Major averages rose on lighter volume last Friday ahead of the 3-day weekend. The S&P 500 hit new all-time highs while the NASDAQ Composite closed firmly above its 50-day moving average. The S&P 500 has hit new highs 3 times since February, only to fail in continuing its uptrend. Will the fourth time be the charm? It depends on whether QE can push markets higher as it has done many times since January 2013 when QE went full bore across major central banks. QE will have to overcome the pronounced damage done to leading stocks, many of which have shown a poor willingness to stage firm bounces. Nevertheless, QE has been the force with which to be reckoned as the saying "Dont fight the fed" has become "Dont fight the feds." MDM remains on its buy signal and UVXY remains on its sell signal until consistent selling pressure shows otherwise.
With little in the way of traditional breakouts among potential leading stocks, pocket pivots will likely remain our primary tool in determining buyable set-ups. As this develops we will send out real-time reports as appropriate. Thus far in May we have seen pocket pivots in GBX, ITMN, THRM, and ILMN, for example, make some upside progress and we would expect to see more if and as the market rally continues to develop. While many potential leaders may be "far away" from standard O'Neil-style base breakouts, we note a number of stocks moving along their 50-day moving averages, such as Facebook (FB), Biogen Idec (BIIB), Michael Kors (KORS), and which may be in position for "roundabout" types of pocket pivots as these stocks potentially round out the lows of current bases.