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MLR - Premarket Pulse April 3, 2013

A bifurcation in the markets was observed yesterday as the NASDAQ Composite, S&P 500, and Dow were all up on higher volume while the Dow Transports and Russell 2000 were lower on higher volume. Divergences between major indexes are often a warning sign. In March 2012, the Russell 2000 was noticeably weaker than the NASDAQ Composite and S&P 500. This was followed by a general market correction of -11.6% on the NASDAQ Composite and -10.5% on the S&P 500, making most investors assume the markets would then fall a lot further since the 10% level was breached. Instead, these levels represented the lows and the markets, with the help of quantitative easing, ground higher in the ensuing months. It was this type of choppy market action absent of sustainable trends that made 2012 the toughest year on record.

Is quantitative easing running out of gas? At least it seems this way for this uptrend which began last November. So while the general markets seem unfazed when it comes to bad news here or abroad, they also are making slower and slower upside progress, and the action in leading stocks is uneven while a number of slower-growing names rise up off their lows. Meanwhile, precious metal gold is heading back to retest its lows. If it breaks the 1531 level, it will be the first time it has broken this uptrend which began in 2001. Interestingly, prices for physical gold and silver remain well above current paper prices. American gold eagles are selling for about $1664/oz while silver eagles are priced at $31.37/oz despite gold and silver "paper" prices of $1573/oz and $27.20/oz, respectively, based on our checks of prices this morning.

There is nothing that we currently see as actionable on the long side as we sit in a holding pattern for now, but internal divergences are becoming more apparent, thus investors should keep a close eye on their stocks and their stops.

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. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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