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MLR - Premarket Pulse October 10, 2012

The NASDAQ Composite logged a fourth distribution day. While the comparison to the prior day's volume is skewed by the light trading on Monday due to Columbus Day, Tuesday's volume still came in at about average so it could be considered a bona fide distribution day. The NASDAQ Composite Index moved below its 50-day moving average for the first time in two months while the S&P 500 remains well above its own 50-day moving average. The NASDAQ is also right at the "handle" area from which it broke out of in September, so the index is in a logical area from which to attempt some sort of reflex bounce. Investors should keep a close eye on how any such bounce occurs, as a weak bounce could portend further downside.

The IMF trimmed global growth forecasts: 3.3% for 2012 (down from 3.5%) and 3.6% for 2013 (down from 3.9%) as the global economy continues to weaken.

Alcoa kicked of earnings season on Tuesday, finishing the day about breakeven. Precious metal ETFs gold GLD and silver SLV both moved lower on below average volume, but on higher volume than the day before, as they both remain unable to clear upside resistance at around 1390 for gold bullion and the 35 level for silver bullion.

AAPL continued to move further below its 50-day moving average in a clear violation and sell-signal, but found support at the top of its prior base around the 624 level , finding a short-term low as it reversed and closed near where it began the trading day in the 635 price area. Other big NASDAQ stocks came under pressure during the day, including Intuitive Surgical (ISRG), which blew through its 50-day moving average, Amazon.com (AMZN), which sold off eight points on heavy volume, Priceline.com (PCLN), which dropped back below its 200-day moving average, and Baidu (BIDU) which gapped down on huge volume to make a lower low on a "downside breakout" to the 106 level. ISRG, PCLN, and BIDU all appear to be in weak topping patterns with further downside becoming a very real possiblity for these stocks.

As we have indicated in prior morning missives, investors need to remain vigilant and cautious, and in particular we do not believe investors should allow profits in any positions to dissipate as stocks come under pressure - a strong defense is called for.

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