Archive for February, 2005|Monthly archive page

Going Our Way

Welcome to this week’s edition of The Growth Stock Report!

Traders,

It was a stellar week for us!

Our current position:

VERY CAUTIOUS, USE SMALL PROFIT TARGETS!

In this week’s edition you will find:

Where We Are:

We had an agreeable week with the market as new highs in commodity and energy stocks helped our recent breakouts.

Metals USA (MUSA), highlighted in last week’s edition, stole the show while posting over a 20% gain from its breakout buy-point.

We believe it’s wise to take off half of a position after a 20% gain no matter what. We believe there is still potential MUSA for the intermediate-term.

Mannetech Inc. (MTEX), gave us a healthy breakout and has now moved 10% higher from it’s buy point.

Also breaking out, Palomar Medical Technologies (PMTI) gave us a decent move, though did not put up the volume consistent with institutional sponsorship. We like the stock, though will be quick to exit if things should turn bad.

From the sizzling commodities sector, Steel Dynamics (STLD) continues to look good, though still shy of a 20% target at 47.77.

And our energy picks KCS Energy (KCS) and XTO Energy (XTO) are alive and well, both short of 20% targets at 18.10 and 43.68 respectively.

The major indexes look strong at present, as the Dow and S&P 500 are poised for new highs:

Charts courtesy of Stockcharts.com.

Technically speaking, cup-and-handle patterns on the Dow and S&P 500 certainly look and are bullish. We continue to hold reservations about longer-term upside potential for U.S. equities. Breakouts can lead to fakeots, but as always we will trade what is and not what should be.

For the Nasdaq 100 we need to see its 5-week range taken out to the upside to feel more comfortable over the potential of the market as a whole.

We are watching closely for institutional support at these levels, and are looking at last Monday’s heavy selling a possible precursor to more.

Also tilting the bullish side of the scale:

  • Banking Stocks ($BKX) put in a bullish tail on a 10-month trend line.
  • The Semiconductor Index ($SOX) is just shy of taking out last weeks high, and looks to be in good shape as it remains north of a longer term trend line.
  • Internet Stocks ($IIX) are challenging a critical long-term trend line. This is a key sector as goes enthusiasm for the market – we gauge it as a sentiment indicator.
  • Pharmaceuticals ($DRG) broke a 10-month trend line to the upside.
  • Homebuilders ($DJUSHB) put in a stellar weak and are looking parabolic after taking out its upper channel line. This is very consistent with the pattern of a climax top – where it stops nobody knows.

Volume: Monday’s heavy distribution is a sign of caution.

Leadership: The top 10 industry groups from the 6 month RS screen are:

OIL GAS DRILLING EXPLO

STEEL IRON

RESIDENTIAL CONSTRUCTI

INDEPENDENT OIL GAS

RESORTS CASINOS

HEALTH CARE PLANS

OIL GAS EQUIPMENT SVCS

MULTIMEDIA GRAPHICS SF

INFORMATION DELIVERY S

INDUSTRIAL EQUIP WHOLE

New Highs vs. Lows: The number of new highs on the combined NYSE and Nasdaq exchanges continue to indicate healthy upside sponsorship with the new lows in tech stocks picking up some.

What We Like:

We continue to favor commodity and energy type stocks.

For a more aggressive small-cap play, we are looking at Vaalco Energy (EGY).

Potential breakouts in the energy sector are Petroleum Development Corp. (PETD) and Houston Exploration (THX). What we don’t like about these stocks is that they are technically lagging the energy sector.

Patience pays in this game! We feel it is always best to wait for nothing but the best circumstances for our money. This means sitting tight while healthy technical pictures take form.

What Was Important About Last Week:

  • Consumer Confidence remains steady.
  • Home Depot (HD) put up a disappointing earnings report and was met with selling pressure.
  • The consumer price index came up with nothing of concern for the market.
  • Federal probing into Fannie Mae is uncovering issues related to book-cooking.
  • Viacom (VIA.B) reported solid earnings. The stock sold off.
  • Durable goods orders fell 0.9%.
  • The U.S. economy grew at its fastest rate since 1999 for the second half
    of last year with a 3.8% increase.

What We Are Watching For This Week:

Key earnings releases:

Many pharmaceutical companies will be reporting this week.

