MLR - PMP 8/16/13

Published : August 16 2013 at 9:07 ET

Major averages took big hits on higher volume. Given the number of distribution days in the major averages, repeated signals from the Hindenburg Omen described here:, and deteriorating leadership, the Market Direction Model is on the verge of switching to a sell signal. The S&P 500 sits just above its 50-day moving average which could result in a dead cat bounce.

Supercaps Walmart (WMT) and Cisco Sysems (CSCO) gapped lower on disappointing earnings news, and a number of leaders have done about faces including Vipshop (VIPS), Exone (XONE), Yy (YY), Lightinthebox (LITB), Yelp (YELP), and Cree (CREE).

Key buyable gap-ups are also failing, including Tesla Motors (TSLA), which failed on Monday. If you own LinkedIn (LNKD), it undercut the low of its buyable gap up (BGU) day after the fifth day so should be sold if you are using the BGU 6-day rule.

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