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.

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