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MLR - PMP 2/25/15

Major averages rose yesterday on mixed volume, closing yet again near intraday highs. The number of quality stocks performing well has been ample expressing healthy market internals. Federal Reserve Chairwoman Yellen's testimony said rates would not rise for at least the next two Fed meetings. While Yellen said the Fed would soon drop the word “patient” from its forward guidance which normally would have caused great concern, Yellen reiterated that the Fed wasn't on automatic pilot and only wanted the flexibility to move “on a meeting-by-meeting basis", thus softening the blow with several dovish comments that suggest the Fed is in no hurry to raise rates. Yellen has always been perceived to be in the dovish camp when it comes to rate hikes. Thus markets believe that rates will only be raised once she sees ample evidence of an economy that has truly turned the corner. Of course, this could come much further down the line than expected, in which case, rate hikes would have to wait.

Semiconductor Qorvo (QRVO) had a pocket pivot yesterday. Earnings are skyrocketing, sales are accelerating, group rank 7.

Server system manufacturer Super Micro Computer (SMCI) had a pocket pivot off its 10-day moving average. Strong earnings and sales, institutional sponsorship has grown last 6 quarters, group rank 44. This is a thinner name so subject to greater volatility as it is no stranger to testing its 50dma.

Biotech United Therapeutics (UTHR) had a pocket pivot on a strong earnings report. It had traded lower during the day but then had a strong upside reversal. Internals are particularly strong with pretax margin 58.9%, ROE 46.6%, group rank 1. Its latest drug Orenitram that treats high blood pressure has all star potential as sales have been particular strong and should continue to accelerate strongly should it pass further regulatory hurdles.

Solar stocks were on fire yesterday with First Solar (FSLR) and Sunpower (SPWR) gapping on huge volume. The two companies announced the formation of a joint Yieldco that could eventually be spun off as an IPO. Both companies also announced earnings yesterday after the close, and both are looking to open up slightly after yesterday's huge-volume gap-up moves. In this market, unorthodox gap-ups like these have been able to move higher, as evidenced by such BGU's in names like Twitter (TWTR), Netflix (NFLX), and Amazon.com (AMZN), to name a few. Treating the moves in FSLR and SPWR as BGUs might be feasible here with SPWR the stronger of the two given that it a) closed near the peak of its daily trading range, and b) has cleared its 200-day moving average.

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