MLR - Premarket Pulse May 9, 2013
Same story, different day: the major averages once again moved higher, this time on increasing volume. The NASDAQ Composite and S&P 500 are ascending with greater relativel strength as quantitative easing continues and a dearth of bad news prevents the general markets from being dragged down, even temporarily.
Santarus (SNTS), which produces drugs that treat gastrointestinal conditions, had another buyable gap up on strong earnings Tuesday, and yesterday drifted in to close one cent below the intra-day low of iits buyable gap-up day's intra-day trading range. We reported on its prior BGU on March 5 after it released a strong earnings report (see archives). Earnings and sales continue to accelerate strongly, and institutional sponsorship has increased over the last 6 quarters.
Actionable buy points appear to be coming mostly in the form of gap-up moves following earnings, and over recent days we've seen such moves in stocks like Electronic Arts (EA), Whole Foods Market (WFM), Fossil (FOSL), and Tesla Motors (TSLA). In some cases quality is an issue, but from a technical standpoint a buyable gap-up operates on the basis of a strict set of price and volume parameters, thus it is always a simple matter to test any gap-up move that meets the criteria of a buyable gap-up. In most cases, adhering to the basic selling rules for a buyable gap-up should keep losses to a minimum once a clear intra-day low on the buyable gap-up day can be determined. We receive many questions regarding any number of stocks showing such action on any given day, but often the "quality" issue causes us to refrain from sending a report out on these. However, members who feel they understand a stock's story well enough to test a buyable gap-up type of move on the long side can certainly do so when the correct parameters are met, as long as they understand the basic and very clear selling rules for buying into such a move.
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