Archive for April, 2005|Monthly archive page

How We Bounce

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

Traders,

It’s been choppy waters for the markets as buyers and sellers have been duking it out on high volume, but the bottom line is we’re in bounce mode short-term, and have no solid indication that we will put in a new bull leg up.

Our current position:

MARKET VULNERABLE TO FURTHER SELLING!

In this week’s edition you will find:

Where We Are:

Taking a look at the overall markets:

Until we do have indication via price and volume that we may put in a new leg up opposed to a bounce we continue to hold our bearish bias.

So what’s the difference between a bounce and an up leg?

A bounce will last a few weeks and not move to take out the highs made in March, while a new leg up will take out that high. The markets are always changing, and we will change with them as new evidence presents itself.

Technically speaking:

The Dow Industrial Average ($INDU), S&P 500 ($SPX) posted modest gains for the week while the Nasdaq ($COMPQ) finished with a slight loss.

All three indexes remain above what we are now considering pivotal lows made the previous week. We continue to be in bounce mode for the short-term, though we remain bearish for the intermediate-term.

The U.S. Dollar Index ($DCX) is technically bearish though on the cusp of reversing trend if its high made three weeks ago is taken out. Inversely, the Gold Miners Index ($XAU) remains in a state of break down.

Key chart action:


Charts courtesy of
Stockcharts.com.

The Semiconductor Index ($SOX) took out last weeks low, and remains vulnerable to further selling. If the semis can’t turn around we will more than likely see a further breakdown of tech stocks.

Banks ($BKX) put in good move up for the week and are attempting to establish leadership for an overall market rally.

Retail ($RLX) finished the week relatively unchanged and are not showing any signs of life.


Healthcare ($HCX) and Drugs ($DRG) continue to look form and are poised for further upside..

Energy ($IXE) erased gains made the previous week and continued to succumb to selling pressure.

Volume indications continue to illustrate an environment of institutional selling, though Friday’s display of upside sponsorship, while not a legitimate follow-through day, gives us indication that there is some conviction for the long side of this market – whether it be short convering or not.

New Highs & Lows for the NYSE and Nasdaq continue to illustrate an environment of domination of new lows. Bearish.

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

  1. DEPARTMENT STORES
  2. HEALTH CARE PLANS
  3. HOSPITALS
  4. RESIDENTIAL CONSTRUCTI
  5. LONG-TERM CARE FACILIT
  6. INTERNET INFO PROVIDER
  7. GROCERY STORES
  8. DATA STORAGE DEVICES
  9. SEMICONDUCTOR-SPECIALI
  10. EDUCATION TRAINING SVC

What We Like:

Our energy positions continue to be in play. This sector appears ‘tired’. We anticipate more pullback or consolidation.

Healthcare and Drug stocks look attractive. We will be searching for buy candidates here.

Action from our open positions:

Our energy positions STO ans XTO remain intact. The sell-off in energy stocks serves as a test to see which ones will hold up best for the next up move.

Currently on our watch list, Hydril Company (HYDL) was absolutely whacked after breaking out the previous week. Given the stock’s top fundamentals, we must take this as a sign not to buy into the sector.

The star of the week was LCA Vision (LCAV), which tore higher on strong volume. This company which develops and operates fixed-site laser vision-correction centers under the brand name LasikPlus has been well supported by institutions.

What Was Important About Last Week:

Stocks:

  • Microsoft (MSFT) missed Wall Street earnings estimates, though its stock rallied on the news.
  • Exxon Mobil (XOM) said its first-quarter earnings were up 44% to $7.86 billion, which is close to the $8.4 billion it earned in the fourth quarter, which was “effectively the biggest quarterly profit ever recorded by a publicly traded U.S. company.”
  • Amazon.com (AMZN) announced it earned $78 million, or 18 cents a share, in the first quarter, down 30% from a year ago. Revenue rose 24% to $1.9 billion. The quarters results were weighed down by one-time tax expenses and was on target with Wall Street estimates. The stock lost ground for the week though regained much from its lows.
  • Verizon said its earnings per share beat Wall Street estimates, the stock rallied nicely for the week.

