MLR - PMP 10/31/13

Published : October 31 2013 at 9:01 ET

Major averages were lower yesterday on higher volume as the NASDAQ Composite Index and the S&P 500 both staged outside reversals to the downside. In its policy announcement, the Federal Reserve said the economy is too weak for them to start tapering, and therefore quantitative easing will remain on full blast until further notice. This should assist the overall uptrend that has been the story of 2013 despite recent weakness in leading names including LinkedIn (LNKD) on a weak earnings report and Tesla (TSLA) which seems to be putting in a base after a massive run up earlier this year. With the market being overbought, a pullback in the indices would not be unwarranted. However, investors should watch their stocks and remain alert to their stops should the market deteriorate further.

Facebook (FB) traded higher after a strong earnings report then settled back to near breakeven to its closing price as nerves were rattled when FB said during the earnings conference call that the speed of growth among younger teens was decelerating. It violated its 10-day moving average on October 9 after 7 weeks so you would have sold on October 9. It is currently trading 3.5% higher from Wednesday's close at the time of this writing. Should it have a buyable gap-up, we will alert all members, although that does not appear likely based on this morning's pre-open trade in FB.

The Ishares Silver Trust (SLV) had a pocket pivot despite selling off shortly after the announcement from the Fed. It was a mid-bar close but could be a sign that full throttle QE will weaken the dollar below its critical support levels at 78 and change, and thus spur higher prices in precious metals, much as occurred the last time the dollar broke important support levels in 2011. A similar buy signal in the SPDR Gold Shares (GLD) would help to confirm the action in the SLV as the metals do tend to correlate, and with the GLD perched atop its 50-day moving average, this remains a possibility that investors should be watching for.

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