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MLR - PMP 6/6/13

The markets were hit hard yesterday as heavier volume selling took the S&P 500 and Dow Jones Industrials Indexes down near their 50-day moving averages. The NASDAQ Composite sold off to a lower low, but volume was lighter on the day. Leading stocks continue to get hit, and a number of former leaders were observed to move below their 50-day moving averages, and in some cases actual 50-day moving average violations occurred, resulting in clear sell signals for those stocks, among them Celgene (CELG) and Stratasys (SSYS).

In our view, a recovery in the market will necessitate some kind of rotation into newer leadership, but so far this is not evident, hence the odds of further downside increase though leading stocks such as WFM, EA, and LOPE have managed to hold strong.

With the S&P 500 roughly at its 50-day moving average, this sets up a logical area from which we could see a reaction bounce or rally this morning, and futures are up slightly at the time of this writing. The question is just how long any such bounce lasts, and a movement by the NYSE-based indexes through their 50-day lines could coincide with the NASDAQ Composite moving down towards its own 50-day moving average. Currently the NASDAQ remains well above its 50-day moving average.

The Investors Intelligence survey of market advisers hit the lowest level since late April at 45.8% bulls. This can be a contrarian signal should this number reach extreme values. 45.8% is nowhere near extreme, so is not fodder for the bulls as of yet.

Since QE is still firing on all cylinders for the foreseeable future from the Federal Reserve, Bank of Japan, Bank of England, and the European Central Bank, the market could very well find a floor sooner than later. The Market Direction Model remains on a neutral signal, as caution continues to be warranted.

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.
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