Economy:

  • Existing home sales were up 1.0% for March to 6.89 million units at an annual rate. Consensus forecasters were looking for a decline to 6.75 million units. Existing home sales are 4.9% higher than a year ago.
  • The median sales price of an existing home increased to $193,600 in March. This is 11.3% higher than a year ago. This is the fastest yearly gain since 1981.
  • New home sales rose 12.2% for March to 1.431 million units at an annual rate. This is highest level ever recorded.
  • The average price of a new home has increased 7.8% in the past year.
  • New orders for durable goods fell 2.8% in March. This is the largest one-month drop since September 2002. Durable goods orders have declined an annualized 15.7% in the last three months. This is the worst three month stretch since November 2002.
  • U.S. gross domestic product expanded at a 3.1% annual rate, the weakest pace in two years.

What We Are Watching For This Week:

Key earnings releases:

  • MONDAY: Brookfield Homes Corp. (BHS), Glammis Gold Ltd. (GLG).
  • TUESDAY: Qwest Communications (Q), UBS (UBS).
  • WEDNESDAY: Time Warner Inc. (TWX), Whole Foods Market (WFMI).
  • THURSDAY: Pixar Animation Studios (PIXR), The Gillette Company (G),
  • FRIDAY: Allied Capital Corporation (ALD).

On the economic front we have potential market movers with:

This Week’s Scans:

Soon to be updated!

RECENT BREAKOUTS:

SETUPS:

BASES: MOH

This Week’s Word On Discipline:

A wish is not a claim on reality – Ayn Rand

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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A Line In The Sand

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

Traders,

Earnings news from major companies came pouring in as price-action turned schizo. When the final tallies were made for the week, we are now looking at a market that could bounce higher from its yearly lows, but we don’t have enough conviction at this point to attempt to play it.

Our current position:

MARKET VULNERABLE TO FURTHER SELLING!

In this week’s edition you will find:

Where We Are:

Taking a look at the overall markets:

We will consider this week’s lows on the major indexes to be lines in the sand. Until they are taken out we are short-term bulls, BUT our intermediate-term stance remains bearish.

We are watching for a follow through day to give us evidence that a more durable up leg in price action is in the cards.

A follow through day is an indication of a potential change of trend in place. After the market has made a new low and a rally has been attempted, a follow through day will be identified when a major index closes up 2% or more for the day with an increase in volume from the day before. A follow through day can only occur between four and seven days from a potential bottom.

Technically speaking:

The Dow Industrial Average ($INDU), S&P 500 ($SPX) are attempting to reverse at critical support areas.

The Nasdaq ($COMPQ) has led the action down and at it is currently at a key support level. If there is no reversal around the 1050 area we’re looking for a further drop to 1800.

Consumer Staples ($CMR) continue to show relative strength versus the Cyclicals ($CYC), and should provide leadership IF this market can put in another bull leg up.

The U.S. Dollar Index ($DCX) has put in a technical reversal at a two-year trend-line and remains trend down.

Key chart action:


Charts courtesy of
Stockcharts.com.

The Semiconductor Index ($SOX) is attempting to reverse on a trend line that began in in January of ’03.

Healthcare ($HCX) and Drugs ($DRG) once again went against the overall trend of the market and lost ground for the week. We still see potential here.

Energy ($IXE) put in a strong rally for the week though remains extended to the upside.

Volume indications continue to illustrate an environment of institutional selling. Bearish.

New Highs & Lows for the NYSE and Nasdaq continue to illustrate an environment of domination of new lows. Bearish.

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

  1. DEPARTMENT STORES
  2. HOSPITALS
  3. RESIDENTIAL CONSTRUCTI
  4. HEALTH CARE PLANS
  5. LONG-TERM CARE FACILIT
  6. GROCERY STORES
  7. INTERNET INFO PROVIDER
  8. DATA STORAGE DEVICES
  9. INDICES DOW UTILITIES
  10. EDUCATION TRAINING SVC

What We Like:

Our energy positions continue to be in play. This sector appears ‘tired’. We anticipate more pullback or consolidation.

