STTG Market Recap March 11, 2014

Markets were weak Tuesday as the S&P 500 fell 0.51% and the NASDAQ 0.63%.  First time in a while that dip buyers have not been rewarded.   Today seemed like an offset for yesterday’s rally intraday as the Chinese export news that initially hurt markets yesterday continued to weigh on some sectors such as commodities.   It is a slow week for economic news; the main one will be Thursday’s retail sales but any bad news will be explained away by bad weather.

We have our first moderate signs of weakness in the indexes in a month.   It is all in a relative sense however; the S&P 500 came back down to finally touch the 10 day moving average while the NASDAQ broke its 10 day on a closing basis for only the second time during this leg of the rally.  We also have the NYSE McClellan Oscillator – which we mentioned yesterday breaking zero – now down firmly below that breakeven level.



We’ll use some charts from MarketSmith today to look at individual equities.

General Motors dropped on news that a House committee would probe the response of the auto manufacturer and regulators to complaints about ignition-switch problems that led to at least 13 deaths.


Shares of the gamemaker Electronic Arts (EA) are hitting multiyear highs with the release of the most-anticipated game of the year, “Titanfall.”


McDonald’s (MCD) spiked after the company’s CFO Pete Bensen said that the fast-food giant could look at new cost-cutting and borrowing measures in an attempt to return cash to stockholders and buoy a stock that has slumped by more than 3% over the past year.


Railroad company Norfolk Southern (NSC) is one to note, as it is holding very strong here.


We mentioned Plug Power (PLUG) in our “nonsense stock” of the day yesterday, citing how this was a momentum favorite from the mid 2000s which had suddenly found life again out of the blue.  Today a famed short selling site slammed it, and it lost a good 40%.  Easy come easy go.

….the decline can be attributed to a delayed reaction to a scathing report issued by well-known short seller, Citron Research. The firm’s analysis is pretty straightforward: during its decade of existence, the solar company has lost close to $850 million, has developed no intellectual property or shown meaningful revenue growth. In their opinion, the fair value of PLUG may be $0.50.

That conclusion was based on a blended average of all of PLUG’s recent capital raises. More importantly, Citron reveals that PLUG’s own management was mysteriously absent from a capital raise with $0.15 warrant. In other words, the company’s own management would not even buy the stock at $0.15 just one year ago.


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