Tag Archives: market lab report

MLR – PMP 1/12/15

Major market averages fell Friday on lower volume as they pulled back to their 50-day moving averages, potentially digesting sharp gains made over the prior two days. Oil and other commodities continue their precipitous fall. Goldman Sachs revised their outlook for the price of oil down to $46 a barrel for the current quarter. Russia recently expressed economic hardship due to the plummeting price of oil begging the question whether another shoe will drop as other countries could express similar troubles. Should the major markets start to tumble, the Fed will most likely step in an announce some form of QE4 as they dont want the markets to undo all of their “hard” work since 2009 as the global economy is extremely fragile. We had another buyable gap up and pocket pivot on Friday further adding to the growing list of actionable names in recent days.

MLR – PMP 1/9/15

The major market averages shot higher yesterday on higher volume. All of the indexes moved sharply above their 50-day moving averages, a constructive sign. In addition, a number of pocket pivots and buyable gap ups surfaced showing internal strength in the markets. Futures were up at the time of this writing in response to a rather benign non-farm payrolls number that came in at 252,000 jobs vs. estimates of 240,000. The unemployment rate ticked lower to 5.6%. The Market Direction Model, which went to a buy yesterday near the open, remains on its signal. Drug maker Valeant Pharmaceuticals (VRX) had a buyable gap up breakout. Earnings are accelerating, group rank 24, pretax margin 36.6%, ROE 46.3%. Semiconductor Avago Technologies (AVGO) had a pocket pivot. AVGO had undercut its gap up on 12/4/14 then redeemed itself. Earnings and sales are strongly accelerating, pretax margin 33.4%, ROE 43.8%, group rank 8. Online order take-out service GrubHub (GRUB) had a pocket pivot yesterday, it’s fifth over the past six days in a row. Earnings and sales are skyrocketing, institutional sponsorship has increased all 3 quarters since the company went public, group rank 48. One caveat is that the company has yet to double in price from its IPO price of 26. We generally prefer to see strong action earlier on such that the stock has at least doubled in price before buying as most winning stocks share this characteristic, unless the stock has only been trading for a few weeks in a weak market environment. That said, GRUB has had 5 pocket pivots out of the last 6 days despite a weak market. We own a position in this stock. Security software company Barrracuda Networks (CUDA) had a buyable gap up on Wednesday. The stock digested gains and became actionable on Thursday. Earnings are skyrocketing, group rank 1. Semiconductor Ambarella (AMBA) had a pocket pivot Tuesday but during a weak market environment. Wednesday’s market behaved better, thus Thursday’s pullback in AMBA was constructive as it was on lighter volume. So given the overall tone of the Thursday’s market, AMBA was actionable. Earnings and sales are accelerating, pretax margin 23.1%, group rank 8.

MLR – PMP 1/8/15

The major market averages finally bounced yesterday on lower volume though a number of leading stocks bounced nicely. The December lows at 1972 on the S&P 500 and 4547 on the NASDAQ Composite provided reasonable reference points for a possible undercut or at least a “Wyckoffian retest” where the indexes approach the lows but volume is not sufficient to drive them below the December lows. The put/call spiked for the second time in weeks, the first occurring near the market lows on Decembber 16. U.S. futures are currently higher by about 1% as the bounce is set to continue. Medical research company Illumina (ILMN) had a pocket pivot yesterday. Earnings and sales accelerating, pretax margin 25.1%, group rank 59.