CANSLIM SETUPS

Where We Are:

Taking a look at the broader market:

New highs across various sectors gives the broader market something to shoot for.

If it weren’t for Wednesday’s heavy distribution on the major indexes, conditions would be more promising.

Nasty sell-offs like we had in February usually aren’t recovered from so smoothly. The V-shaped price-action found on the major indexes does not promote the sound basing environment technical analysts like to see.

But the market can do anything.

Rather than focus on all that’s wrong, it’s more important to look at what’s working. The Follow Through Day in the books holds.

Breakouts in Energy names continue to perform.

New highs in Software, Telecom, and Health related sectors set the tone for opportunity.

Subscribers to the report get the layout for single name candidates.

Technically speaking:

The Dow Industrial Average

($INDU), 0.4 %, pushes higher above its 50-day MA – closer to February’s high.

The S&P 500

($SPX), 0.6 %, moves comfortably above its 50-day MA – closer to February’s high.

Nasdaq

($COMPQ), 0.8 %, fills a downside gap on the charts as it trades above its 50-day MA, under February’s high.

Russell 2000

($RUT), 0.7 %, edges north of its 50-day MA, continue to win the relative strength game against the other major indexes.

Volume indications lean t the bears for the week with heavy distribution across the indexes Wednesday. It’s not enough to signal a bearish bias, but one or two more this week would do it.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The US Dollar Index ($USD) sinks to new lows for the year.

The Gold & Silver Miners Index ($XAU) moves further above its 50-day MA, and closer to negating a bearish head-and-shoulders pattern.

The Consumer Index ($CMR) comes within kissing distance of a new high.

The Cyclical Index ($CYC) positions to breakout of a bullish cup-and-handle pattern.

The Technology Index ($DJUSTC) consolidates above its 50-day MA.

The Semiconductor Index ($SOX) holds above its 50-day MA as it struggles in a tightening triangle pattern.

The Banking Index ($BKX) struggles below its 200-day MA.

The Broker Dealer Index ($XBD) consolidate below the 50-day MA and above the 200-day MA.

The Retail Index ($RLX) consolidates on its 200-day MA.

The Software Index ($GSO) breaks out to a new high.

The Telecom Index ($XTC) hits a new high.

The Healthcare Index ($HCX) hits a new high.

The Pharmaceutical Index ($DRG) hits a new high.

The Biotechnology Index ($BTK) hits a new high.

The REIT Index ($DJR) consolidates below its 50-day MA.

The Transportation Index ($TRAN) inches above its 50-day MA as it approaches new highs.

The Energy Index ($IXE) hits a new high.

What Was Important About Last Week

STOCKS:

• Lam Research (LRCX) reported Q3 (Mar) earnings of $1.15 per share, $0.09 better than the Reuters Estimates consensus of $1.06. Revenues rose 2.7% year/year to $650.3 mln vs. the $644.7 mln consensus.
• Research In Motion (RIMM) reported Q4 (Feb) earnings of $0.99 per share, including a stock-based compensation expense that was included in analyst estimates, in-line with the Reuters Estimates consensus of $0.99 and a penny below the First Call consensus of $1.00. Revenues rose 65.8% year/year to $930.4 mln vs. the $936.8 mln consensus.
• Bed Bath & Beyond (BBBY) reported Q4 (Feb) earnings of $0.79 per share, $0.01 better than the Reuters Estimates consensus of $0.78. Revenues rose 18.4% year/year to $2 bln (consensus $1.94 bln).
• Genentech (DNA) reported Q1 (Mar) earnings of $0.74 per share, excluding option expense & Roche redemption items, $0.07 better than the Reuters Estimates consensus of $0.67. Revenues rose 43.2% year/year to $2.84 bln (consensus $2.75 bln).

ECONOMY:

• The Producer Price Index (PPI) increased 1.0% in March versus a consensus expected gain of 0.7%. The PPI is up 3.1% in the past twelve months and has climbed at an annual rate of 6.9% in the past three months.
• All of the PPI increase in March was due to food and energy prices, which rose 1.4% and 3.6%, respectively. The core PPI was unchanged versus a consensus expected 0.2% gain. However, the core PPI is up 1.6% at an annual rate in the past year and 2.3% over three months.
• Consumer goods prices increased 1.4% in March and are up at an annual rate of 8.6% in the past three months. Excluding energy, consumer goods prices increased 0.5% and rose 7.8% at an annual rate in the first quarter, the fastest quarterly growth rate since 1988. Capital equipment prices fell 0.1%, but are up 2.0% in the past year.
• Core intermediate goods prices (ex-food and energy) increased 0.2% in March and are up 3.5% versus last year. Core crude prices increased 7.7%, are up at a 59.8% annual rate the past three months, and are up 24.7% versus a year ago.The trade deficit in goods and services contracted to $58.4 billion in February from a downwardly revised $58.9 billion in January. The consensus had expected an increase to $60.0 billion.
• Exports declined $2.8 billion in February but are up 9.3% versus a year ago. The drop in exports was attributable to widespread weakness in capital goods, including computer accessories, drilling and oilfield equipment, and civilian aircraft.
• Imports declined $3.3 billion in February, have fallen in four of the past six months, and are up only 3.4% versus a year ago. Petroleum accounted for the entire drop in imports, mostly due to lower volume rather than lower oil prices.

What We’re Looking For This Week

Key earnings releases:

• MONDAY: Citigroup Inc. (C)
• TUESDAY: Ameritrade Holding Corp. (AMTD), Intel Corporation (INTC), International Business Machines (IBM), Johnson & Johnson (JNJ), Steel Dynamics (STLD), Washington Mutual (WM), Wells Fargo & Company (WFC), Yahoo, Inc. (YHOO)
• WEDNESDAY: Abbott Laboratories (ABT), eBay (EBAY), Gilead Sciences (GILD), .P. Morgan Chase & Co (JPM), Kraft Foods (KFT), LaSalle Hotel Properties (LHO), Motorola Inc. (MOT),
• THURSDAY: CBOT HLDGS INC (CBOT), D.R. Horton (DHI), Google (GOOG), Harley-Davidson (HOG), Marriott International (MAR), Merrill Lynch (MER), Nucor (NUE), The Nasdaq Stock Market, Inc. (NDAQ), UnitedHealth Group Inc. (UNH)
• FRIDAY: Caterpillar Inc. (CAT), McDonald’s Corporation (MCD), Schlumberger (SLB), Xerox Corporation (XRX)

On the economic front we have potential market movers with:

• MONDAY: Retail Sales, Retail Sales ex-auto, NY Empire State Index, Net Foreign Purchases, Business Inventories
• TUESDAY: CPI, Core CPI, Housing Starts, Building Permits, Industrial Production, Capacity Utilization
• WEDNESDAY: Crude Inventories
• THURSDAY: Initial Claims, Leading Indicators, Philadelphia Fed
• FRIDAY:

The Following Sections Are On Our Home Site:

• The Growth Stock Landscape
• What We Like – What We Have
• This Week’s Scans: • SETUPS • BREAKOUTS • BASE BUILDING • SHORTS

This Week’s Word On Discipline:

“Everything you want in life has a price connected to it. There’s a price to pay if you want to make things better, a price to pay just for leaving things as they are, a price for everything.” – Harry Browne

CANSLIM SETUPS