  • MONDAY: Tiffany & Co. (TIF)
  • TUESDAY: Ford Motor (F)
  • WEDNESDAY: XM Satellite Radio (XMSR)
  • THURSDAY: Hovnanian Enterprises (HOV), Shuffle Master (SHFL)
  • FRIDAY: Ceradyne (CRDN)

On the economic front we have potential market movers with:

  • MONDAY: New Home Sales, NAPM- Chicago
  • TUESDAY: Construction Spending, Vehicle Sales, ISM Manufacturing Index.
  • WEDNESDAY: EIA Petroleum Status
  • THURSDAY: Jobless Claims, ISM Non-manufacturing, Productivity and Costs
  • FRIDAY: EMPLOYMENT SITUATION, Consumer Sentiment, Factory Orders

This Week’s Scans:

SETUPS

BREAKOUT WATCH

BASE BUILDING

SHORTS

This Week’s Word On Discipline:

“Being ignorant is not so much a shame, as being unwilling to learn.”
— Ben Franklin

DISCLAIMER: Past Performance Is Not Indicative of Future Returns. All commentary provided by The Growth Stock Report is for educational purposes only. The analysts and employees or affiliates of The Growth Stock Report may hold positions in the stocks or industries discussed here. This information is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained in The Growth Stock Report is governed by the Terms and Conditions of Use. Opinions expressed are our present opinions only. This material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and that it should be relied upon, as such.

High On Accumulation

Welcome to this week’s edition of The Growth Stock Report!

Traders,

Our good buddy Mr. Market gave us some things to cheer about this week, but at the heart of matters we are less than confident over current index levels.

Our current position:

VERY CAUTIOUS, USE SMALL PROFIT TARGETS!

In this week’s edition you will find:

Where We Are:

SHAZAM! Energy stocks rewarded us nicely – and as highlighted in the January 30th issue of The GSR – KCS and XTO have already given us 10% moves.

We like energy long-term, though believe taking some off the table after a 20% run-up is a good habit.

Our market research this week is giving us some mixed signals.

Where the S&P 100 hit highs not seen since March of 2002, techland stocks have not been bid so well, and have struggled to match old economy strength.

Banking stocks were hit with selling and are vulnerable. With financial’s making up the largest market-cap component of the major indexes, any weakness here will weigh in accordingly for the market as a whole.

We believe the key to this market is in the Semiconductor Index. If the SOX can break trend and gather upside momentum, we will feel more at ease in buying.

Charts courtesy of Stockcharts.com.

Technically speaking, the Dow 30 and S&P 500 are giving us a bullish cup-and-handle look. This doesn’t mean the market is going to breakout and trend higher – but it does mean we are at a critical juncture.

Breakouts can lead to fake outs, and with our longer-term belief that stocks have little upside potential, we will not be surprised to see this current bullish picture shattered.

However, as experienced traders we take advantage of “what is” and not “what should be”. At the core of our decisions we try not to let our long-term speculation interfere with short-term profit potential. Therefore, small profit targets have been our credence.

Volume: Accumulation on the Dow Friday is a healthy sign for new highs to be expected. But distribution in techs have put the two indexes at odds, and with out the support of one another it makes our market world one of conflict.

Leadership: The top 10 industry groups from the 6 month RS screen are:

  • RESORTS CASINOS
  • OIL GAS DRILLING EXPLO
  • HEALTH CARE PLANS
  • RESIDENTIAL CONSTRUCTI
  • STEEL IRON
  • OIL GAS EQUIPMENT SVCS
  • INDEPENDENT OIL GAS
  • INFORMATION DELIVERY S
  • MULTIMEDIA GRAPHICS SF
  • TEXTILE MANUFACTURING

New Highs vs. Lows: NYSE and Nasdaq New Highs have held up sturdily, with New Lows yet to indicate any significant downward bias.

What We Like:

Commodity stocks remain to be our preference. As listed as a potential breakout last week, STLD did in fact stage a healthy breakout, and we are watching carefully.

Ready to launch in the commodities sector are:

Metals USA, (MUSA) – a provider of value-added processed steel, aluminum and specialty metals, as well as manufactured metal components.

We are also seeing strength in Healthcare type stocks. Here we like:

Palomar Medical Technologies, Inc., (PMTI) – a researcher and developer of light-based systems for hair removal and other cosmetic procedures. We believe a key factor for this company is tattoo removal.

Also, Mannatech, Inc., (MTEX) – develops and sells nutritional supplements, topical products and weight management products, primarily through a global network marketing system operating in the United States, Canada, Australia, the United Kingdom, Japan and New Zealand.

