After Market Report – Despite Big Nasdaq Move There are Reasons to Be Cautious; Stock of Day – Life Time Fitness (LTM)

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 0

::: Today’s Market Action :::

With a light economic calendar this week, earnings (see today’s earnings movers below) were once again the focus of traders.  This time around strong earnings from some big tech names fueled a big Nasdaq bounce after a rough week of heavy selling.  The trading action to begin the new year continues to be volatile and unpredictable.  I’ll try and sort out the technical picture by weighing the positives and negatives.

Positives: 

1. Dow and S&P continue to make new highs
2. Nasdaq still has support of the 50dma which it bounced from today

Negatives:

1.  Dow and S&P broke to new highs on lighter volume than the day before; overall volume continues to wane as price moves forward indicating buyers are becoming less enthusiastic up at these levels
2. Nasdaq has logged 2 big distribution days in the past week
3. Semiconductors breaking down

After weighing the technical positives and negatives I’ll conclude that the bulls are still in charge for now but showing signs of tiring.  There isn’t any reason to move to large cash positions or short this market heavily just yet, but the time may come soon.  It’s wise to remain a bit cautious despite today’s move.

::: Major Indices Performance – The Numbers :::

(Note: volume averages are based on the average over the past 50 days)
Data as of 4:00EST – End of Day Jan 24th 2007

Nasdaq: UP 1.43% today with volume 13% ABOVE average
Nasdaq ETF (QQQQ) UP 1.65%, volume 5% ABOVE average
Dow: UP .70%, volume 27% ABOVE the average
Dow ETF (DIA): UP .59%, volume 27% ABOVE the average
S&P ETF (SPY): UP .81%, volume 16% BELOW the average
Russell Small Cap ETF (IWM): UP 1.09%, volume 39% BELOW the average

::: SelflInvestors Leading Stocks :::

The Self Investors Leading Stocks Index is comprised of stocks in the Breakout Tracker, which is a database of the fastest growing companies near a breakout or having already broken out of a base.  Leading stocks did well today, but not as well as the Nasdaq.  In a strong market I like to see leading stocks outperform all of the major indices

Summary:

* Advancers led Decliners 335 to 74.
* Advancers were up an average of 1.77% today, with volume 6% ABOVE average
* Decliners were down an average of .92% with volume 27% ABOVE average
* The total SI Leading Stocks Index was UP 1.28% today with volume 10% ABOVE  the average

::: Today’s Earning’s Movers :::

Note:
* fundamental rank in brackets does not include latest earnings results
* earnings movers included here only include those stocks in the SelfInvestors.com Breakout Tracker database so often won’t include stocks in a downard trend or significantly below major moving averages – most will be market leading stocks.

UP

  • EZCorp (EZPW) Specialty Retail, fundamental rank [27/30],  up 12%, continues to surge off support of the 200 day moving average; will most likely continue carving out a base from here
  • Ametek (AME) Industrial Electrical Equipment, fundamental rank [26/30],  up 6%, broke out of a base to a new all time high today

DOWN

  • Norfolk Southern (NSC) Railroads, fundamental rank [26/30],  down 6%, working on the right side of a base; still looking OK despite today’s selling

::: Where’s the Money Flowing :::

Many investing websites provide leading industries based on price performance alone. However, without accompanying volume levels, this can sometimes be misleading.  The only way that I know of to gauge industry/sector strength WITH volume levels is through the analysis of ETF’s.  A couple years ago this was not possible, but as more traders/investors use ETF’s they become a much better tool for guaging the health of the market and seeing where the money is flowing (or not flowing).  Using the proprietary SelfInvestors Demand Indicator score which measures price and volume movements, I’m able to quickly see which sectors/industries are seeing the greatest inflows of cash.  For a detailed look at how I go about gauging sector/industry strength please see the following post: http://investing.typepad.com/tradingstocks/2006/09/wheres_the_big_.html

* Current Leading Sectors/Industries (over last 30 trading days): 
Technology, Aerospace/Defense, Broker/Dealer, Retail, Biotech
[Aerospace/Defense making first appearance in this list]
                                              
* Current Lagging Sectors/Industries (over last 30 trading days): 
Oil, Oil Services, Commodities, Semis

* Today’s Market Moving Industries/Sectors (UP):
Tech surged today – Internet, Broadband, Broker/Dealers, Technology, REITs

* Today’s Market Moving Industries/Sectors (DOWN):
Global Dividend Plays

::: Stocks :::

The stocks section will be an area where I highlight one stock selected from a group of stocks moving up with volume well above average and most likely breaking out of a base or consolidation.  There were quite a few high quality companies moving today, but one in particular stood out and it’s a company I’ve liked for some time and have owned personally (I don’t currently) – Life Time Fitness (LTM)

ABOUT:  Life Time Fitness, Inc. operates sports and athletic, professional fitness, family recreation and resort/spa centers under the LIFE TIME FITNESS brand. The Company designs and develops its own centers, and it focuses on providing its members and customers with products and services in the areas of exercise, education and nutrition. In addition to traditional health club offerings, most of its centers include an selection of amenities and services, such as indoor swimming pools with water slides, basketball and racquet courts, interactive and entertaining child centers, full-service spas and dining services and, in many cases, climbing walls and outdoor swimming pools. As of March 1, 2006, the Company operated 48 centers primarily in residential locations across nine states.

FUNDAMENTALS:  Life Time Fitness is really a company that didn’t begin to hit its stride until 2003 when it posted earnings of .72/share versus just .02 in 2002.  While growth hasn’t been any near those levels, this is a company that consistently posts earnings and sales growth of 20 – 30% which is expected to continue.  Net margins isn’t outstanding but in an industry with low margins it’s impressive.  Return on Equity is very good at 15% and management owns a good portion of the company (17%).  All in all, this is a well run company that should continue to do well as people continue to become more health conscious .  The company reports earnings on February 15th.

TECHNICAL:  The technical picture remains outstanding.  The stock has trended along the 200 day moving average since its IPO in 2004 and is currently breaking out of a base to a new all time high with very good volume indicating institutions are still initiating positions. 

SELFINVESTORS RATING: With a total score of 52/60 (26/30 for fundamentals, 26/30 for technical), LTM is currently a top 10 Self Investors break out stock.

Full Disclosure/Disclaimer: The stock of the day is by no means a buy recommendation.  Please do your own research and make a personal decision based on your own tolerance for risk.  I currently don’t hold a position in LTM but am considering a position in the next several days.

More on this topic (What's this?)
Lifetime Fitness?
Life Time Fitness Inc. Looks To Be Out Of Shape
Technical Analysis Trade Of The Day – Life Time Fitness
Read more on Life Time Fitness at Wikinvest

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