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Market Lab Report - Premarket Pulse for Thursday, January 18, 2018

Major market averages closed at all-time highs, with the Dow decisively clearing and closing above the 26,000 price level for the first time. The S&P 500 cleared its own milestone by closing above the 2800 level for the first time. The majors still remain extended from their respective 10-day moving averages so a pause here could be expected.

Futures are currently trading lower. The yield on the benchmark 10-yr Treasury note is at its best level since March 2017 though some analysts have cited relatively low long-term rates as a sign that the U.S. economy is not as healthy as it may appear. Indeed, the yield spread between the 2- and 10-yr Treasurys continues to narrow, though a yield curve inversion typically precedes recession by as much as 1-2 years. Recession this time, however, may come much sooner if the QE bubble begins to burst should central banks shrink their balance sheets too aggressively. On the other hand, recession may be delayed while central banks shrink their balance sheets by amounts that are not meaningful. In such a case, stocks could continue to rally well beyond anyone's expectations.

The FAANG technology names are due to report in the coming days including NFLX (Jan 22), FB (Jan 31), AAPL/AMZN/GOOGL (Feb 1).

Focus List Notes:
BABA held support at its 50-dma. Despite the high-volume reversal on Tuesday, this could represent an opportunistic entry point using the 50-dma as a tight selling guide.
COHR broke out on heavy volume. The stock was last buyable along the 50-dma per our notes on the stock over the weekend.
FB is attempting to hold support just above the prior 174.67 low in the pattern. Selling volume is dissipating, so we may be nearing a point where a reaction rally back up towards or through the 50-dma might occur.
NVDA remains within buying range of last Monday's buyable gap-up and base breakout.
SQ held support at its 50-dma as selling volume dissipated. It remains in a lower-risk entry position using the 50-dma as a tight selling guide.
TTWO held support at the 20-dema, and is in a buyable position for those who want to anticipate a possible breakout while using the 20-dema as a tight selling guide.

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