What Was Important About Last Week:

MCI (MCIP) agreed to be purchased by Verizon (VZ) for $6.75 billion.”

American International Group, (AIG) was hit with subpoenas from Eliot Spitzer over “nontraditional insurance products and certain assumed reinsurance transactions and AIG’s accounting for such transactions.”

U.S. retail sales fell 0.3% for January. This was better than Wall Street economists expected”

Hedge fund Highfields Capital Management offered to buy Circuit City (CC) at $17 a share and take it private.

Alan Greenspan said the U.S. economy was doing fine and that key short-term interest rate was still too low.

Greenspan warned Medicare’s future financing problems were than Social Security.

New home construction for January grew at its fastest pace in more than two decades.

Housing starts grew 4.7% to a seasonally adjusted annual rate of 2.159 million units. This is the fastest increase since February 1984.

The New York Times, (NYT) – said it planned to buy tAbout.com from Primedia for about $410 million.

Wal-Mart (WMT) posted earnings of $3.16 billion (75 cents a share), for its fiscal fourth quarter, up 16% from a year ago. As the Wall Street Journal reported, “If Wal-Mart were a nation and revenue were gross domestic product, Wal-Mart would have ranked as the world’s 20th biggest economy in 2003, the latest data available from the World Bank. In the fourth quarter, its revenue jumped 10% to $83.02 billion (bigger than the 2003 GDP of Hungary).”

No. 2 U.S. retailer, Target (TGT), posted earnings of $825 million, (91 cents a share). Excluding one-time items, this is a 12% increase that beats Wall Street forecasts.

Jobless Claims fell to a four-year low.

The FDA said Merck (MRK) and Pfizer (PFE) arthritis-pain drugs may be risky, but should be allowed to stay on pharmacy shelves.

The producer price index rose 0.3% for January. Core PPI was driven higher by gains in tobacco, alcohol and cars. Also increasing were electric power, tires, railroad equipment and heavy trucks.

Mitsubishi Tokyo Financial and UFJ Holdings announced plans for merger to create the world’s biggest bank.

What We Are Watching For This Week:

Key earnings releases:

  • MONDAY: HOLIDAY
  • TUESDAY: Eastman Kodak (EK).
  • WEDNESDAY: Altria Group (MO).
  • THURSDAY: ImClone Systems (IMCL).
  • FRIDAY: Clear Channel Communications (CCU).

On the economic front we have potential U.S. market movers with:

  • MONDAY: HOLIDAY
  • TUESDAY: Consumer Confidence.
  • WEDNESDAY: Consumer Price Index.
  • THURSDAY: Durable Goods, EIA Petro Status, Jobless Claims, Money Supply.
  • FRIDAY: Existing Home Sales, U.S. Gross Domestic Product (Q4 2004).

This Week’s Scans:

SETUPS

BREAKOUT WATCH

BASE BUILDING

SHORTS We give a heavy caution to entering shorts.

This Week’s Word On Discipline:

“Endurance is one of the most difficult disciplines, but it is to the one who endures that the final victory comes.” — Siddhartha Gautama

DISCLAIMER: Past Performance Is Not Indicative of Future Returns. All commentary provided by The Growth Stock Report is for educational purposes only. The analysts and employees or affiliates of The Growth Stock Report may hold positions in the stocks or industries discussed here. This information is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained in The Growth Stock Report is governed by the Terms and Conditions of Use. Opinions expressed are our present opinions only. This material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and that it should be relied upon, as such.

Loaded And Ready

Welcome to this week’s edition of The Growth Stock Report!

Traders,

We’re all shook up for the week as the major indexes gave us something new to consider.

The bottom line is we have plenty of evidence to commit to buying this market, though will be quick to take profits due to lack of conviction over long-term potential.

Our current position:

VERY CAUTIOUS, USE SMALL PROFIT TARGETS!

In this week’s edition you will find:

Where We Are:

Charts courtesy of Stockcharts.com.

Technically speaking, The Dow 30, S&P 500, and Nasdaq are poised for new highs. We have a bona fide “cup-and-handle” formation on the weekly chart of Dow, coupled with underlying strength in banking and semiconductor stocks to make this a pretty picture.

It’s important to see confirmation from the finance and tech sectors. Without it, we tend to get sloppy markets from less significant leadership.

Volume: The past week gave us a very heavy day of distribution across the majors Wednesday – though Friday marked a comeback as key prices were taken out to the upside on decent accumulation. Whenever we see a bearish signs erased we get bullish.

