weeks ago. A breach of the 20-dema would be a bearish sign.

FB is holding along its 20-dema as it sits within what is now an eight-week base. Technically, this would represent a lower-risk entry here using the 50-dma as a maximum selling guide, but the potential for the stock to move higher and eventually breakout of this current base will likely be determined by the action of the general market going forward.

LITE had a very short half-life on the list yesterday. It was added based on our morning VooDoo Report which cited the low-volume pullback to the 50-dma as a lower-risk entry using the 50-dma as a tight selling guide. That selling guide was triggered much sooner than expected, but at that point it was a sell, and the stock has quickly been removed from the list.

JD pulled into the confluence of its 10-dma, 20-dema and 50-dma yesterday as volume declined to -33% below average. This presents a lower-risk entry here, using the moving averages as tight selling guides.

MOMO is failing badly and has been removed from the list.

SNAP broke below its 50-dma yesterday on increased selling volume. It has been removed from the list.

VRTX closed below its 50-dma for the first time since January and is in danger of violating the moving average.

WTW held tight yesterday at its 50-dma as volume declined to -23% below-average. This does work as a lower-risk entry here, but we would be very strict about maintaining the 50-dma as a tight selling guide.

The failure of most of the stocks that were added to the Focus List over the past few days is not constructive. In this market it is often the action of individual stocks that is the first clue of impending trouble, and this may be meaningful with respect to the overall market situation. As we wrote in yesterday's PMP, "The baby-stepping into new highs has began once again. Such excursions to new highs has been met with big selling soon thereafter. With the VIX flirting with levels under 10 once again, this suggests higher odds of such a recurrence." Stick to your stops!

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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