MLR - PMP 12/19/13
The major averages rocketed higher on big volume after the Fed announced they would start tapering. It could be argued this is a ceremonial move as it only will cut bond buying by $10 billion a month to $75 billion. Further, the Fed is committed to keeping rates low for an extended period of time well after bond buying ends. It also added new language that it plans to maintain low rates "well past the time that the unemployment rate declines below 6.5%.” So the Fed has substitutes for tapering in mind to keep rates low. The markets naturally reacted very bullishly to this announcement.
One other bullish interpretation was that if the Fed is confident the economy will recover sooner than later, it can afford to end its bond buying program sooner than later while keeping rates low even should unemployment fall below 6.5%.
With the major averages jumping higher on the Fed announcement, a number of leading stocks had pocket pivots:
PCLN - the stock has obeyed its 50-day moving average for many months. Group rank 8, ROE 49.8%, pretax margin 36.5%, and accelerating earnings and sales growth.
AMZN had a gap up when it reported earnings recently. It is taking advantage of cloud computing technologies so earnings are expected to accelerate. Keep in mind it tends to violate its 50-day moving average so position size accordingly.
BIIB - it violates its 50-day moving average regularly, however, so position size accordingly.
GOOG - It had a buyable gap up on its last earnings report. Group rank 2, pretax margin 33%.
PII - tends to obey its 50-day moving average well. Earnings and sales are accelerating, institutional sponsorship rose over the last 4 quarters, ROE 52.5%, group rank 22.
BLK - Pocket pivot after a very constructive sideways multi-week consolidation. Pretax margin 37.7%.
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