MLR - Premarket Pulse April 26, 2013
Major averages were up on higher volume, although a late-day sell-off caused the indexes to give up about half of their earlier gains, resulting in action that has the appearance of churning. The NASDAQ Composite is now a hair away from new multi-year highs, although well below its all-time high in contrast to the S&P 500 and the Dow Jones Industrials Indexes. After coming up four straight days, the indexes are in a logical position for a pause and a pullback, and the manner in which any such pullback unfolds will be key in determining whether the indexes have the capacity to exceed their April highs.
Gold and silver both continue to rally sharply, with both of the most popular ETFs for each, the SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV) moving higher on strong volume as the bounce continues. Strong physical demand in the face of the April sell-off is providing a counterweight in the paradox of paper metals vs. the realities of the physical market.
Workday (WDAY) issued a pocket pivot buy point coming up through its 50-day moving average yesterday. While earnings are negative, sales is growing around 100% each quarter going back 7 quarters, and a number of strong institutions have been building positions in the stock. As well, it has absorbed in stellar fashion a 63-million-share IPO lock-up expiration two weeks ago, moving higher in the face of the release of such a large amount of supply. WDAY provides cloud based applications to manage human capital, payroll, time tracking, and procurement primarily to large organizations.
Splunk (SPLK), another recent new issue, also had a pocket pivot in yesteray's trade. Sales have been strong and institutional sponsorship has grown in every quarter since the company went public, and, like WDAY, SPLK has seen a number of strong institutions build positions in the stock. SPLK is the 'google' of the business world and boasts a number of major companies as customers. It is a search engine and analytic software program for a company’s IT data. It tracks customer behavior, user transactions, security threats, and more, and uses a company's IT data to help the decision making process. SPLK is the first pure play of the so-called big-data companies to go public.
With the Market Direction Model on a buy signal, taking measured positions in some of these "newer merchandise" situations can be done with the idea that the market uptrend must continue for these to be viable. With futures down this morning as of the time of this writing, the market will undergo its first test following a sharp rally off of the mid-April pullback lows, so investors should remain alert.
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