::: Today’s Market Action :::
Eventually something had to give between the bull/bear tug-o-war and today it was clear that the bulls have won this battle. Traders have been waiting patiently for any indication that we’ll see the Santa Claus rally this year and I think today we got confirmation that this market is heading higher at least over the next couple weeks. All of the major indices broke out of tight consolidations today, with the Dow and S&P moving to new highs. If there was a negative today, it was the performance of SelfInvestors Leading stocks, which did move up today with significant volume and lagged the price performances of the major indices. Tomorrow morning we get the important CPI number.
::: 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 Dec 14th 2006
Nasdaq: UP .88% today with volume 13% ABOVE average
Nasdaq ETF (QQQQ) UP 1.12%, volume 1% BELOW average
Dow: UP .81%, volume 4% ABOVE the average
Dow ETF (DIA): UP .71%, volume 5% BELOW the average
S&P ETF (SPY): UP .88%, volume 8% BELOW the average
Russell Small Cap ETF (IWM): UP .41%, volume 4% ABOVE 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. On a day like today, you’d expect leading stocks to surge higher with heavy volume.. they did not.
Summary:
* Advancers led Decliners 267 to 125.
* Advancers were up an average of 1.52% today, with volume 10% BELOW average
* Decliners were down an average of 1.26% with volume 20% ABOVE average
* The total SI Leading Stocks Index was UP .64% today with volume 1% BELOW the average
* 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):
Home Construction, HomeBuilders, Health Care, Semis, Consumer Goods, Technology
* Current Lagging Sectors/Industries (over last 30 trading days):
Broadband, Nanotech
* Today’s Market Moving Industries/Sectors (UP):
Fairly broad based rally today- Internet Infrastructure, Retail, Broadband, Oil & Gas, Semis
* Today’s Market Moving Industries/Sectors (DOWN):
None
** 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. Today’s stock is Interactive Intelligence (ININ), a stock that actually broke out of consolidation yesterday, but cleared multi year highs today. Volume levels have indicated tremendous demand for this stock.
ABOUT: Interactive Intelligence, Inc. is a provider of software applications for contact centers with a presence in North America; Europe, the Middle East and Africa, and Asia/Pacific. The Company offers a software solution based on Microsoft Windows that resides on a customer’s server and uses an open Session Initiation Protocol (SIP) for voice over Internet protocol (VoIP) networking. This open approach typically results in lower overall costs for phone devices, system maintenance and customer networking. The Company’s software applications are also pre-integrated to many business applications, such as financial, customer relationship management (CRM) and enterprise resource planning (ERP) software, thereby automating and tracking business transactions to customer interactions.
FUNDAMENTALS: A company that began to move rapidly toward profitability beginning in ’02 and reached that milestone for the first time in ’04. 2006 will end as a year of record growth.
Margins are solid and ROE is outstanding (both are rising rapidly). I have found that one key element to the market’s biggest winners is rapidly rising margins & ROE, but there aren’t many companies that meet the criteria. Management owns a significant portion of the company (30%) which is a big positive as well.
TECHNICAL: The technical picture of ININ is just as good as the fundamental picture, if not better. After busting out of a base at the end of October, the stock spent several weeks carving out a very bullish pennant formation, which it just broke out of.
SELFINVESTORS RATING: With a total score of 54/60 (26/30 for fundamentals, 28/30 for technical), ININ has been the highest rated candidate in the Breakout Watch for many weeks now and remains a holding in the SelfInvetors Model Portfolio.
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.