The major market averages outside of the Dow Jones Industrials managed to claw back to near breakeven after nervousness that the government shutdown would last longer than expected sent the markets gapping down at the open. Volumes eased from the prior day. Despite no resolution between the House and Senate, premarket futures in the major indices are near flat.
Tesla Motors (TSLA) was downgraded to neutral yesterday by Baird & Company, dropping below its 10-day moving average on the news. Volume was heavy at 107% over its 50-day average volume, but got heavy support during the last 40 minutes of trade. TSLA is trading down again in the premarket after a report that one of its cars caught fire, but this fire resulted from a collision after 83,000 miles of driving. Deutsche Bank says this has not changed its view thus maintains its $200 price target on the company. Investors, however, should pay attention to the stock's price/volume action. We would use a maximum sell stop at 175 as a violation of the 10-day moving average, although investors can decide how to handle the position based on their own entry and position size. Some have traded around a core position with looser stops and may wish to continue to do so.
Leading stocks such as Priceline (PCLN), Acadia Pharmaceuticals (ACAD), Vipshop (VIPS), Yy (YY), and Trulia (TRLA) were all under strong accumulation today, with some hitting new highs. Overall most leading stocks appear to be well intact, despite the market's short-term volatility. Investors should simply keep a close eye on their stocks and maintain their selling guides.