In this week’s edition you will find:
- Where We Are
- What Was Important About Last Week
- What We Are Watching For This Week
- A Word On Discipline
Where We Are:
Taking a look at the broader market:
CANSLIM investors take note of the high-volume rally off recent lows to confirm a Follow Through Day – but it’s no reason to buy.
Not all FTD’s turn into significant rallies, though all significant rallies do begin with FTD’s.
We love corrections for their shuffling of industry groups.
Where categories such as Energy and Telecoms show areas of emerging relative strength, Financial groups attempt to recover from severe hemorrhaging.
The overall picture could be summed up as a wounded Bull looking for new footing.
Moving averages will be key measuring marks in the coming weeks.
Volatility could be high in coming sessions. We want to be careful before placing any heavy bets on stocks.
The Dow Industrial Average
($INDU), +3.1%, roars back to its 50-day MA, holding its uptrend form in the two-year time frame.
The S&P 500
($SPX), +3.5%, reclaims its 50-day MA, holding its uptrend form in the two-year time frame.
($COMPQ), +3.5%, finds support at the gap formed three weeks ago, though managed to close above its 50-day MA. The index holds its uptrend form in the two-year time frame.
($RUT), +3.8%, charges above its 50-day MA, maintaining its relative strength against the other major indexes.
Volume indications give Follow Through Days for the major indexes, increasing the chances of a near-term low put in.
Key chart action for the week:
Charts courtesy of Stockcharts.com
The U.S. Dollar Index slides further below its 50-day MA to a new three-month low.
The Gold and Silver Miners Index rallies to close just above its 50-day MA.
The Consumer Index and Cylicals Index close above their 50-day MA’s, still below yearly highs.
The Technology Index struggles with its 50-day MA as it attempts to work off the month’s sharp decline.
Telecoms hold on to relative strength, firmly above its 50-day MA, and just under a new high.
The Semiconductor Index remains range bound for the year, with its 40-week MA serving as support.
The Banking Index failed to close above its 50-day MA, as it attempts to turn around off last week’s low.
Retail flirts with its 50-day MA, holding the uptrend shape of the last two years.
Healthcare finds support at its 50-day MA as it bounces from recent lows.
Biotechnology finds resistance at its 50-day MA, bouncing off the support if its 40-week MA. Overall pattern holds a bearish failed breakout scenario for the year.
Transportation clears above its 50-day MA after undercutting its 40-week MA last week.
Energy holds relative strength as it trades above its major MA’s and just under new highs.
What Was Important About Last Week
- Oracle Corp (ORCL) reported Q3 (Feb) earnings of $0.25 per share, $0.03 better than the Reuters Estimates consensus of $0.22
- Motorola (MOT) sees Q1 EPS of $0.00-0.02, ex items, vs. the Reuters Estimates consensus of $0.17, on lower than anticipated revenues of $9.2-9.3 bln (consensus $10.44 bln).
- Nike (NKE) reported Q3 (Feb) earnings of $1.37 per share, $0.04 better than the Reuters Estimates consensus of $1.33. Revenues rose 8.7% year/year to $3.93 bln vs. the $3.93 bln consensus.
- Jabil Circuit (JBL) reported Q2 revenues up 27% yr/yr to $2.9 bln, vs. $2.83 bln Reuters consensus.
- Palm Inc. (PALM) reported Q3 (Feb) earnings of $0.16 per share, $0.04 better than the Reuters Estimates consensus of $0.12.
- 3Com Corp. (COMS) reported Q3 (Feb) earnings of $0.04 per share, excluding restructuring, amortization, in-process R&D and stock-based compensation expense, $0.02 better than the Reuters Estimates consensus of $0.02.
- Existing home sales increased 3.9% in February to an annual rate of 6.69 million, substantially better than the consensus expected level of 6.30 million. Sales increased in the Northeast, Midwest, and South, but were flat in the West. Both single-family home sales and condo/coop sales made gains.
- The median price of an existing home rose to $212,800 in February, but is still down 1.3% versus a year ago.
- Housing starts increased 9.0% in February to 1.525 million units at an annual rate. The consensus had expected a smaller gain of 3.0%. Starts were revised down slightly for both December and January.
What We’re Looking For This Week
Key earnings releases:
- MONDAY: Dollar General Corp. (DG), Rubios Restaurants (RUBO), Tiffany & Co. (TIF)
- TUESDAY: Lennar Corporation (LEN)
- WEDNESDAY: Paychex (PAYX), Sonic Corp. (SONC)
- THURSDAY: CarMax, Inc (KMX), CKE Restaurants (CKR), Family Dollar (FDO), Red Hat, Inc. (RHT)
- FRIDAY: Global Payments Inc. (GPN)
On the economic front we have potential market movers with:
- MONDAY: New Home Sales
- TUESDAY: Consumer Confidence
- WEDNESDAY: Durable Orders, Crude Inventories,
- THURSDAY: Initial Claims, GDP-Final, Chain Deflator-Final, Help-Wanted Index
- FRIDAY: Personal Income, Personal Spending, Chicago PMI, Construction Spending, Mich Sentiment-Rev.
- 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:
“First master the fundamentals.” – Larry Bird