MLR - PMP 9/19/13
Stocks and precious metals rallied on substantial volume after the Fed surprised the markets with the announcement that it would hold its asset-purchase program steady, putting off any decision for tapering until later in the year. The move was unexpected as many had expected at least a token taper in the range of $5 to $15 billion. Both the SPDR Gold Shares (GLD) and iShares Silver Trust (SLV) had powerful pocket pivots as they reversed off of their 50-day moving averages.
By a nearly unanimous 9-1 vote, the Fed plans to continue to buy $85 billion a month in Treasurys and mortgage-backed bonds. The central bank said the unemployment rate, government spending cuts, and rising mortgage rates are "restraining economic growth." The Fed said that there has been gradual improvement in the economy over the past year, and they expect higher interest rates by 2015.
The S&P 500 is now in a de facto rally resumption of its own after breaking out to new highs yesterday, while the NASDAQ moves further above its recent breakout from last week. For now the market trend remains strongly up.
Vanda Pharmaceuticals (VNDA) had a pocket pivot yesterday. It has had a gap down then a gap up in its pattern and is a micro-cap biotech so investors should expect huge volatility in this name if you decide to trade it. The bio-tech group is quite strong with a ranking of #5, but VNDA's earnings growth is negative and sales are nearly nil. Bio-techs can still make big moves based on pending approvals to products in their pipeline, as we've seen with a number of other smaller names in the group.
Priceline.com (PCLN) had a pocket pivot break out, hitting $1000 for the first time. It recently gapped up on a strong earnings report, then formed a constructive base during a bout of weakness in the market. PCLN continues to have strong fundamental numbers with pre-tax margins of 36.5%, ROE of 49.8%, and the company has maintained steady earnings growth in the low- to mid-double digits while sales growth has accelerated over the past three quarters.
Tesla Motors (TSLA), which did not react much to yesterday's strong move in the market indexes following the Fed announcement of no tapering, is gapping up this morning. It's 40-day ATR is 6.2, so a gap-up of .75 x 6.2 = 4.65 points would be sufficient for a buyable gap-up if volume comes in at 150% or greater of average daily volume. We will likely follow-up with a report on this later depending on how the move develops.
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