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
- What We Like
- What Was Important About Last Week
- What We Are Watching For This Week
- This Week’s Scans
- A Word On Discipline
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:
- DEPARTMENT STORES
- INTERNET INFO PROVIDER
- RESIDENTIAL CONSTRUCTI
- HOSPITALS
- RUBBER PLASTICS
- HEALTH CARE PLANS
- GROCERY STORES
- APPAREL STORES
- INDICES DOW UTILITIES
- 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.
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.
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
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