Leadership: The top 10 industry groups from the 6 month RS screen are:

  • HEALTH CARE PLANS
  • RESIDENTIAL CONSTRUCTI
  • RESORTS CASINOS
  • OIL GAS DRILLING EXPLO
  • LODGING
  • INVESTMNT BROKERAGE-RE
  • CONSUMER SERVICES
  • STEEL IRON
  • DATA STORAGE DEVICES
  • OIL GAS EQUIPMENT SVCS

New Highs vs. Lows: The number of new highs posted on the major exchanges gave us a bullish indication, though showed some signs of slowing as last week’s numbers were not matched. The number of new lows for tech stocks gave rise to the bearish argument.

What We Like:

As new highs continue to clock in for energy stocks, we continue to be positive on the sector. As highlighted for a couple of weeks ago, KCS and XTO have made nice moves for us.

Keep in mind that energy stocks should be treated differently from other sectors as they hum to a different tune than the major indexes.

The same goes for all commodity related stocks, which brings us to what we like this week:

Steel Dynamics meets all of our fundamental requirements, and its chances of breaking out successfully are supported by STTX, which should be watched carefully for any failure here will likely affect STLD:

What Was Important About Last Week:

  • Carly Fiorina resigned as chairman and CEO of Hewlett-Packard. The stock exploded higher.
  • Disappointing earnings report from Cisco Systems. The stock moved sideways for the week.
  • American International Group, the world’s biggest insurance company, reported positive fourth-quarter earnings. The stock moved nicely higher.
  • Dell, the No. 1 computer maker, reported fourth-quarter earnings that beat forecasts, but reported disappointing sales and issued a weak forecast. The stock was hit by heavy selling.

What We Are Watching For This Week:

Key earnings releases:

  • MONDAY: no market movers.
  • TUESDAY: AMAT, CEPH, DE, JUPM.
  • WEDNESDAY: JNY, MDT, TK, KO.
  • THURSDAY: IVGN, INTU, NXTL, SFY, WMT, WFII.
  • FRIDAY: CBP,

On the economic front we have potential market movers with:

  • MONDAY: nothing.
  • TUESDAY: Business Inventories, NY Empire State Index, Retail Sales.
  • WEDNESDAY: Housing Starts, Industrial Production, EIA Petro. Status.
  • THURSDAY: Import/Export Prices, Jobless Claims, Leading Indicators, Philadelphia Fed.
  • FRIDAY: Producer Price Index, Consumer Sentiment.

This Week’s Scans:

Breakout Watch:

Setups, Stocks Ready To Breakout

StocksForming New Bases

Potential Shorts

Comments:

We give a heavy caution to entering shorts.

This Week’s Word On Discipline:

What it lies in our power to do, it lies in our power not to do. — Aristotle

DISCLAIMER: Past Performance Is Not Indicative of Future Returns. All commentary provided by The Growth Stock Report is for educational purposes only. The analysts and employees or affiliates of The Growth Stock Report may hold positions in the stocks or industries discussed here. This information is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained in The Growth Stock Report is governed by the Terms and Conditions of Use. Opinions expressed are our present opinions only. This material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and that it should be relied upon, as such.

After The Fed

Welcome to this week’s edition of The Growth Stock Report!

Traders,

It’s been a wild week on the heels of a Fed announcement to raise interest
rates a quarter. As far as U.S. equities are concerned , everything did well.
Everything looks like it turned around. Could it be that easy??

Our current position:

VERY CAUTIOUS,
USE SMALL PROFIT TARGETS!

In this week’s edition you will find:

  • Where We Are
  • What Was Important About Last Week
  • What We Like
  • What We Are Watching For This Week
  • This Week’s Scans
  • A Word On Discipline

Where We Are:

Charts courtesy of Stockcharts.com.

Technically speaking, we’re seeing broad sector participation
in this quick change of direction for the market. Going into the weekly charts
it appears the majority of issues have put in healthy reversals at the critical
40-week ema’s and tests of previous bases.

Energy and homebuilders had particularly strong
weeks:

.

Volume: We now have booked what Mr. William O’Neil calls a
Follow Through Day
. Friday’s high volume accumulation for the Dow and
S&P 500 put the indexes up 1.16% and 1.10% respectively. This indication
has a 75% accuracy rate for signaling a significant change of direction in the
market.

So we ask ourselves this key question: Do we take the signal knowing we have
a good historical indication and go long? What’s so different about this market?
The answer is we compromise. We believe the overall trend of
the market has a good chance of trending sideways like it did in the 60’s and
70’s.

