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Market Lab Report - Premarket Pulse 9/22/16

Major averages rose yesterday on higher, above average volume with the NASDAQ Composite closing at all-time highs.

The Federal Reserve on Wednesday voted 7-3 to keep interest rates unchanged but said it expects to raise rates once this year, and twice in 2017 instead of three times. The Federal Reserve's dotplot shows central bankers expect a somewhat slower increase in U.S. interest rates over the next few years. The bank also trimmed its long-run target for fed funds to 2.9% from 3%, nor does it expect to reach that level until 2020 at the earliest. Fed officials also cut their estimate for 2016 GDP to 1.8% from 2%.

In its statement, the Fed policy committee said "the case for an increase in the federal funds rate has strengthened but decided, for the time being to wait for further evidence of continued progress toward its objectives." The Fed also said that the risks facing the economy appear "roughly balanced." This is the first time the Fed has been so optimistic about the outlook since last December when it hiked rates for the first time since 2006.

It favors Hilary Clinton for the Fed to be optimistic about the outlook for the economy since people tend to vote in the incumbent party when the economy is improving. It is unlikely the Fed will want to deviate from this path ahead of elections so expect a continuation of such a position where the Fed claims the economy is on the mend, thus can afford another rate hike by the end of the year.

iShares Silver Trust (SLV) and precious metals name Silver Wheaton (SLW) had pocket pivots as yesterday's report by the Federal Reserve suggests dovish days ahead as the Fed does not want to rock the boat ahead of the elections. Dovish, easy money polices for the time being are a tailwind to pushing precious metals prices higher. The SPDR Gold Trust (GLD) pushed above its 50-day moving average along with the SLV but did not trade enough volume for a pocket pivot.

Dental malocclusion treatment company Align Technology (ALGN) had a pocket pivot. Earnings and sales are strongly accelerating, pretax margin 21.2%, group rank 20.

Among stocks already on our Focus List, Alibaba (BABA) posted a continuation pocket pivot, while Twilio (TWLO) posted its second five-day pocket pivot over the past three days. Clusters of five-day pocket pivots in lieu of a single 10-day pocket pivot are often signs of nascent strength.

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