Major averages rose yesterday on mixed volume. With the ECB having lowered the interest rate it pays banks that deposit with it to a negative -0.1% last Thursday, the first time a major central bank has ever done this, the ECB hopes to spur banks to lend the money they are hoarding to businesses with the idea that this will spark new and expanding growth. This sort of plan smacks of desperation as QE has yet to fulfill its original intentions. Despite that, major central banks around the world including the ECB, US Federal Reserve, UK, and Japan all have aggressive QE strategies in place. Thus interest rates continue to drop which pushes money into stocks, sending major stock markets higher overall since 2009. While blistering upside moves are not the order of the day, it has been possible to make progress on the long side of this market as a number of leading stocks have trended higher over the past month or so.
Indeed, a number of actionable pocket pivots and buyable gap ups have accelerated over the last couple of months. Of the pocket pivots we have reported in April and May, AAL, ANIK, AL, INXN, CELG, PANW, JAZZ, GBX, WWWW, THRM, CBG, SLCA, XRS, ITMN, NXPI, and Z are all higher. ACT is higher, but one might have been stopped out of that one. ALGN, WDAY, PCLN, and GLOG are lower. With respect to the June pocket pivot reports, ANIK, HZNP, VIPS, DIOD, CAVM, and VLCCF are either higher or well within range of the pocket pivot. VRX could be said to have failed.
Among the buyable gap-ups over the same period, in April we reported on SLCA, TRN and SWKS as buyable gap-ups, and all three are higher. In May we reported on PANW, QIHU, WDAY, CAVM, and ENBL as buyable gap-ups, and PANW and CAVM are higher. In June we have reported on SWKS and SPWR as buyable gap-ups, SWKS is up, SPWR is roughly even.
Futures are down this morning which is not surprising given the extended state of the market indexes. Pullbacks, however, can provide entry opportunities in leading stocks as they pull down into areas of logical support.