MLR - PMP 12/20/13

Published : December 20 2013 at 9:47 ET

The major market averages fell slightly on lower volume yesterday. This is constructive especially after the big up day on appreciable volume the day before. Despite the huge upside move on Wednesday following the Fed tapering, the indexes, outside of the Dow, remain within roughly three-week consolidations. A breakout to new highs from this range would confirm the market's recent constructive action, and a number of stocks remain in buyable positions, including the names mentioned in yesterday's Pre-Market Pulse.

Vipshops (VIPS) had another pocket pivot yesterday, its second over the past eight days. The prior pocket pivot was a strong supporting day off the 50-day moving average, but the stock went nowhere after that. Yesterday's pocket pivot may indicate that the stock is finally going to follow-through on that initial pocket pivot. VIPS' fundamentals remain intact with earnings and sales continuing to skyrocket and despite its volatility has managed to obey its 50-day line. Because it is highly volatile one might want to position size accordingly.

Elon Musk's "other public company," Solar City (SCTY) also had a pocket pivot yesterday. Three days ago SCTY had a more subtle pocket pivot along the 10-day and 50-day moving average confluence, and yesterday's pocket pivot was a much stronger follow-through to that initial pocket pivot. Meanwhile SCTY has rounded out its base, tracking along its 50-day line. It did gap down on its earnings report but in context with the overall pattern, its recent action is constructive so it serves to correct its prior action. Keep in mind this is a choppy volatile stock so one might want to position size accordingly.

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