Monday, November 18, 2013

MLR - Premarket Pulse Nov 18, 2013

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MLR - Premarket Pulse Nov 18, 2013

The major market averages were up on mixed volume. Inflation is benign, interest rates are at all-time lows, quantitative easing is on full blast, so the big concern is when the Fed begins
tapering/tightening. But the Fed will only do this when the economy shows real signs of turning the corner which, based on the metrics the Fed is watching, are still potentially a long way off. And even when the Fed begins to tighten/taper, this would be early in the tightening cycle, and such periods tend to be bullish for stocks, as the bond outlook becomes increasingly bearish as rates begin to tighten, thus money flows out of bonds and into stocks.

We have provided buy points on Organovo (ONVO) since it issued its pocket pivot at around the 6 price level. Intraday on Friday it had a high volume reversal which necessitated a sell. Its record volume was a big clue that it is topping at least on an intermediate term basis, similar to the way in which it has topped before. While less likely, ONVO managed to rally just before the close for a strong finish which speaks to the intense interest in this company's potential as it is the only publicly traded company engaged in the business of 3-D bio-printing. While the company has successfully printed organs that have survived for a period of several weeks, its main source of revenues currently is derived from printing tissue for research. Based on Friday's action, an aggressive investor could therefore have bought back any ONVO sold earlier in the day on this very strong end-of-day move.

That said, Friday's record volume and widest ranging day in ONVO is often the mark of at least an intermediate term top, as we have seen before in ONVO's pattern on 1/23/13 and 7/18/13, as well as in other high-streaking stocks. Any ONVO you hold should be allowed to run higher but watch for subsequent high volume reversals and keep your stops in context with how it trades.

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