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MLR - PMP 6/2/14

Major averages finished mixed on higher volume. As the S&P 500 carves out new highs, the NASDAQ Composite and Russell 2000 play catch up. The NASDAQ is now firmly trading above its 50-day moving average while the Russell 2000 rests roughly at its 50-day. That said, the Russell 2000 has been the weakest index and Friday's higher volume on a lower close signals another distribution day for the index. However, the huge number of actionable names this past week speak to the potential durability and sustainability of the current rally.

However, as the indexes drift higher, the more important question for stock investors is where and how does one make big money in this market? Where are the "new merchandise" type of dynamic, innovative growth names that can sustain big price moves? In our view, stock selection will be key if the rally turns out to be sustainable, and in this vein one must ask whether the names that they seek to purchase are earlier or later stage situations, e.g., new merchandise vs. old merchandise. Think TSLA in May of last year, YELP in June of last year, FEYE in January of this year, etc. Are there names like these that exist in the market right here, right now? This is an important consideration that investors should take into account in what is now June of 2014, as it probably leads to the most profitable routes if and as the general market rally continues.

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