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MLR - Premarket Pulse October 23, 2012

Despite the market's late-day push into the green by the close, the market remains in a downtrend, and this morning's sharp drop in U.S. futures before the opening bell confirms this. The bottom line is that the market is essentially a "falling knife," and investors would do well to avoid trying to catch a falling knife and instead wait for a valid low and turn to be put into place. The S&P 500 broke down through its 50-day moving average early in the day yesterday and was able to close right back at the line, roughly in the same position as it closed at last Friday. The NASDAQ Composite had a stronger rebound but still remains well below its 50-day moving average with a test of the 200-day moving average looming large this morning.

We noted pocket pivot buy points in Silver Wheaton (SLW) and Regeneron Pharamaceuticals (REGN) yesterday, but such action in individual stocks merely highlights their relative strength. In this environment, whether such relative strength translates into truly sustainable upside price performance is doubtful until the market can right itself. Therefore we only note these pocket pivot buy points as indications that these stocks should be placed on one's buy watch list and only become actionable if and when the market begins to right itself.

Apple (AAPL) was able to bounce yesterday in anticipation of its "mini-Ipad" product announcement today, but it may be that any such rally may turn out to be a shortable event. Currently we see upside resistance in the 650 price area. Meanwhile the Market Direction Model (MDM) remains on a sell signal, and the continued breakdown in leading stocks as they crash through and/or violate their 50-day moving averages confirms that the current environment is far from an "all clear" signal.

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. ©2020 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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