MLR - Premarket Pulse February 13, 2013
In a relatively quiet day, the general market closed closed mixed on somewhat higher volume with the S&P 500 once again hitting a 5-year high. The NASDAQ took a back seat once again as Apple (AAPL) again weighed on the index.
Home-building stocks, which had been pulling back over the past couple of weeks, all found support at and bounced off of their 50-day moving averages, although volume was mixed on a stock-by-stock basis. D.R. Horton (DHI) remains the strongest homebuilder following its buyable gap-up on January 29th, which we reported on at that time, and the stock moved to a higher closing high, in fact a six-year high, yesterday as the group moved up in synchrony.
Invensense (INVN), after issuing a pocket pivot buy point on Monday, moved sharply higher intra-day yesterday but was unable to maintain its gains and reversed on very heavy volume to close down on the day. In our view, investors who didn't sell before Tuesday's close should sell on Wednesday's open as high volume reversals are generally bearish patterns. It is possible that INVN began to move on Monday as a result of talk of Apple announcing a new wrist-watch product, a sort of "iWatch." The small size of such a product would likely make INVN's smaller, more energy efficient motion-sensor chips more attractive in manufacturing an "iWatch," and the stock may have been rallying yesterday because of Apple CEO Tim Cook's appearance at a Goldman Sachs conference. Buyers of INVN yesterday may have been looking for such an announcement, but we noted that once Cook's talk was over INVN immediately began to give up its sharp gains from earlier in the day yesterday. This is solely our own conjecture, and has not been confirmed in any other media reports that we've seen.
KORS had a buyable gap up after a strong earnings report. We have reported on KORS in prior reports, most recently on Feb 5 when it had a pocket pivot (see http://www.virtueofselfishinvesting.com/reports). Given KORS weaker close at the lows of its trading range yesterday, VoSI members should refer to our reports from yesterday where we outline the conditions under which we would consider the stock a solid sell. Investors who bought the stock higher within yesterday's trading range, say at 64 or better, must consider what their own downside stops are for the stock given their own expectations for the trade, position size, and average cost if one had purchased shares on the pocket pivot buy point of last Tuesday, February 5.
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