We’re looking to book profits at 10 and 20%, and not bank on much else. Good
money management allows us to take half a position off after 20%, then let the
other half ride with a break-even stop.

Leadership: The top 10 industry groups from the 6
month RS screen
are:

– HEALTH CARE PLANS

– RESIDENTIAL CONSTRUCTI

– CONSUMER SERVICES

– RESORTS CASINOS

– STEEL IRON

– OIL GAS DRILLING EXPLO

– TOP 100 STOCKS

– MULTIMEDIA GRAPHICS SF

– LODGING

– OIL GAS EQUIPMENT SVCS

New Highs vs. Lows: The number of new highs made for the
week gave us an indication that this market is alive and well. This indicator
more than any other has given us a steady bullish signal.

What Was Important About Last Week:

The Fed raised rates a quarter. The market was not surprised.

The employment situation was mildly disappointing, but the
market’s strong upside performance afterwards was a positive. .

Money inflows was a major theme of the week as AMG
Data Services
issued a strong report for new money coming in.

As a group the Internet sector is lagging the overall market.
This is the sector that really drove us higher over the last year and a half,
and is giving us a sign that sector rotation is in play. Consumer staples and
more defensive issues are showing their durability.

  • Amazon.com (AMZN) put up dissapointing numbers and took a nose dive on the
    week.
  • Websense (WBSN) put up “happy” numbers and hit a new al time high.

What We Like:

We have some nice bases formed for our GSR stocks.

Remember, we first screen our candidates for top fundamental criteria then
look for opportunities to set up from the technical perspective.

Looking to burst north we have two healthcare stocks to highlight:

Mannatech (MTEX) and Palomar Medical Tech
(PMTI). Watch for PMTI’s earnings release Thursday before the market open.

What We Are Watching For This Week:

Key earnings
releases:

  • MONDAY: Sohu.com (SOHU), Triquint Semi.
    (TQNT), WellPoint Inc. (WLP)
  • TUESDAY: Taser International Inc. (TASR), The Cheesecake
    Factory
    (CAKE),
  • WEDNESDAY: AIG (AIG), Garmin Ltd. (GRMN),
    Rare Hospitality (RARE), Ultra Ptroleum
    (UPL), WebEx Communications (WEBX), XTO
    Energy Inc.
    (XTO).
  • THURSDAY: Accredited Home Lenders (LEND), Aetna
    (AET), Cognizant Technologies (CTSH), Dell Inc. (DELL),
    Palomar Medical Tech (PMTI), Pixar Animation
    (PIXR), The May Depratment Stores (MAY), XM Satelite
    Radio
    (XMSR).
  • FRIDAY: Proposed – Gerdau S.A. (GGB), Noble Energy
    (NOBL),

On the economic
front we have potential market movers with:

  • MONDAY: none
  • TUESDAY: none
  • WEDNESDAY: U.S. Wholesale Trade. U.S. EIA Petroleum Status.
  • THURSDAY: U.S. International Trade. Jobless Claims. Treasury
    Budget. Money Supply.
  • FRIDAY: none.

This Week’s Scans:

Breakout
Watch:

Comments:

New Breakouts on high volume: KCS.

New Breakouts on low volume: NUE

New Highs: SGTL, AFFX, CNQ, JAH, UCL, AEOS, SC, HOV, SWN, AMX, HYDL, WBSN,
VLO, AVID, FMD, PHM, MTH, SPF, MDC, EOG, TOL, FDG, UNH, MUR, COP, XTO.

Setups,
Stocks Ready To Breakout

Comments:

Ready to explode: POG, MTEX, STLD, UPL, EXPD

Stocks
Forming New Bases

Comments:

none

Potential
Shorts

Comments:

Though we have a coupe of potential shorts we give a heavy caution
to entering shorts
. We’d prefer to see an overall market breakdown
below current support.

This Week’s Word On Discipline:

“It is not the mountain we conquer, but ourselves”. — Sir
Edmund Hillary

DISCLAIMER: Past Performance Is Not Indicative of Future Returns. All commentary provided by The Growth Stock Report is for educational purposes only. The analysts and employees or affiliates of The Growth Stock Report may hold positions in the stocks or industries discussed here. This information is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained in The Growth Stock Report is governed by the Terms and Conditions of Use. Opinions expressed are our present opinions only. This material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and that it should be relied upon, as such.