::: Today’s Market Action :::
The market was due for a bounce after several days of sharp declines, but today’s action wasn’t any indication that a bottom to this correction has been put in. However, it was strong enough to push the market a bit higher. Volume levels were well above average today, but significantly lower than the volume we had during the selling. Short covering undoubtedly helped to push this market higher today. I would expect that the volume will continue to subside on additional up moves. It’s possible but not probable that the market will bounce all the way up to test what is now resistance of those 50 day moving averages. More likely is a bounce closer to half way from here.. perhaps another 150 or so in the Dow. If you didn’t get into short positions earlier or reluctant to part with losing positions, soon you just may get a second chance.
::: 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 March 6th 2007
Nasdaq: UP 1.9% today with volume 1% ABOVE average
Nasdaq ETF (QQQQ) UP 1.35%, volume 32% ABOVE average
Dow: UP .96%, volume 2% BELOW the average
Dow ETF (DIA): UP .18%, volume 215% ABOVE the average
S&P ETF (SPY): UP 1.28%, volume 48% ABOVE the average
Russell Small Cap ETF (IWM): UIP 2.22%, volume 81% 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. Leading stocks led the way higher today but volume wasn’t impressive for a price move of this magnitude. Volume in leading stocks moving down was much greater today.
Summary:
* Advancers led Decliners 391 to 41.
* Advancers were up an average of 2.39% today, with volume 5% ABOVE average
* Decliners were down an average of 1.08% with volume 60% ABOVE average
* The total SI Leading Stocks Index was UP 2.06% today with volume 10% ABOVE 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://selfinvestors.com/industry_tracking/
* Current Leading Sectors/Industries (over last 30 trading days):
Utilities, Bonds, Materials
* Current Lagging Sectors/Industries (over last 30 trading days):
Biotech, Internet Infrastructure, Homebuilders, Gold Miners
* Today’s Market Moving Industries/Sectors (UP):
Real Estate, Gold Miners, Broker/Dealers, Basic Materials
* Today’s Market Moving Industries/Sectors (DOWN):
No big down movers today.
::: 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 Bolt Technology (BTJ), a stock that broke out the day before the market went haywire and has held up reasonably well since.
ABOUT: Bolt Technology Corporation operates in two segments: geophysical equipment and industrial products. The geophysical equipment segment develops, manufactures and sells marine seismic energy sources and underwater electrical connectors and cables, air gun signature hydrophones and pressure transducers used by the marine seismic industry. The industrial products segment develops, manufactures and sells miniature industrial clutches, brakes and sub-fractional horsepower electric motors. The Company consists of three operating units: Bolt Technology Corporation (Bolt), A-G Geophysical Products, Inc. (A-G) and Custom Products Corporation (Custom Products). Bolt manufactures and sells air guns and replacement parts, and A-G manufactures and sells underwater cables, connectors and hydrophones. Custom Products, which is in the industrial products segment, manufactures and sells miniature industrial clutches and brakes and sells sub-fractional horsepower electrical motors.
FUNDAMENTALS: Bolt Technology is a very small company, but one that has grown tremendously after losing money in 2003. Profits have more than doubled in each of the past 3 years with sales growth equally as impressive. Net margins (18%) and ROE (25%) are impressive, but more impressive is the fact that both margins and ROE have been rising over the past 3 years (one key quality to look for in the best companies). On top of that, the company has no debt. This is a company off the radar of Wall St – no analysts are covering it!
TECHNICAL: A volatile stock but continues to look very bullish. It broke out to a new all time high on Feb 26th but not surprisingly has stalled during the market correction. The technical action still looks good though. The stock bounced off support of the 50 day moving average yesterday and surged nearly 10% today with good volume. I’d like to get into the stock as close to that 50 day moving average as possible with a continued decrease in selling volume. With the market correction unlikely over, it just may offer that opportunity in the coming days.
SELFINVESTORS RATING: With a total score of 53/60 (27/30 for fundamentals, 26/30 for technical), BTJ is currently the second highest rated SelfInvestors.com Breakout 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 do not own a position in Bolt Technology (BTJ)