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MLR - Premarket Pulse August 14, 2012


Over the past five days the S&P 500 Index has followed a pattern of either opening down or moving lower at the outset of the trading day but closing near the peak of its trading range on all five of those days while managing to close in the black on four of those days. On balance, this is constructive action for the indexes, and indicates an unwillingness to stay down whenever sellers move in as selling volume has in fact remained light. The NASDAQ Composite Index has followed a similar pattern, and despite its deepest intra-day sell-off over the past five days, managed to close at its highest closing high since the start of the market's rally off the early June lows. Given this resiliency, and the lack of negative news coming out of Europe or elsewhere, and today's positive news on retail sales coming in stronger than expected, the market appears poised to move higher today, and the pre-open action in the S&P and NASDAQ futures confirms this.


As we discussed yesterday, Apple (AAPL) looked like it was likely to move higher and in fact has climbed back above the 630 price level, closing right at 630 yesterday. Pre-open AAPL is trading another 1/2 a percent higher, pushing just above the 633 level.

One technology titan flashed very positive technical action yesterday, largely a consequence of being able to grow its business despite the global slowdown, with Google (GOOG) breaking out from a double-bottom consolidation as it just cleared its 658.59 midpoint. GOOG recently had a strong earnings report resulting in a mini-gap up on better than expected earnings though sales came in slightly lower than forecasts. GOOG has not made substantial price progress since January 2010 but its sales accelerated in the latest quarter and this represents the largest quarter-over-quarter percentage gain it has had in years, impressive especially given the global slowdown.

LinkedIn (LNKD), the last of the social-networking stocks left standing after Zynga (ZNGA), Facebook (FB), and now Groupon (GRPN) have blown apart, continues to hold above its 50-day moving average following a strong 20% move to the upside off the 93.51 close of not quite two weeks ago after announcing strong earnings. Short-sellers continue to swarm the stock, but there is still little in the way of negative technical action to validate such a strategy. Unless LNKD breaks down through its 50-day moving average, it may make an attempt to clear the recent 113 high set six trading sessions ago.

Materials or, as we like to say, "stuff" stocks have been strong, and several have moved to the forefront as potential leadership in a continued market rally. The oil patch has come to life, led by Tesoro Petroleum (TSO), a veritable "rocket stock" that has launched over 35% higher since breaking out just under two weeks ago, and the stock is now extended from a buyable range. Agriculture names like big fertilizer names Agrium (AGU) and CF Industries (CF) also contiinue to hold above recent breakouts, with CF being in a buyable position just above the 200 price level.

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