MLR - PMP 8/15/13
Major averages were lower on lower volume. The number of distribution days is a concern as is the two Hindenburg signals in the last two days, bringing the total to ten since the first one hit this year on May 31. While quantitative easing has pushed major averages higher and limited the downside to just 5-6% so far this year plus rendered a number of reliable indicators unreliable, the market could be topping. Major tops can occur quickly or take a number of months to unfold. Leading stocks are bifurcating where some are breaking down while others are okay. For all these reasons, the Market Direction Model is close to switching out of its buy signal.
Today's premarket futures are down largely due to a disappointing earnings report from Cisco (CSCO) which is cutting 5% of its global workforce and posted a quarterly outlook that fell below Wall Street projections. Cisco said it expects year-over-year revenue growth of 3% to 5%, compared with a consensus of 5%. Cisco shares are down nearly 10% in premarket trading. Chief Financial Officer Frank Calderoni said the networking giant was "managing the business to account for slow inconsistent recovery." This morning Cisco Chairman John Chambers is trying to put a positive spin on last night's report, but it may be that the market is simply using the Cisco news as a reason to sell off.
Russian internet search engine Yandex (YNDX) had a pocket pivot yesterday, but it is not clear that one would want to be acting on buy signals given the action of the general market this morning.
Tableau Software (DATA) undercut the low of its buyable gap up day by 1%. We would give this 1-2% allowance before selling unless on or after the 6th day, it undercuts any low by any amount, in which case the stock should be sold.
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