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MLR - PMP 10/3/14

Major averages bounced yesterday, albeit on lower volume, though prior market floors have also been accompanied by up days on lower volume wherein the major averages eventually reached new high ground, thus yesterday's lower volume is not necessarily a sign of a dead cat bounce. While we were looking for the possibility that the NASDAQ and the S&P 500 would continue lower and possibly find support on an undercut of their prior August lows and their 200-day moving averages, the market threw a little twist into the action yesterday when the broad New York Composite Index undercut its August low and the Russell 2000 undercut both its August and May lows, putting those indexes in a logical position for a rally attempt.

The put-call ratio closed at 1.07, marking the sixth time in a row it has done this during this current correction. Readings over 1.0 are often seen near short-term market bottoms as witnessed in April 11 and August 1 of this year, and indeed this indicator has a good record so far this year. But as we wrote in yesterday's PMP, in April, the NASDAQ Composite fell another 1.3% to its absolute low before bouncing and in August, the S&P 500 fell another 1.1% before bouncing. In addition, the Hulbert Nasdaq Newsletter Sentiment Index, or HNNSI has had a good record so far this year as well in calling market bottoms.

However, should the market continue lower beyond what it has done since January 2013, or should the market bounce in weak fashion and rollover again, this could be the sign of a major market top and the end of the great QE-manipulated bull that began in 2009.

Today's Bureau of Labor Statistics monthly jobs report showed an increase of 248,000 jobs, ahead of estimates of 210,000, while the unemployment rate dropped to 5.9% from 6.1%.

Network security company Palo Alto Networks (PANW) had a pocket pivot yesterday. Earnings are robust and sales are accelerating, group rank 12.

Twitter (TWTR) had a pocket pivot yesterday as well. . Earnings went positive 3 quarters ago and sales are soaring, group rank 9.

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