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MLR - PMP 10/15/13

Major averages gapped down yesterday then headed higher from the open as the push from quantitative easing and renewed hopes that an agreement on the budget and debt ceiling issues would be reached sooner than later. On the Senate floor, Senate Majority Leader Harry Reid said he was “very optimistic” about concluding deals “this week.” The "risk-on" small cap index Russell 2000 hit new highs, reflecting an optimistic market. Volume eased but the drop was likely due to the Columbus Day holiday. Banks and the bond market were closed.

Netflix (NFLX) had enough volume for a pocket pivot though the quality of its pocket pivot is debatable. Last week, at the height of the market's sell-off, the stock found support at its 50-day moving average and has since moved higher. Yesterday's move occurred after the company announced that it is in talks with several cable companies to include its services as an app on set-top cable boxes. NFLX's sales have accelerated and its earnings show it has managed to turn itself around. So on a price/volume basis, the stock is actionable. But on a fundamental basis, its critics argue that it is unlikely to evolve into an on-demand network co-marketed by the cable, phone and satellite pay-TV companies. The argument is that its allies have little to gain and much to risk if Netflix's subscriber growth continues much beyond current levels, and that current levels of subscribers are already priced into the stock.

Tesla Motors (TSLA) is gapping up this morning after Wedbush put an outperform rating and $240 price target on the stock. We are monitoring this action for a possible buyable gap-up and will report on TSLA as necessary later today.

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