Healthcare and Drug stocks look attractive. We will be searching for buy candidates here.

Action from our open positions:

Our energy positions STO ans XTO regained some ground for the week, though lack of volume isn’t getting us excited about new highs soon to follow.

Currently on our watch list, Hydril Company (HYDL), came roaring back up for the week on heavy volume. We’re looking to be buyers if it breaks north of 63.18 – BUT will not commit to a full position unless we see a healthy technical shakeout of “weak hands”. Email me if you don’t know what I mean by this. mailto:dan@thegrowthstockreport.com


What Was Important About Last Week:

  • Texas Instruments (TXN) beat Wall Street forecasts for its first-quarter while giving a strong outlook. The stock rallied for the week.
  • In the software sector, Adobe Systems (ADBE) agreed to buy Macromedia (MACR) for $3.4 billion.
  • Bank of America (BAC), the third-biggest U.S. bank, beat Wall Street forecasts for the first-quarter. The stock was slightly down for the week.
  • On a disappointing note for Dow stock 3M (MMM), it sold off over 5 points for the week after announcing earnings and reaffirming guidance for the year.
  • Chip giant Intel (INTC) beat estimates for the first-quarter while announcing it would boost capital spending for the year. The stock made a solid heavy volume move to the upside for the week.
  • Internet company Yahoo! (YHOO) beat first-quarter estimates and announced that it expects to top Wall Street expectations for second-quarter revenue.
  • General Motors (GM) announced a first-quarter loss in profits which was its worst performance in over 10 years. The company declined to give guidance. The stock moved slightly higher for the week.
  • New home construction dropped 17.6% in March, its biggest decline in 14 years. The rate is still at a historically high level, though believed by many to be evidence of a vulnerable housing market.
  • Coca-Cola (KO), the world’s No. 1 soft-drink maker, beat estimates with earnings down 11% from a year ago. The stock moved higher for the week.
  • Drug maker Pfizer (PFE) announced earnings of .04 a share as the stock sold off slightly for the week.
  • The consumer price index rose 0.6% in March, the biggest gain in five months due largely to higher in energy prices.
  • Online auctioneer eBay (EBAY) beat first-quarter estimates while guiding in line with Wall Street for the second and third quartrers. The stock hit a four-month low.
  • Number 2 auto maker Ford (F) reported earnings worse than expected while cutting its outlook for the year. The stock posted a slight gain for the week.
  • Internet firm Google (GOOG) smashed Wall Street expectations while earning 5 times what id did a year ago. The stock hit an all-time high for the week.

What We Are Watching For This Week:

Key earnings releases:

  • MONDAY: Harmony Gold Mining (HMY), Hydril (HYDL), JDA Software (JDAS), Metals USA (MUSA), SBC Communications (SBC),
  • TUESDAY: Amazon.com (AMZN), American Express (AXP), BJ Sewrvices (BJS), Chicago Mercantile Holdings (CME), Countrywide Financial Corporation (CFC), Placer Dome (PDG),
  • WEDNESDAY: Ask Jeeves (ASKJ), Baker Hughes Incorporated (BHI), ConocoPhillips (COP), LCA-Vision (LCAV), Phelps Dodge (PD), Starbucks (SBUX), The Boeing Company (BA), Verizon (VZ).
  • THURSDAY: Aetna Inc. (AET), American Electric Power (AEP), Beazer Homes USA Inc. (BZH), DaimlerChrysler (DCX), ExxonMobil Corporation (XOM), KLA-Tencor (KLAC), Palomar Med Technologies Inc (PMTI).
  • FRIDAY: ChevronTexaco (CVX).

On the economic front we have potential market movers with:

  • MONDAY: Existing Home Sales
  • TUESDAY: Consumer Confidence, New Home Sales
  • WEDNESDAY: Durable Orders
  • THURSDAY: GDP-Adv., Initial Claims,
  • FRIDAY: Personal Income, Personal Spending, Mich Sentiment-Rev., Chicago PMI.

This Week’s Scans:

Soon to be updated!

RECENT BREAKOUTS:

SETUPS:

BASES: MOH

This Week’s Word On Discipline:

With regard to excellence, it is not enough to know, but we must try to have and use it. – 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.

