The major market averages closed mixed yesterday, with the NASDAQ slightly higher on increased volume while the S&P 500 and Dow were slightly down on lighter volume. However, all of the major indexes closed near the peak of their daily trading ranges on at least above-average volume after selling off hard earlier in the day for what was clearly a round of buying support off the lows. With tapering well delayed, it's easy to assume the markets will continue the uptrend that has been present all year. While the odds are good this will occur, be prepared for the unexpected. Price/volume action, as always, will lead the way.
Most major leaders have pulled back during the past three days' of market pullback, and investors should look for those leaders which have shown prior strength and then pulled back in constructive fashion. While many continue to make little progress overall, they continue to be dragged slowly higher when the market is stepping higher, then pummeled when the market gets hit just 1-2%. The key factor here will be whether recent pullbacks are helping to set up the stronger leading stocks, many of which we've reported on in recent emails, for stronger action in December should the market make a year-end move higher.
The gaming stocks showed strength yesterday as Las Vegas Sands (LVS) had a standard-issue base breakout from a six-week flat base on heavy volume, while Macau casino operator Melco Crown Entertainment Ltd. (MELP) flashed a pocket pivot breakout and Wynn Resorts (WYNN) flashed a pocket pivot as it tries to round out the lows of a potential new base. Further group confirmation is found in the recent action of Bally's (BYI), which flashed a pocket pivot five days ago as it regained its 50-day moving average despite prior weakness in the pattern.
Apple (AAPL) finally inked a long-awaited agreement with China Mobile to sell iPhones in China.