MLR - PMP 4/14/15

Published : April 14 2015 at 8:33 ET

Major averages fell yesterday on mixed volume, reversing earlier gains. The NASDAQ Composite showed the most strength as a number of tech heavyweights advanced including NFLX, PCLN, and FB which had an actionable pocket pivot. Meanwhile the NASDAQ Composite continues to bump up against the 5,000 level where it is finding resistance, but this appears normal within the context of the prior five-day rally coming up through the 50-day moving average. As we move into spring earnings season the market may be poised to break out depending on the outcome of earnings announcements from key leading stocks.

Note that NFLX's recent pocket pivot was theoretically not actionable due to its major gap down in October on earnings and its smaller gap down in March. This type of volatility is best avoided when it comes to selecting leading names. Nevertheless, should one wish to try their hand on a stock such as NFLX on the day it had a pocket pivot that closed above its 50-day moving average on 4/10/15, the risk level may be within your tolerance levels, thus manageable.

Social networking company Facebook (FB) had a pocket pivot. Earnings and sales have remained robust in this competitive space. Pretax margin 56.5%, institutional sponsorship has grown every quarter since the company went public 12 quarters ago. The price structure has been tightly constructive over the past week. While FB had a midbar close, this is contextually acceptable given yesterday's weak performance by the major averages. Still, the market could back and fill once again so keep stops tight as always. Leaders often resist minor pullbacks in the market.

Internet advertising company Criteo (CRTO) had a pocket pivot. Earnings are soaring, sales are robust, group rank 35. The company had two prior gap ups on strong earnings over the last 6 months as it rounds out its basing pattern.

Medicinal cannabinoid manufacturer GW Pharmaceuticals (GWPH) had a pocket pivot. It is rounding out its basing pattern in constructive fashion. This company is the leader in this space.

CyberArk Software (CYBR), which had a pocket pivot five days ago is pulling back constructively, and yesterday pulled into its 10-day moving average on a "voodoo" volume signature.

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