When Good News Is Bad News

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

Traders,

The markets were hammered by sellers and we’re looking at a picture of a technical breakdown.

Our current position:

MARKET VULNERABLE TO FURTHER SELLING!

In this week’s edition you will find:

Where We Are:

Taking a look at the overall markets:

It’s earning season, and so far not even good news can inspire buyers. This is never a good sign.

We are currently in the hunt for short opportunities.

Technically speaking:

The Dow Industrial Average ($INDU), S&P 500 ($SPX) and Nasdaq ($COMPQ) broke long-term trend-lines on heavy volume for the week. This may just be the beginning.

The Nasdaq ($COMPQ) has led the action down and at 1408 it is currently at a key support level. If there is no reversal around the 1400 area we’re looking for a further drop to 1300.

Consumer Staples ($CMR) are showing relative strength while the Cyclicals ($CYC) have succumbed to heavy selling. Traditionally staples have been leaders of later stage bull markets, so if the markets gather footing and put in another upside leg we’ll expect money to be made here.

The U.S. Dollar Index ($DCX) is at a critical juncture as it tests a two-year trend-line. Inversely, Gold Miners ($XAU) have technically broken down.

Key chart action:


Charts courtesy of
Stockcharts.com.

The Semiconductor Index ($SOX) is testing trend in that began in January of ’03. Again, we have felt the key to this market is in the semis, so look for leadership here.


The Banking Sector ($BKX) is trend down for the short-term. We have a support level at 92.33.

Retail ($RLX) has also broken down.

Healthcare ($HCX) and Drugs ($DRG) bucked the trend for the week. We’ve had our eyes on these sectors and are liking it even more now.

Homebuilders ($DJUSHB) have also been in decline. We cited a potential top here in an earlier report, though have been pressed to find an inviting technical entry. Patience pays, stay tuned.

Energy ($IXE) sold off with the rest of the market for the week, though we don’t see any indication of a major turn around here. We suspect we will see some more selling here before it gets better.

Volume indications continue to illustrate an environment of institutional selling.

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

  1. DEPARTMENT STORES
  2. HOSPITALS
  3. RESIDENTIAL CONSTRUCTI
  4. HEALTH CARE PLANS
  5. INTERNET INFO PROVIDER
  6. GROCERY STORES
  7. INVESTMNT BROKERAGE-RE
  8. LONG-TERM CARE FACILIT
  9. RUBBER PLASTICS
  10. APPAREL STORES

New Highs: The number of New Highs made droped off for the week while New Lows spiked. The trend here has been bearish for the past few weeks.

What We Like:

Our energy positions continue to be in play. This sector appears ‘tired’. We anticipate more pullback or consolidation.

Healthcare and Drug stocks look attractive. We will be searching for buy candidates here.

Action from our open positions:

STO – sold off on heavy volume this week. This one could turn into a nail-biter. We’ve booked nearly a 20% profit on half a position, and will dump it if it hits our original buy-point of 15.81.

XTO – also sold off on heavy volume. We’ve already made a 20% profit, but will hold on for a loss of no more than 5% (which would be 26.04). We want to give this one a chance and believe a base test might be in store here.

MUSA – major sell-off here. We’re out at breakeven after locking in a 20% profit on half a positon.

As mentioned in last week’s report, we had our eye on Hydril Company (HYDL) which succumbed to heavy selling. Please don’t ever make the mistake of viewing any new names listed as “buys”. We cited a buy-point above 62.80. This one has much to prove before we pull the trigger.

We also mentioned Molina Healthcare, Inc. (MOH) as an ‘aggressive’ buy. Players we’re burned. We continue to like the stock and see a safer buy-point above 48.90.

Keep in mind trading is a numbers game. We want to do everything we can to put the odds in our favor. Aggressive money has it’s risk and reward as does safer money.


