MLR - PMP 5/22/14

Published : May 22 2014 at 8:44 ET

The major market averages rose on lower volume yesterday. Once again the NASDAQ Composite is close to retesting its 50-day moving average while the S&P 500 and various European bourses are less than 1% off their highs. The relatively flat, non-trending market has been tough on trend followers, but this is a market of stocks rather than a stock market, so our primary focus has been on actionable individual names on either the short or long side. Adjusting to the quantitative easing induced manipulation of the major averages has also been a focus though when the market turns trendless, there is little to be gained in terms of market timing. But such periods always come to an end so we remain ever-vigilant for the next trend.

Website publishing and management software company Group (WWWW) had a pocket pivot as it closed firmly above its 50-day moving average having rounded out the lows of a potential new cup base. Institutional sponsorship has grown over the last 9 quarters, ROE 67.6%, group rank 46.

Railroad transportation equipment manufacturer Greenbrier Companies (GBX) had a pocket pivot breakout yesterday from a short three-week flag formation.. Transports have been strong all year. Group rank 5.

As we wrote in our Tuesday Pre-Market Pulse report, "roundabout" type formations where stocks are attempting to round out the lows of a potential new base are likely to be the most common buy set-up once the roundabout is confirmed with a pocket pivot coming up through the 50-day and/or 10-day moving averages. This is the type of set-up that members should be alert to. We would note that Facebook (FB) is currently in position for a roundabout-type of pocket pivot, and we have a position in the stock currently.

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