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MLR - PMP 9/20/13

Major averages finished mixed yesterday on lower volume, nearly flat, consolidating yesterday's big gains in constructive fashion after the Fed announced no tapering in September. Economic news came in stronger than expected. Existing home sales reached the highest level since February 2007, and the Philadelphia Fed's September manufacturing survey expected a reading of 10 but got 22.3, well ahead of 16.6, the high end of estimates.

This is in step with increasing evidence of a global economy recovery seen in juggernauts Germany and China. Is recent evidence a blip or something more permanent? If its just a blip, and recovery is further down the road than expected, the Fed and other central banks will have no choice but to continue to drive their respective countries deeper into debt. This cannot be good for the health and stability of these countries in the long run.

On the other hand, if the global recovery takes hold sooner than later, giving central banks headroom to slow the pace of money printing, debtor nations can perhaps ease their debt burden by jumping on the economic growth train. That is the idea in theory. In practice, history shows this less likely to be the case as all this money printing creates issues for the countries who were already deeply in debt prior to quantitative easing which began in late 2008/early 2009. Creditor nations should have more leverage to wield their currencies into potentially a sovereign status in the years to come. Predictions about China then India moving into first place economically ahead of the US have come from various entities including Goldman Sachs.

Tesla Motors (TSLA) had a pocket pivot in Thursday's trade, just barely clearly the necessary volume. The stock is the de facto leader in terms of price and first mover advantage. Earnings and sales continue to accelerate into the stratosphere, institutional sponsorship has climbed in every quarter since the company went public 13 quarters ago, and the auto stocks in general have been strong with a group rank of #4.

Some stocks to keep an eye on: Recent IPO Noodles (NDLS) is showing constructive action as it tightens up considerably along its 10-day moving average as volume dries up sharply. NDLS had a pocket pivot back on September 5th but has gone nowhere since then. The stock is currently working on its 4th tight weekly close in a row and may be setting up to move higher. LinkedIn (LNKD) is also tightening up around its 10-day moving average, and may be working off its 5.38 million share secondary offering which in the short-term may have absorbed demand for the stock. With the stock holding in tight, a continued market uptrend will likely eventually lead to further upside given LNKD's status as a big-stock market leader.

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