What Was Important About Last Week:

  • Crude oil sold off to almost $50 per barrel. for the week after Goldman Sachs announce it would hit $105 a barrel.
  • The trade gap between the U.S. and the rest of the world is at its biggest in history with the U.S. showing a $61 billion deficit.
  • Apple Computer (AAPL) announce it had earned 34 cents a share for its fiscal second quarter, beating Wall Street estimates of 24 cents a share. The stock sold off heavily on the news.
  • Leisure favorite Harley-Davidson (HDI) cut its forecasts for the year. The stock was slammed.
  • Retail sales rose only 0.3% for March, which is less than half of what economists had anticipated.
  • Drug giant Merck (MRK) increased its outlook for the first-quarter to 62 cents a share. Analysts have put estimates at 56 cents share.
  • IBM (IBM) announced earnings earlier than scheduled, and reported a disappointing 85 cents a share to expectations of 90 cents a share.
  • Jobless claims fell for the week, though the four-week moving average rose slightly.
  • General Electric (GE) announced earnings up 25% for the quarter which has been the strongest in years. The company expects growth to continue. The stock was little changed for the week. The stock out in a modest gain, going against the selling trend of the overall market.
  • Citigroup (C) said its net earning rose 3.2% due to strong retail banking.
  • Factory output for March was lower for the first time in 6 months.


What We Are Watching For This Week:

Key earnings releases:

  • MONDAY: Texas Instruments (TXN).
  • TUESDAY: Boston Scientific (BSX), Kraft Foods (KFT), Taser Int’l (TASR), Coca-Cola (KO), Viacom (VIA).
  • WEDNESDAY: Altria Group (MO), Caterpillar (CAT), Ford Motor (F), Motoroloa (MOT).
  • THURSDAY: Amgen (AMGN), Valero Energy (VLO).
  • FRIDAY: Halliburton (HAL).

    On the economic front we have potential market movers with:

  • MONDAY: none
  • TUESDAY: Housing Starts, Producer Price Index.
  • WEDNESDAY: Beige Book, Consumer Price Index.
  • THURSDAY: Leading Indicators, Jobless Claims, Phily Fed Index.
  • FRIDAY: none

This Week’s Scans:

Soon to be updated!

RECENT BREAKOUTS:

SETUPS:

BASES:

This Week’s Word On Discipline:

“Ability is what you’re capable of doing. Motivation determines what you do. Attitude determines how well you do it.” — Raymond Chandler

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.

On A Lighter Note

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

Traders,

We got the bounce we were looking for, but it’s nothing to get us interested in this market.

Our current position:

MARKET VULNERABLE TO FURTHER SELLING!

In this week’s edition you will find:

Where We Are:

Taking a look at the overall markets:

It was a light news week, a light trading week, and our thoughts on things are pretty light.

Oil and gas prices continue to be a major concern for market players, and this camp has always felt that once the price of crude broke and remained above 40 there would be other markets that would suffer. We continue to feel that this will be a difficult environment for U.S. equities.

But of course we try not to let our opinion get too much in the way of what is actually going on.

We need to see a decisive breakdown in price-action until we begin to stalk shorts.

We need to see a technical improvement in price-action before putting our bull hats on.

Until we get a signal either way we will do nothing.

Technically speaking,

The Dow Industrial Average ($INDU), S&P 500 ($SPX) and Nasdaq ($COMPQ) bounced off their respective long-term trendlines. For us to believe a low for the year has been made we need to see institutional support in the form of higher buy side volume. We’re waiting.

Key chart action:


Charts courtesy of
Stockcharts.com.

The Semiconductor Index ($SOX) is trend down. Despite closing higher for the week, the index made a 9-week low.


The Banking Sector ($BKX) is technically bearish and vulnerable to further selling.


The Internet Sector ($IIX) is also technically bearish and vulnerable to further selling.

We saw good moves in Healthcare ($HCX) and Drugs ($DRG). We like these sectors, though want to be extremely selective over individual buy candidates.

Volume indications continue to illustrate an environment of institutional selling.

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

  1. DEPARTMENT STORES
  2. INTERNET INFO PROVIDER
  3. RESIDENTIAL CONSTRUCTI
  4. HOSPITALS
  5. RUBBER PLASTICS
  6. HEALTH CARE PLANS
  7. GROCERY STORES
  8. APPAREL STORES
  9. INDICES DOW UTILITIES
  10. DATA STORAGE DEVICES

New Highs: the number of new lows made on the NYSE and Nasdaq exchanges eased for the week, while the number of New Highs inched higher.

