MLR - PMP 12/10/13

Published : December 10 2013 at 10:47 ET

Major averages ended up on lower volume. This reluctance to move higher on waning volume has been standard for 2013. Nevertheless, the S&P 500 closed at new highs and the NASDAQ Composite briefly touched 13-year highs. Bullish sentiment among newsletters is at new highs for the year as quantitative easing continues on full blast and the seasonally strong December adds to the positive sentiment. That said, not many leaders are showing strength and the advance/decline lines on the major indices continues to lag. As always, keep a close eye on your stops since even a small pullback in the major indices has led to much steeper drops in leading names this year.

Gilead Sciences (GILD) had a buyable gap up Monday morning on news that the FDA had approved Sovaldi, GILD's blockbuster drug for Hepatitis C. GILD has also shown promising results in pivotal Phase 2 data for Idelalisib in refractory indolent non-Hodgkin's lymphoma. While earnings are a bit flat at present, they are expected to greatly accelerate in 2014. That said, the gap closed but the action is still positive as 12,869,000 shares traded allowing for a pocket pivot.

Chicago Bridge & Iron (CBI) flashed a pocket pivot yesterday, something we advised members to watch for pre-open yesterday given its tight action along the 10-day moving average. Illumina (ILMN), another stock we highlighted pre-open yesterday, moved up and off of its 10-day moving average, but volume was not sufficient for a pocket pivot. Buy signals in recent days have had mixed results, so if one decides to act on such a signal it is necessary to keep a clear stop in mind in the event the buy signal fails.

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