Stock Averages Start Weak, Reverse Higher

By Donald H. Gold, Investor’s Business Daily

Stocks reversed higher after a weak start Wednesday, as fiscal cliff worries turned to optimism that a deal will be worked out between President Obama and Congress.

The Dow Jones industrial average, the Nasdaq and the S&P 500 each moved up 0.8%. These broad averages were off as much as 0.9% to 1.1% at their worst.

Volume ended mixed, with totals rising on the NYSE but falling on the Nasdaq, according to preliminary data.

At a White House news conference, Obama sounded more conciliatory and eager for a deal.

“Our ultimate goal is an agreement that gets our long-term deficit under control in a way that is fair and balanced. I believe that both parties can agree on a framework that does that in the coming weeks. In fact, my hope is to get this done before Christmas,” Obama said.

Warehouse-style retailer Costco (COST) shot up 6% in 3-1/2 times its usual volume on news the company will pay a special dividend of $7 per share next month, making that distribution Dec. 18 to shareholders of record Dec. 10. The $3 billion payout beats the year-end deadline in anticipation of higher tax rates next year. This payment will be in addition to its regular 27-1/2 cent dividend.

3D Systems (DDD) shot up 7%, scoring a new 52-week high.

What had begun as a mild, low-volume climb from the 10-week moving average turned into a ferocious rebound two days ago, when the company unveiled two next-generation 3D printers. These are the latest versions of 3D’s technology, which is applied with great effect to prototyping and manufacturing.

3D is rising in the wake of a serious base failure. The stock had triggered its 44.90 buy point from an eight-week cup, failed, then regained the buy point, then failed again.

DaVita HealthCare Partners (DVA) fell 1% in more than twice its usual volume, undercutting its 50-day moving average. But the stock had sunk as much as 3% before turning around with the broad market’s improvement. The stock, No. 48 in Wednesday’s IBD 50 lineup, hadn’t closed below that key support level since early September.

Fresh Market (TFM) lost 12% in big turnover, though it had been down as much as 19%. The upscale grocery chain posted October-ended third-quarter earnings that missed forecasts, as well as a weaker-than-expected outlook. The stock had been consolidating along its 50-day moving average for about three months, but it’s now plunged below that level and its 200-day moving average.

Mellanox Technologies (MLNX) dived 10%, faltering at a test of resistance at its 10-week moving average. The Israel-based designer of chips for networking gear has been recovering since Oct. 23 after an eight-week, 43% correction.


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