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MLR - Premarket Pulse January 23, 2013

Major averages were up on lower volume yesterday, although this is not unexpected given last Friday's elevated options expiration related volume. Overall, the major market indexes continue their uptrend as all the major indexes closed at higher-highs, with the S&P 500 and Dow Jones Industrials closing at five-year highs while the Russell 2000 remains at an all-tiime high.

The GOP has caved in once again, allowing the Obama administration to go beyond the debt ceiling for three more months. When it comes to real estate, it's location, location, location. When it comes to quantitative easing, it's print, print, print, and one can almost hear those ink futures rocketing to the upside. This should bode well for gold and silver, both which have bounced off their base lows and appear to be trying to form double-bottom type formations. The iShares Silver Trust (SLV) was able to get back above its 50-day moving average yesterday, and we continue to remain alert for any potential pocket pivot or other buy signal as the precious metals move towards and above this key moving average.

In economic news, the National Association of Realtors said existing-home sales slowed to an annualized rate of 4.94 million in December which missed forecasts. Google (GOOG) shared jumped 5% after the close as their earnings report came in strong. Advertising revenue jumped more than 20% to $12.91 billion in the quarter. GOOG generates most of its revenue from advertising. Intuitive Surgical (ISRG) also jumped about the same amount after announcing earnings after the close yesterday. While the growth rates indicated by both GOOG's and ISRG's earnings reports are not anywhere near the blistering growth rates seen earlier in these stocks' long-term price runs, apparently it is good enough to spark sharp bounces off the lower regions of their current chart patterns. Apple (AAPL) announces earnings today after the close. Pre-open, Coach (COH) is dropping nearly 20% after missing on earnings, adding weight to the argument that the consumer cannot do anything but become weaker in the face of more taxes and continued slow jobs growth. This is putting pre-open pressure on other high-end retailers such as Michael Kors Holdings (KORS) and Fossil (FOSL), both of which have been acting more constructively recently with KORS re-gaining its 50-day moving average over the past three weeks.

Three D Systems (DDD) has gone parabolic and may be getting short-term climactic as it rides a wave of positive news, including a Consumer Electronics Show "Best in Show" award, as this is likely too early in its life-cycle to be a final climax top type of move. However, we would not be surprised to see the stock pause to form a new base in here as it streaks to the upside given the now obvious price/volume action in the stock. Longer-term, however, we feel the stock likely has more upside potential given its moves to tap a huge consumer market for home 3-D printers.

As the rally continues, the odds of a normal pullback and digestion of upside gains increase, but so far the market rally shows no signs of abating as it shows surprising strength in the face of a more aggressive socialist/statist, anti-business agenda set forth by President Obama in his inaugural speech. This proves, once again, that price/volume action rules all.

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