Resolve and History

Posted onAuthorGSRTrades

Traders,

And it’s a hard, it’s a hard, it’s a hard, it’s a hard,
It’s a hard rain’s a-gonna fall.
— Bob Dylan “A Hard Rain’s A-Gonna Fall”

Our current position:

BUYERS’ EDGE INTACT

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

The following sections are on our home site:

Where We Are:

Taking a look at the broader market:

With one week left in one of Wall Street’s historically weakest months the market has proven itself a sturdy bull.

As price action pulls back from recent highs the Bulls’ resolve continues to be tested.

Economic chatter bounces from the notions of hard landing, soft landing or continued growth. We at the Growth Stock Report have no idea.

The charts are telling us the market is in an institutionally sponsored uptrend. Until we see evidence otherwise – we’re waving our Green Flag.

The real strength is in Big-caps and Consumer Staples.

Key to further success, Banks are on the verge of a 6-month base breakout.

And surprisingly, Software and Telecoms have hit new highs.

While Tech as a group is unarguably a drag on broad market action, Software and Telecom represent strong votes of confidence for the group.

Healthcare and Drugs have also hit new highs, and represent recent Longs in our portfolio.

REITs are also hot.

Downside weakness is in Commodities, which have been worked over handily with sellers – and Energy, as it tests a key support level.

Technically speaking:

The Dow Industrial Average
($INDU), -0.5 %, holds an up-trend as it pulls back from yearly highs.

The S&P 500
($SPX), -0.4 %, also holds an up-trend as it pulls back from yearly highs.

Nasdaq
($COMPQ), -0.7 %, closed on its 200-day moving average, which is positioned above its 50-day average as evidence of a weaker trend in comparison to its Dow and S&P counterparts.

Russell 2000
($RUT), -1.5 %, also closed on its 200-day moving average, which is positioned above its 50-day average as evidence of a weaker trend in comparison to its Dow and S&P counterparts.

Volume indications are stacked to the buyer’s advantage.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The top 10 industry groups from the 6 month RS screen are:

  1. LONG-TERM CARE FACILIT
  2. MEAT PRODUCTS
  3. DRUG RELATED PRODUCTS
  4. PERSONAL SERVICES
  5. CATV SYSTEMS
  6. PACKAGING CONTAINERS
  7. HOSPITALS
  8. DISCOUNT VARIETY STORE
  9. BROADCASTING – TV
  10. TOYS GAMES

What Was Important About Last Week

STOCKS:

  • NY Times (NYT) sees Q3 EPS of $0.11-0.15, ex items, vs. $0.18 consensus. The third-quarter range excludes an estimated $0.01-0.02 per share for staff reduction costs, and an estimated $0.02-0.03 per share from a loss on the co’s sale of its investment in the Discovery Times Channel, which the co has agreed to sell for $100 mln.
  • Palm (PALM) reported Q1 (Aug) earnings of $0.21 per share, $0.03 better than the Reuters Estimates consensus of $0.18. Revenues rose 4.0% year/year to $355.8 mln vs. the $354.6 mln consensus; co preannounced revenues of $354-356 mln. Co issued downside guidance for Q2, sees EPS of $0.20-0.23 (consensus $0.27) on revenues of $430-450 mln (consensus $470.02 mln).
  • Bed Bath & Beyond (BBBY) reported Q2 (Aug) earnings of $0.51 per share, in line with the Reuters Estimates consensus of $0.51. Revenues rose 12.3% year/year to $1.61 bln vs. the $1.6 bln consensus.

ECONOMY:

  • Housing starts fell 6.0% in August to 1.665 million units at an annual rate. Single family starts declined 5.9% while multi-unit starts slid 6.7%.
  • New building permits declined 2.3% in August to an annualized 1.722 million units – the lowest level in over four years.
  • Housing completions fell 3.2% to 1.868 million units in August.
  • The producer price index for finished goods (PPI) rose a less-than-expected 0.1% in August after an identical gain in July. Finished good prices are up 3.7% in the past year. Excluding food and energy, the “core” PPI fell 0.4% last month and the YOY gain retreated to 0.9%. This is the slowest YOY gain since the 12-months ending in March 2004.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Walgreen (WAG)
  • TUESDAY: Dress Barn (DBRN), Paychex (PAYX), Red Hat, Inc. (RHAT)
  • WEDNESDAY: none
  • THURSDAY: none
  • FRIDAY: none

On the economic front we have potential market movers with:

  • MONDAY: Existing Home Sales
  • TUESDAY: Consumer Confidence,
  • WEDNESDAY: Durable Orders, New Home Sales, Crude Inventories,
  • THURSDAY: Chain Deflator-Final, GDP-Final, Initial Claims, Help-Wanted Index
  • FRIDAY: Personal Income, Personal Spending, Mich Sentiment-Rev., Chicago PMI

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“Discipline is the soul of an army. It makes small numbers formidable;
procures success to the weak, and esteem to all.”– George Washington