MLR - Premarket Pulse November 12, 2012

Published : November 12 2012 at 9:30 ET

Markets closed slightly higher on lower volume in unconvincing fashion with the S&P 500 closing just below its 200-day moving average. The NASDAQ Composite, Dow Jones Industrial Average, and Russell 2000 remain firmly below their respective 200-day moving averages. A real bounce has yet to materialize, though the more the market gets oversold, the greater the odds of a more substantial bounce. As well, any anticipation of a deal on the so-called "fiscal cliff" could spark a short-term reaction rally and bounce as the Friday meeting between the Administration and Congressional leaders looms. Look for short-term news flow to have some affect on the market, and this could include a natural reaction rally from current levels following 6% and 9% sell-offs of their September peaks in the S&P 500 Index and the NASDAQ Composite, respectively.

Precious metals ETFs SPDR Gold Shares (GLD) ETF and iShares Silver Trust (SLV) both are wedging up into their 50-day moving averages. With Obama comes QEternity, so constructive pullbacks could potentially be bought. And we will keep members apprised of any pocket pivot buy points emerging along the 10-day or 50-day moving averages. In our view, patience can be exercised as investors wait for a proper buy pint to emerge.

Apple (AAPL) found support 2% above its 40-week moving avearge, rising on volume that was 77% above-average but lower than the prior day. AAPL's downtrend is firmly in place but given its current "oversold" position following a steady 22% decline off of its all-time highs at around $705 a reaction bounce becomes more increasingly likely. Such a bounce could hypothetically take the stock back up to the 200-day moving average at around 593.67, a one-third retracement of the prior downside move off the peak. Investors who may have been campaigning AAPL on the short side per our previous comments on the stock over the past 2-3 weeks should heed this potential and be prepared to steer clear of a short-term short-squeeze in the stock. We would also take the same approach to Google (GOOG), which also came within 2% of its 200-day/40-week moving average and found support at the top of its prior base on volume that was only 1% above-average but materially higher than the prior day.

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