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.

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