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

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

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