Well, the bulls just continue to trample all over any attempt to sell off this market. That was the case yesterday, when it appeared that the market would confirm that distribution day on Monday and end in the red for a second straight day. However, buyers stepped in at the end, keeping the steep upward trends of the indices intact. While today’s move didn’t have the volume behind it that yesterday’s did, the S&P did notch a new multi year high and the Dow continues to reach new record highs. At this point, the S&P will have a very good chance of testing its all time high as well. This does not mean it’s time to get aggressive on the long side. Both the Dow and the S&P are sitting right at resistance of a 1.5 year trend line. Where the market closes at the end of the trading day on Friday may go a long way in determining where this market is headed over the next few months. Stay tuned!
::: 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 May 2nd 2007
Nasdaq: UP 1.04% today with volume 1% ABOVE average
Nasdaq ETF (QQQQ) UP 1.1%, volume 23% BELOW average
Dow: UP 1.05%, volume 1% ABOVE the average
Dow ETF (DIA): UP .65%, volume 10% BELOW the average
S&P ETF (SPY): UP .59%, volume 23% BELOW the average
Russell Small Cap ETF (IWM): UP 1.24%, volume 22% 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, surprisingly, did very well today; rising higher than all of the major indices with a decent amount of volume behind it.
Summary:
* Advancers led Decliners 334 to 72
* Advancers were up an average of 2.24% today, with volume 16% ABOVE average
* Decliners were down an average of 1.57% with volume 45% ABOVE average
* The total SI Leading Stocks Index was UP 1.56% today with volume 21% 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 gauging 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/si/industry_tracking/
* Current Leading Sectors/Industries (over last 30 trading days):
Semiconductors, Networking, Biotech, Homebuilders (what a shock – close to bottom?), Financial
* Current Lagging Sectors/Industries (over last 30 trading days):
Internet Infrastructure, Agriculture
* Today’s Market Moving Industries/Sectors (UP):
Gold Miners, Real Estate, Broadband, Oil & Gas Services, Consumer Discretionary, Retail
* Today’s Market Moving Industries/Sectors (DOWN):
US Oil, Commodities, Agriculture
::: 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 Vocus Inc (VOCS).
ABOUT (from MSN): Vocus, Inc. is a provider of on-demand software for public relations management. Its on-demand software addresses the functions of public relations, including media relations, news distribution and news monitoring. The Company delivers its solutions over the Internet using a secure, scalable application and system architecture. During the year ended December 31, 2006, the Company derived principally all of its revenues from subscription agreements and related services. The Company sells access to its on-demand software primarily through its direct sales channel, and to a lesser extent through third-party distributors. As of December 31, 2006, it had 1,727 active customers of all sizes across a variety of industries, including financial and insurance, technology, healthcare and pharmaceutical and retail and consumer products, as well as government agencies, not-for-profit organizations and educational institutions. On August 4, 2006, the Company acquired PRWeb International, Inc.
FUNDAMENTALS: Vocus (VOCS) is a small company that turned a profit for the first time last year and has just begun to emerge. Earnings have nearly quadrupled over the past year, rising from .03/share to .11/share in the latest quarter. Sales growth hasn’t been as eye popping, but has been very consistent at around 50% quarter over quarter. The company has raised ’07 estimates for both sales and earnings growth. Management owns a significant portion of the company and more institutions are beginning to initiate positions. All characteristics of a winner. If there is a negative, it’s the poor margins and ROE. However, they are improving.
TECHNICAL: Typically, I try and feature stocks in this section that have just broken out or are hovering in a buyable range. Currently, neither is the case with VOCS. The company reported earnings this morning and the stock gapped up with heavy volume to a new all time high and well above the 50 day moving average. Since breaking out of its first base since going public last year, VOCS has trended along the 50 day moving average with above average volatility but with volume levels that indicate tremendous demand. That continues to be the case, but I would wait to catch it off the 50 day moving average or breaking out of a new base. A pull back in this market just may provide you with that opportunity. Put this one near the top of the watch list.
SELFINVESTORS RATING: With a total score of 50/60 (25/30 for fundamentals, 25/30 for technical), Vocus (VOCS) is a high quality growth 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 own a small position in Vocus (VOCS).