Major market averages began the day yesterday with a big gap-down move, but recovered sharply off their lows with the NASDAQ Composite Index closing up in what is now a four-day rally off the lows of last week. The S&P 500 closed down slightly, with the Dow lagging, but only down -0.33% and well off its lows of the day. The Trump Administration is expected to sign off on new steel and aluminum tariffs, but has given some hints that there will be "carve-outs" and exemptions for certain U.S. trading partners. This was partly responsible for the market's strong recovery towards the end of the day. It is possible that once the tariffs are out and the market knows exactly what they will consist of a rally will ensue. The S&P 500, which has the lion's share of steel-consuming names in it, is sitting in a two-day flag formation just below its 50-dma. Once the tariffs are a known factor and perhaps turn out to be less onerous than originally feared, this could spark a move in the S&P 500 back above the 50-dma.
Futures are up as the European Central Bank left interest rates unchanged Thursday, but said it would increase asset purchases if economic conditions weakened. As we have written in prior reports, this stance comes as no surprise. The ECB said it would continue its program of asset purchases through September, "or beyond, if necessary." The ECB left its refinancing rate at 0%, while the rate paid on deposits parked overnight at the bank was left at -0.4% and the rate on the deposit facility was left at 0.25%. The ECB repeated that it expects rates to remain at present levels "for an extended period of time, and well past the horizon of the net asset purchases."
The ECB's stance is no different than what other central banks are thinking. In other words, this QE party could continue for much longer than expected. With QE money flows still near record levels, the U.S. market continues to be the primary beneficiary. And despite rates at historically low levels, and negative in some cases, that does not deter the ECB from potentially increasing its asset purchases if necessary. Negative rates in Germany and Japan have been shown to corrupt financial structures. But central banks may have no choice should global economic conditions deteriorate.
Focus List Notes:
Nvidia (NVDA) is sitting right at its 20-dema with volume declining yesterday, putting it in a lower-risk entry position.
Market Lab Report - Premarket Pulse for Thursday, March 8, 2018
|Published:||8 Mar 2018 08:30 ET|
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. ©2019 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.