MLR - Premarket Pulse September 25, 2012

Published : September 25 2012 at 9:05 ET

The NASDAQ Composite led the major market idexes on the downside yesterday, thanks to Apple (AAPL) and other big NASDAQ stocks trading down. Riots at the Foxconn manufacturing facility in China, which supplies AAPL with components for its products, were cited as the reason for the drop in AAPL shares. However, AAPL is having some trouble getting through the psychological $700 price level where buying volume has waned to some extent. Meanwhile, Google (GOOG) has taken over as the big NASDAQ name leading on the upside. Futures are up this morning as the market perhaps looks forward to European Central Bank chief Mario Draghi's comments.

The market lacks any real catalysts as we move into tomorrow's Yom Kippur holiday, and volumes may diminish as a result of the Jewish Day of Atonement. The market did avoid any distribution yesterday given that volume levels were lower than Friday, but investors should keep in mind that Friday's bloated volume was due to quadruple-witching options expiraton and S&P index rebalancing, making a useful comparison difficult. Nevertheless, the market rally remains intact despite the sluggish action in the indexes as well as some leading stocks. Investors should remain vigilant and keep a close eye on their stop-out levels for individual equity positions. As well, purchases at higher levels within a stock's patterns should not be allowed to put an investors in the position of being "top heavy," in other words allowing the stock to fall too far below points where additional shares were purchased at higher prices should the stock pull back more than expected.

Leading retailer Michael Kors (KORS) priced a 20-million-share secondary offering at $53, a surprising price in our view given the stock's strong move and close at $57.35 on Friday. Investors buying into Friday's buyable gap-up move have essentially been given the shaft as pre-open we are seeing the stock drop below the 54.40 intra-day low on Friday which would serve as a selling guide for the buyable gap-up move on Friday.

Facebook (FB) turned tail yesterday after a negative Barron's cover story came out over the weekend, and with the stock unable to hold above its 50-day moving average, any chance of a resurgent move in this "big stock" social-networking name has been quashed for now.

Gold and silver continue to hold up within their short consolidatons following a sharp upside move not quite two weeks ago after the Fed announced QE3. In the short term, we would consider a violation of the 10-day moving average on the GLD and SLV precious metals ETFs as a reason to sell or cut back positions depending on one's cost basis. Otherwise, we note that the GLD's 50-day moving average is just barely starting to cross above its 200-day moving average, a "golden cross," while the SLV's 50-day moving average remains below its 200-day moving average despite its much sharper upside move since mid-August.

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