Major averages bounced yesterday at the open, then weakened and reversed later in the day to finish near their trading day lows. The Market Direction MOdel MDM took advantage of the bounce and switched to cash.
Futures are currently lower at the time of this writing. European stocks continue to sell off after the International Energy Agency cut its outlook for global oil demand. Oil prices are at around $59 as oil continues its free fall due to the U.S. shale boom brought on by fracking technologies, stagnating oil demand growth in Asia and Europe, and the reluctance of large Middle Eastern producers such as Saudi Arabia to intervene to cut the global supply glut.
Furniture retailer Restoration Holdings (RH) had a buyable gap up after a strong earnings report. We mentioned RH's pocket pivot on 12/9. Members should keep in mind, however, that in this environment buying anything carries a high degree of risk given the current general market action.
Short-sale target Workday (WDAY) rallied right into its 200-day moving average yesterday before reversing to close near flat on the day. The stock remains shortable here using the 200-day line as the new upside stop. We currently have a position in the stock.
Tesla Motors (TSLA) rallied yesterday on the big phony market rally early in the day but reversed to close down on the day on above-average volume. So far the stock has been unable to get back above the prior October low in the 217 area. We continue to look for a breach of the 200 price level and a move towards our next downside price target at the 177.22 low of the prior cup base. We currently have a position in the stock.