MLR - Premarket Pulse May 15, 2013

Published : May 15 2013 at 9:32 ET

The major averages moved higher on higher volume yesterday, after moving higher on lighter volume the prior day. While investors may fret from day to day when the market moves higher on lighter volume, each time we have seen volume come in higher to provide healthy sustenance to the market's uptrend. The market has now gone 19 days without a significant decline in higher volume, marking the longest period of bullish market action since the market bottomed in November.

3-D printing stocks all rose sharply on vigorous volume. The group is showing great strength as major components of the group have reported strong earnings. After the close yesterday Exone Company (XONE) missed on earnings due to weak orders coming out of Europe, and the stock is correcting about 10% this morning pre-open. However, XONE had been on a run over the past three days that included two gaps to the upside and took it from a low of 40.29 to a high of 48.60. Pre-open at the time of this writing the stock is now trading in the 43-44 price area. Given the sharp upside moves in all of these stocks, including DDD and SSYS, some consolidation is to be expected.

Tesla Motors (TSLA) had a high volume reversal yesterday after a sharp upside run following its earnings announcement last week. This could be where TSLA forms a base before moving higher, and members should be patient in allowing the stock to settle down and form some sort of consolidation from which it might issue a new buy point, either in the form of a pocket pivot or another buyable gap-up, although we would consider the former to be more likely at this stage.

Lions Gate Entertainment (LGF) had a continuation pocket pivot off of its 10-day moving average yesterday, trading just enough shares to qualify. Earnings and sales have rocketed higher, institutional sponsorship has grown over the last 6 quarters, and industry group rank is #6. LGF's price formation during its uptrend has been very tight and constructive overall.

Gold continues to get hit, as have Treasury bonds over the past couple of weeks, while the dollar has rallied. All of this seems to point towards some expectation by the market that QE may begin to taper off, although we might expect that this will be a gradual process. At the same time, such clues regarding a tapering off of QE have not resulted in any meaningful decline in stocks, thus the trend remains to the upside and should be played as such pending new evidence to the contrary as our Market Direction Model remains on a buy signal.

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