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MLR - PMP 6/7/13

The S&P 500 and Dow Jones Industrials Indexes both found logical short-term support at their 50-day moving averages yesterday, resulting in a reaction rally and bounce on mixed  volume. Futures are up again this morning following a jobs number that exceeded estimates. The unemployment rate rose, however, to 7.6% from 7.5%, moving further away from the Fed's threshold for tapering back on QE.

A small handful of leading stocks showed pocket pivot action at logical areas of support, including Regeneron Pharmaceuticals (REGN) and Fortune Brands Home & Security (FBHS) which both bounced off of their 50-day moving averages, while Fleetcor Technologies (FLT), which has been able to hold up in its pattern better than most stocks, flashed a pocket pivot yesterday as it just barely held above its 10-day moving average by the close.

For the most part many leading stocks' patterns are showing a fair bit of technical damage and likely need more time to heal. However, with the NYSE-based indexes bouncing off of their 50-day moving averages, the market is in a logical position to bounce, and if this bounce turns into something more material then stocks showing pocket pivot moves off of logical support areas such as the 50-day moving average as in the case of REGN and FBHS represent the type of action you want to see among leading stocks as they attempt to recover with the market. While they may not move higher right away, these initial rumblings of constructive action at logical support areas mean that these stocks merit focus on one's watch list. In the case of REGN, one could have taken a stab at the stock right at the 50-day moving average as it sat there early in the day yesterday as the market was getting pummeled, but that entails a certain level of risk-taking that may not be suited to everyone. Nevertheless, yesterday's pocket pivot bounce off the 50-day line means that REGN should be watched closely as it may be the first sign of the stock's ability to set up again.

The Market Direction Model remains on a neutral signal.

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