General
The market continues to push higher, and futures this morning indicate another reasonably strong opening. Otherwise the market tends to display constructive resilience on an intra-day basis as over the last couple of weeks we've seen many intraday sell-offs that are met with support as buyers move in to take advantage of price dips. This is then followed by more concerted buying pressure that is able to continuously push the market indexes to higher-highs in this continued rally off the early June lows. Investors continue to remain skeptical of the rally, but the market does what the market will do, and from our perspective those who do not heed price/volume action, preferring instead to rely on their opinions of what the market "should" be doing, will simply be left behind as the market has offered a number of actionable situations with respect to individual stocks and, now, commodities in the form of precious metals.
Precious metals are showing more deliberate signs of life as expectations grow that quantitative easing will accelerate in the months ahead, given the positions taken by central banks, in particular the ECB. Germany's director at the European Central Bank has thrown his weight behind mass purchases of Spanish and Italian debt to prevent the disintegration of the euro. Last week we mentioned the simple moving average cross-over buy signal in gold as its 20-day moving average crossed above its 50-day moving average, and over the past two trading days the SPDR Gold Shares ETF (GLD) has issued two pocket pivot buy points on Friday and then again on Monday. SLV also had a pocket pivot in Monday's trade, adding weight to the possiblity that the precious metals are trying to stage a turn off of their lows. These types of pocket pivots are considered "bottom fishing" types of buy points, and they are usually avoided with stocks. However, with commodities, they can be relevant and provide an early entry point, as commodities have been showing signs of life with further expectations of possibly accelerated levels of quantitative easing down the road. Because these are initial and very early buy points with lower probabilities of working, despite being very constructive potentially "first-mover" buy points, investors should make initial purchases very small as one seeks to pyramid into a larger positioin if SLV and GLD are able to move higher from current levels over the next few days and weeks, otherwise they may continue to base for a while longer.
Stocks
MLNX had a "continuation" pocket pivot buy point in Monday's trade as i moved up off of its 10-day moving average and appears poised to move higher as it continues its strong rally. We discuss pocket pivots at www.selfishinvesting.com. MLNX had a buyable gap up on a strong earnings report and since has moved constructively higher. Earnings and sales have exploded higher over the last few quarters. Earnings are up 41%, 48%, 112%, and 267% in the most recent quarter compared to the same quarter a year ago. Sales are up 80%, 79%, 61%, and 111% in the most recent quarter compared to the same quarter a year ago. Institutional sponsorship has increased over the last 7 quarters. MLNX designs gateway and switch ICs for servers, storage systems, and telecom infrastructure. INTC is adopting MLNX's adapter for its telecom platform.
LinkedIn (LNKD) is poised to move back above its 50-day moving average as it emerges as the only "surviving" social-networking name in the market. Pre-open LNKD is flirting with the 104 level, and a sustained, strong-volume move above the 50-day moving average could set up a potential breakout through the recent 113 high. LNKD's weekly pattern shows sign of accumulation, and institutional sponsorship in the stock has increased sharply over the past quarter. While the stock has been weak during the market's most recent move to new highs, we would remain cognizant of any attempt by the stock to recover in a constructive manner, and this would begin with a move back above the 50-day moving average.