MLR - Premarket Pulse November 6, 2012
The major market indexes have been able to hold near-term support levels with the NASDAQ Composite Index closing above its 200-day moving average despite dipping below the line earlier in the trading day, while the S&P 500 remains well above support at the 1400 level. While today's election is considered crucial to the future of the U.S. economy, it may be that the market's reaction centers around the removal of uncertainty rather than who exactly wins the election. As always, focusing on price/volume action rather than the news provides the clearest picture of investors, and for now the market remains in a correction. Keep in mind that both the NASDAQ and S&P 500 Indexes remain in a what is so far a tepid four-day rally attempt off the lows of last Wednesday when the market re-opened following a two-day closure as a result of Hurricane Sandy. Bottom line: anything could happen here, and investors should focus on keeping an open mind and not getting locked into a mentality that falls on either the bull or bear side of the market - acting solely and objectively on the basis of price/volume wiill always keep one on the right side of the market.
There is little on the long side of this market that looks attractive, such that even if we did have a follow-through day the "merchandise" available for purchases is rather limited. However, we note that stocks like Michael Kors Holdings (KORS), remains in a tight range along its 10-week and 50-day moving averages despite a failed breakout attempt last week. Apple (AAPL) rallied weakly on light volume yesterday and remains underneath its 200-day moving average.
We also note that housing names like Pulte Home (PHM), Lennar (LEN), and DR Horton (DHI) remain in decent bases despite the market correction, while housing-related names like Lumber Liquidators (LL), Eagle Materials (EXP), and U.S. Gypsum (USG) remain very close to their 52-week highs after recent breakouts over the last couple of weeks.
Precious metals are doing their best to hold their 200-day moving averages, and both gold and silver futures yesterday saw heavy trade as gold found support above its 200-day moving average while silver traded back above its 200-day moving average. The action in the SPDR Gold Shares (GLD) ETF and iShares Silver Trust (SLV) was commensurate, but the ETFs saw lighter volume. The action in the nearest futures contracts, however, was somewhat constructive for the metals.
Our current posture is to take things as they come, allowing the election results to play out and reacting to the market's price/volume action alone, regardless of the final election outcome. As small business-owners ourselves, we would like to see some real change that lifts the dark cloud of taxation and regulation currently plaguing the crucial entrepreneurial component of our economy - those small business that create the vast majority of jobs. Vote wisely, as our economic future likely depends upon it.
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