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MLR - PMP 12/19/13

The major averages rocketed higher on big volume after the Fed announced they would start tapering. It could be argued this is a ceremonial move as it only will cut bond buying by $10 billion a month to $75 billion. Further, the Fed is committed to keeping rates low for an extended period of time well after bond buying ends. It also added new language that it plans to maintain low rates "well past the time that the unemployment rate declines below 6.5%.” So the Fed has substitutes for tapering in mind to keep rates low. The markets naturally reacted very bullishly to this announcement.

One other bullish interpretation was that if the Fed is confident the economy will recover sooner than later, it can afford to end its bond buying program sooner than later while keeping rates low even should unemployment fall below 6.5%.

With the major averages jumping higher on the Fed announcement, a number of leading stocks had pocket pivots:

PCLN - the stock has obeyed its 50-day moving average for many months. Group rank 8, ROE 49.8%, pretax margin 36.5%, and accelerating earnings and sales growth.

AMZN had a gap up when it reported earnings recently. It is taking advantage of cloud computing technologies so earnings are expected to accelerate. Keep in mind it tends to violate its 50-day moving average so position size accordingly.

BIIB - it violates its 50-day moving average regularly, however, so position size accordingly.

GOOG - It had a buyable gap up on its last earnings report. Group rank 2, pretax margin 33%.

PII - tends to obey its 50-day moving average well. Earnings and sales are accelerating, institutional sponsorship rose over the last 4 quarters, ROE 52.5%, group rank 22.

BLK - Pocket pivot after a very constructive sideways multi-week consolidation. Pretax margin 37.7%.

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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