What We Like:

Our energy positions continue to be in play. This sector appears ‘tired’. We anticipate more pullback or consolidation.

Healthcare and Drug stocks look attractive. We will be searching for buy candidates here.

There are two names that jump out at us this week:

HYDL, Hydril Company “is engaged in engineering, manufacturing and marketing premium connection and pressure control products used for oil and gas drilling and production.”

We give it a fundamental grade of A.

A Buy Point would be above 62.80.


MOH, Molina Healthcare, Inc. “is a multi-state, managed-care organization that arranges for the delivery of healthcare services to persons eligible for Medicaid and other programs for low-income families and individuals. “

We give it a fundamental grade of A.

A Buy Point is not clear at present, though aggressive money would get in now.


Action from our open positions:

STO – moved modestly higher for the week.

XTO – XTO made an all-time high before position a loss for the week.

MUSA – Metals U.S.A. is still just barely alive. We will exit if the low of two weeks ago ( 19.16) is taken out.

PMTI – Palomar Medical dipped below our buy point. We cited this one as “aggressive”. Now we’re out with no harm done.


What Was Important About Last Week:

  • ChevronTexaco (CVX) announced it will buy Unocal (UCL) for $16.8 billion. CVX closed down on heavy volume for the week.
  • Aluminum giant Alcoa (AA) tipped off earnings season by beating forecasts with earnings of 31 cents a share, a 27% decline from a year ago.
  • Retailers reported mixed sales for March. Strong sales were reported from American Eagle Outfitters (AEOS), Abercrombie & Fitch (ANF), and Bebe Stores (BEBE). Upscale department stores Federated Department Stores (FD) and Nordstrom (JWN) also reported positive results. Retailers reporting below estimates were: Limited Brands (LTD), the Gap (GPS), May (MAY) and J.C. Penney (JCP).
  • Jobless claims fell back to their four-week moving average.


What We Are Watching For This Week:

Key earnings releases:

  • MONDAY: none
  • TUESDAY: Ameritrade (AMTD), Boston Scientific (BSX), First Energy (FE).
  • WEDNESDAY: Auto Zone Inc. (AZO).
  • THURSDAY: Fairchild Semiconductor (FCS), Infosys Tech. (INFY), United Health Group (UNH).
  • FRIDAY: Citigroup (C).

On the economic front we have potential market movers with:

  • MONDAY: none
  • TUESDAY: none
  • WEDNESDAY: Retail Sales
  • THURSDAY: Business Inventories, Jobless Claims.
  • FRIDAY: Consumer Sentiment, NY Empiore State index, Industrial Production.

This Week’s Scans:

RECENT BREAKOUTS: AMHC, APPX,

SETUPS: ABRX, ADEX, GBX, HET, HYDL, ISSC, KOSP, RAH

BASES: MOH, MTLG.

This Week’s Word On Discipline:

“I measure what’s going on, and I adapt to it. I try to get my ego out of the way. The market is smarter than I am, so I bend.” — Martin Zweig

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.

The Damnedest

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

Traders,

This past week we saw the markets kick up dust around key technical zones, but when all was said and done there wasn’t a whole lot of progress.

We don’t like this market. We see no reason to buy, and are not ready to lay on the shorts just yet.

Our only bright spot is in our energy positions which continue to appear healthy.

Our current position:

WARNING! MARKET VULNERABLE TO FURTHER SELLING!

In this week’s edition you will find:

Where We Are:

Taking a look at the overall markets:

We’re oversold and are in a likely zone for a bounce. We continue to keep in mind that the market often has the damnedest way of doing what we ultimately believe it will do.

We don’t like this market. Don’t like it long, don’t like it short. We will continue to do nothing until we get the signal otherwise.

If things do turn around we want to see a follow through day (FTD) on the books before we buy. A FTD occurs when a major index closes up 2% or more for the day with an increase in volume from the day before. A follow through day can only occur between four and seven days from a potential bottom.

