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MLR - Premarket Pulse September 28, 2012

After the recent sell off which brought the major averages back toward the top of their cup and handle breakout points, the market rallied on Thursday but on lower volume. You generally want to see higher volume on a rebound day. However, there have been other instances in the past where bounce-type rallies began on quiet volume which then accelerated in subsequent days as the bounce sustained itself and the overall rally phase was renewed. This morning U.S. futures are off a decent amount, indicating that the bounce could be short-lived, although it is admittedly too early in the day to come to any solid conclusions just yet.

Economic news was mixed Thursday. The second revision to Q2 GDP growth came in at 1.3%, under the 1.7% growth expected. Durable goods orders in August sank -13.2%, well under the expected -5% drop. On the positive side, initial jobless claims came in lower than expected. Thus the U.S. economy continues to show signs of weakening, justifying the case (at least in the mind of Fed officials) for QE3. European news remains mixed, but Spain delivered news that was encouraging as its 2013 budget involves spending cuts but no tax increases. Gold GLD and silver SLV rebounded but on lower volume as they remain within short consolidations following sharp upside moves over the past month.

AAPL bounced off its 10-week moving average (which is higher than its 50-day moving average) on higher volume, a positive sign for the general market as AAPL still is the leading juggernaut weighing in at a market capitalization of $639 billion. This is consistent with several other leading stocks which pulled back to and found support at either key moving averages or the tops of prior bases. Both leading bio-techs Regeneron Pharmaceuticals (REGN) and Onyx Pharmaceuticals (ONXX) found support at or near the tops of prior bases, with REGN leading the way on a 5.76% rebound vs. ONXX's still healthy 2.57% bounce as these stocks remain very close to previous highs.

With this being the last trading day of the third quarter the possiblity of quarter-end "window-dressing" is always a factor, while the market may continue to be range-bounce over the next few days and weeks as various issues affecting the markets, from the U.S. election to the European debt crisis, come to resolution.

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