The major averages were up on lower volume, but the NASDAQ Composite closed at a new high, creating a de facto resumption of the market's rally. The S&P 500 provided some confirmation as it was able to regain its 50-day moving average. Over the past two weeks, leading stocks have been acting well, and the number of actionable stocks since Wednesday of last week on which we have reported to members has grown. This was a clear pre-indication of a potential market turn as the action underneath the market's "hood," so to speak, was percolating in constructive fashion. The Market Direction Model switched to a buy signal yesterday near the close, and this morning futures are up as the Syrian crisis appears to become somewhat defused. Following Russia's urging of Syria to place their chemical weapons under international control, U.S. Secretary of State John Kerry confirmed that Syria could avert an attack by promptly handing control of their chemical weapons to the international community.
Among leading stocks showing strong action yesterday, Acadia Pharmaceuticals (ACAD) broke out of its sideways base two days after we sent a report on its pocket pivot on Friday.
Trulia (TRLA) followed through on its pocket pivot of four trading days ago with another one yesterday. TRLA gave investors two days of buying opportunity after that September 4th pocket pivot as its pullback over last Friday and Thursday was on constructively lower volume.
VipShops (VIPS) had another pocket pivot. We have mentioned VIPS in prior reports (see archives).
Mercadolibre (MELI) recovered from a sell-off on last Friday and turned back to the upside yesterday, trading enough volume for a pocket pivot. Keep in mind this stock trades sloppy and often violates its 50-day moving average, thus it might be worth a quick profit, especially given how a number of higher quality stocks have acted this year, moving ahead 3 steps, then moving back 2 1/2.
Tesla Motors (TSLA) tested its 20-day exponential moving average yesterday and was able to trade up and off of the line as volume came in well above-average. However, the stock did gap down in the morning and closed in the lower part of its daily trading range, so a retest is always possible.
Discount retailer Five Below (FIVE) will gap up at today's open after a strong earnings report. Earnings are accelerating but have been erratic, so caution is warranted.
We note a couple of stocks trying to turn up the right sides of their bases and which flashed "bottom-fishing" pocket pivots yesterday: Eagle Materials (EXP) and Chicago Bridge & Iron (CBI) both moved above their 50-day moving averages yesterday on pocket pivot volume signatures.