The Market Direction Model has now logged four distribution days for the NASDAQ Composite following yesterday's sell-off on higher volume. While the model remains on a neutral/cash signal, continued deterioration would likely lead to a sell signal at some point, so members should remain alert to any real-time reports if and when such a signal change occurs. Alternatively, should the market stabilize as a quantitative easing "floor" is established, the model would more likely switch to a buy signal.
Michaels Kors Holdings (KORS) had a pocket pivot/base breakout on a strong earnings report. Earnings and sales are particularly strong and accelerating, and institutional sponsorship has increased every quarter since the company went public. The caveat with KORS is it has done secondary stock offerings every time the stock breaks out or goes on a run, which sets the stock back into its base. At this point, however, the company's namesake and its CEO have both essentially sold out of their stock holdings.
Tesla Motors (TSLA) appeared to be having a high volume reversal day but managed to claw its way back to finish close to mid-range though in the lower half of its trading range. TLSA has been the leading stock in this market as it has risen over 150% since it launched from its base first on a buyable gap up on April 1, and then accelerated to the upside following another buyable gap-up on May 9. Sales have skyrocketed into the mid-triple digits. Overnight TSLA announced that it will be tripling the number of Supercharger sites as it continues to build out the infrastructure necessary for the success of electric vehicles over the longer term. While the stock is trading up a couple of points pre-open, we would not be surprised to see it pause to build a proper base at this stage.