If things get uglier we will patiently stalk out shorts.

Technically speaking,

The Dow Industrial Average ($INDU) and S&P 500 ($SPX) and Nasdaq ($COMPQ) continue to flirt with a trendlines that began over two years ago.

Key chart action:

Charts courtesy of Stockcharts.com.

The Semiconductor Index ($SOX) is suspiciously lackluster. Never short a dull market!

The Banking Sector ($BKX) has broken down technically, and is evidence that the overall market may be in trouble. Looking forward we see these possible scenarios: a trading range forms, a right shoulder to a head-and-shoulder is put in, or a possible a decline to the 88 price area where a key technical area will come in play.


The Internet Sector ($IIX) remains vulnerable under a longer-term trendline.

Energy ($IXE) came charging back for the week. Wahooo!

Volume indications continue to illustrate an environment of institutional selling.

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

  1. DEPARTMENT STORES
  2. HOSPITALS
  3. INTERNET INFO PROVIDER
  4. HEALTH CARE PLANS
  5. RESIDENTIAL CONSTRUCTI
  6. LONG-TERM CARE FACILIT
  7. APPAREL STORES
  8. GROCERY STORES
  9. TEXTILE MANUFACTURING
  10. INDICES DOW UTILITIES

New Highs: New Lows continue their edge over New Highs.

What We Like:

We continue to see nothing worth buying at this time.

Energy continues to be our only favorable sector at present.

Healthcare and Drug stocks continue to hold up. We see potential here, but we are by no means ready to pull the trigger.

Biotech ($BTX) on the other hand looks ripe for more selling.

Action from our open positions:

STO – Statoil came back with the rest of the energy sector. We’re still holding.

XTO – XTO gave us a huge upside surprise after raising its production growth target after making a deal to buy producing properties from Plains Exploration (PXP).

MUSA – Metals U.S.A. gave us a spook for the week though remained above our stop loss point by 6 cents. We’re holding, but will cut our losses if appropriate. Technically this is not an attractive chart, and will consider pulling out if we feel their is better opportunity elsewhere.

PMTI – Palomar Medical technologies remains vulnerable to further selling. This is now considered by us an aggressive long. We’re outa this one.


What Was Important About Last Week:

  • Consumer confidence fell for the second straight month.
  • Agricultural giant Monsato (MON) raised its earnings outlook to $1.37 a share, much higher than the $1.17 analysts are expecting.
  • American International Group (AIG) admitted to improper book keeping over a deal with General Re. The stock has fallen over 20% for the year.
  • After tax profits in the U.S. rose 12.% for Q4 2004, the highest rate in three years.
  • Goldman Sachs energy analysts said he believed oil could rise over $100 a barrel in a “super spike”.
  • Personal income rose 0.03% for February, after a 2.5% drop in January.
  • Freddie Mac (FRE) said its earnings for 2004 came in at $3.78 a share for 2004, a 40% drop from its 2003 earnings. The company said losses were largely due to derivatives it uses to hedge against inflation.
  • Payrolls were down for the month as only 110,000 jobs were added compared to 243,000 the previous month.
  • The Institute for Supply Management announced that its service sector activity jumped,and its factory index dropped. This added to inflationary fears of economists.


What We Are Watching For This Week:

Key earnings releases:

  • MONDAY: none
  • TUESDAY: Circuit City (CC).
  • WEDNESDAY: Bed Bath & Beyond (BBBY), Monsato Co. (MON).
  • THURSDAY: Constellation Brands (STZ).
  • FRIDAY: none

On the economic front we have potential market movers with:

  • MONDAY: none
  • TUESDAY: none
  • WEDNESDAY: none
  • THURSDAY: Jobless Claims
  • FRIDAY: none

This Week’s Scans:

Soon To be Updated!

SETUPS:

BASES:

This Week’s Word On Discipline:

“Without discipline, no matter how good you are, you are nothing! One day, and I might not be around, you’re going to meet a tough guy who takes your best shot. He’ll keep coming because he’s tough. Don’t get discouraged. That’s when the discipline comes in.” — Mike Tyson

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