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MLR - Premarket Pulse February 6, 2013

After Monday's lower volume sell off the markets responded constructively by rising on higher volume in yesterday's trade, nearly recovering all of Monday's losses. Part of this rally was spurred by bullish economic news in Europe with Markit's composite purchasing managers index reaching a 10-month high. Over in the U.S., the Institute of Supply Management's nonmanufacturing index slightly beat forecasts, adding to the upbeat economic tone. Futures are lower this morning as the market continues to "wobble" around its recent highs.

A number of stocks recovered Monday's losses. Of note were some of the home building and housing-related stocks including D.R. Horton (DHI), Lumber Liquidators (LL), Ocwen Financial (OCN), U.S. Gympsum (USG), and American Woodmark (AMWD). We reported on AMWD recently as it had a pocket pivot on January 31 from which it has vaulted higher. Industry group strength overall remains strong. USG which we reported on January 17 has been trading sideways and had another pocket pivot in Tuesday's trade.

We reported on Virgin Media's (VMED) pocket pivot in a recent report (see archives at https://www.virtueofselfishinvesting.com/reports). On Tuesday , it gapped up on buyout news. It is being bought out by Liberty Media. Investors could sell here with the risk that the buyout may send VMED price somewhat higher, or lock in profits at the current price in the small chance the deal does not go through.

Michael Kors (KORS) traded enough volume for a pocket pivot as it found support at and bounced off of its 50-day moving average. We have reported on KORS in prior reports (see archives at https://www.virtueofselfishinvesting.com/reports). KORS announces earnings on February 12.

Precious metals have gone nowhere despite QEternity, but such money printing does not cause much inflation in and of itself because the money pays for the government's operating costs, rather than being used to create wealth and grow the economy. Silver continues to act better than gold as the iShares Silver Trust (SLV) regained its 50-day moving average as it moves tight sideways over the past three days. We will be watching for a more definitive buy signal potentially coming off the 50-day line.

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