MLR - PMP 7/30/14

Published : July 30 2014 at 8:18 ET

Major market averages closed near their lows yesterday on higher volume, marking another distribution day. The Russell 2000 has shown pronounced weakness and currently sits just under its 200-dma. The S&P 500 has had a choppy, reluctant move into higher ground as it gasps for daylight only to get sucked back under like a swimmer that's been treading water for far too long. Indeed, this QE market appears tired as uptrends have been weak albeit relentless as central banks continue to print. Thus, taking profits when you have them is a good strategy in this type of environment where even slight market weakness can cause leading stocks to sharply sell off.

Semiconductor company IDTI gapped up on a strong earnings report. Earnings are soaring, group rank 31. This gap-up is less than perfect, however, given that it has had lackluster price performance, routinely violating its 50dma. The question is whether its gap up can overcome prior price history. 

Fuel cell manufacturer PLUG gapped up after Wal-Mart's follow-on order with the company. Note, it closed near its low so may hit sell stops today, even if one allows for a 1-2% undercut. Group rank 1. PLUG is a low priced, small cap stock that can gap-up on news then fail to sustain any kind of meaningful uptrend. It needs to set up just right as it did twice early this year as was evidenced by its constructive price/volume action leading up to two significant buy points. The current gap up is less than perfect so keep stops tight if you hold this.

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