MLR - Premarket Pulse January 31, 2013
The general markets fell slightly yesterday on mixed volume, as the NASDAQ traded higher volume to log another distribution day. The Russell 2000 fell the hardest, logging its largest single-day decline since mid-November of last year. As the leading index and one that is more volatile as a small-cap index, the Russell is also more vulnerable to sharper pullbacks. The Federal Reserve released its policy statement yesterday saying that "growth in economic activity paused in recent months" because of "transitory factors." The Fed said it would continue to buy mortgage-backed securities at an $85 billion-per-month pace. GDP also fell by -.1%, its first drop since 2009.
Silver ETF SLV had a pocket pivot (for complete details: http://www.virtueofselfishinvesting.com/pocket-pivot). With quantitative easing firing on all cylinders on both sides of the Atlantic, precious metals should eventually find their footing and break out of these long consolidations that began in 2011. In the meantime, pocket pivots may allow one early entry at a lower price. While the SLV's chart shows a slight v-shaped move back above its 50-day moving average, this is still acceptable given the white metal's volatility as well as the context of its movement around the 50-day moving average.
Apple (AAPL) found resistance near its intra-day high from the gap-down day of five trading days ago at 465.73. The stock remains a short, using that high as an upside stop.
With the futures coming off this morning pre-open, the market is set to continue its pullback from yesterday, and given the extended state of affairs with respect to the indexes this is not surprising. If it develops into something worse, then sticking to downside stops on long positions should be effective in naturally forcing one to exit from the market.
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