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
• 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:

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:

• MONDAY: Construction Spending, ISM Index.
• TUESDAY: Auto Sales, Truck Sales, Factory Orders, FOMC policy announcement.
• WEDNESDAY: ISM Services,
• THURSDAY: Initial Claims, Productivity-Prel,
• FRIDAY: Average Workweek, Hourly Earnings, Nonfarm Payrolls, Unemployment Rate, Consumer Credit

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

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