Off your game?

Read our free Dr K report on how to optimize your mind and body so you can boost your focus when trading the markets.
Your email will always remain private.

MLR - PMP 5/8/14

Major averages traded mixed on higher volume. The divergence was pronounced with the NASDAQ Composite down -0.32% while the S&P 500 was up 0.56%. This divergence between NASDAQ Composite and S&P 500 is somewhat akin to the divergence seen in late 2007 when the Russell 2000 and S&P 500 started to severely laggged the NASDAQ Composite which was the beginning of the market slide in 2008, culminating in a great crash. This year, the Dow and S&P 500 lead while the NASDAQ Composite and Russell 2000 lag.

Divergences of such a major magnitude are generally bearish as they lead to further market weakness. The quantitative easing effect has prevented major averages from correcting sharply since January 2013. Indeed, corrections in the S&P 500 since then have been contained to 6.1%. So even with said divergences and major damage done to leading groups, can QE still save the day and spur markets higher once again? Conditions would say otherwise, especially given additional pronounced damage done to leaders today and in recent days. Further, defensive stocks continue to lead the way and the % of bullish newsletters remains stubbornly high, perhaps due to the S&P 500 being less than 1% off its all time highs.

In economic news, first-quarter nonfarm productivity sank 1.7% while unit labor costs grew 4.2%, both which didn't come close to the more favorable expectations. Unsurprisingly, testimony from Federal Reserve chief Janet Yellen hinted that interest rates would be kept at record low levels for an extended period of time. In other words, QE remains alive and well. But mounting evidence suggests that the economy is not turning around in the US or abroad, despite aggressive money printing by central banks around the world.

Las Vegas Sands (LVS), which we discussed as a short in our Pre-Market Pulse report of this past Monday, is gapping down this morning to its 200-day moving average and is undercutting the 73.01 low from last week. This and the 71.09 mid-April low lie near the 200-day moving average, so we would look at this area as our initial downside price target, although the stock could continue lower. If the stock drops below the 200-day line, then one could use that as a useful upside trailing stop.

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. ©2021 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
Copyright ©2021 MoKa Investors, LLC DBA Virtue of Selfish Investing.
All Rights Reserved.
privacy policy