Synalloy continues to look extremely bullish and has busted out of a triangle formation today with heavy volume.
All posts by Tate Dwinnell
Indices Break Short Downward Trend; Stock of Day – Lifecell (LIFC)
I don’t know about you, but a bit of motion sickness is setting in. Today marks the 5th 100 point move or greater in the Dow in the last 6 trading days as bulls and bears battle it out. There wasn’t a ton of conviction behind today’s move but it was enough to call it a day of accumulation and indicate that the bulls aren’t going to roll over and play dead just yet. With the indices breaking out of their short term downward trends, we could see further upside pressure but keep in mind important inflation numbers come tomorrow and Friday so anything is possible. At this point, the market is still in decent shape (never even got close to breaking support of the 50 dma), but the bias is still bearish, so continue to be cautious out there.
::: 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 June 13th 2007
Accumuluation across all indices.
Nasdaq: UP 1.28% today with volume 5% ABOVE average
Nasdaq ETF (QQQQ) UP 1.1%, volume 32% ABOVE average
Dow: UP 1.41%, with volume 12% ABOVE the average
Dow ETF (DIA): UP 1.41%, volume 54% ABOVE the average
S&P ETF (SPY): UP 1.50%, volume 74% ABOVE the average
Russell Small Cap ETF (IWM): UP 1.32%, 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 did very well in terms of price performance today vaulting 1.53%, but just as with the overall market, there wasn’t much conviction behind the move.
Summary:
* Advancers led Decliners 351 to 62
* Advancers were up an average of 2.05% today, with volume 1% ABOVE average
* Decliners were down an average of 1.39% with volume 7% ABOVE average
* The total SI Leading Stocks Index was UP 1.24% today with volume 5% ABOVE 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):
Internet, Agriculture, Technology, Software, Telecom, Networking
(it’s all about tech right now!)
* Current Lagging Sectors/Industries (over last 30 trading days):
REIT, Real Estate, Realty, Gold Miners, Global Dividend
* Today’s Market Moving Industries/Sectors (UP):
Oil & Gas Services, Realty, Industrial, Materials, REIT, Utilities
* 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 one of the highest rated biotechs that I track – Lifecell (LIFC) which broke out of cup with handle base today following news of FDA approval for a new tissue graft made from pigs.
ABOUT: LifeCell Corporation develops and markets tissue-based products for use in reconstructive, orthopedic and urogynecologic surgical procedures to repair soft tissue defects. The CompanyGÇÖs products include AlloDerm, for plastic reconstructive, general surgical, burn and periodontal procedures; Cymetra, a particulate form of AlloDerm suitable for injection; GraftJacket and GraftJacket Xpress, for orthopedic applications and lower extremity wounds; AlloCraftDBM, for bone grafting procedures, and Repliform, for urogynecologic surgical procedures. The Company’s tissue process technology produces a regenerative tissue matrix, a three- structure that contains proteins, growth factor binding sites and vascular channels that provide a template for the regeneration of normal human tissue. It markets AlloDerm in the United States for plastic reconstructive, general surgical and burn applications through a direct sales and marketing organization.
FUNDAMENTALS: LIFC is a company with a history of posting excellent growth. Over the past 3 years, the company has posted year over year earnings growth of 180%, 100% and 111%. Sales growth has been impressive as well, with consistent sales growth in the neighborhood of 50% in that time. With this kind of growth it’s no surprise that margins and ROE are well above industry averages. I like to see net margin a bit higher for leading companies, but 15% is quite good. ROE has been rising steadily for several years and sits at around 19%.
TECHNICAL: The stock just cleared a handle formation intraday with volume more than double the average, resulting in a successful technical breakout from a cup with handle base. It finished the day right at the high of the handle. Overall, this can be a volatile stock at times and the big, high volume drop in the left side of the base back in October is of some concern. However, initiating a small position and using a tight stop may prove to be a worthy trade. After all, this is a company with a proven history of outstanding growth.
SELFINVESTORS RATING: With a total score of 48/60 (27/30 for fundamentals, 21/30 for technical), Lifecell (LIFC) is a very good 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 Lifecell (LIFC).
Institutions Still Selling Into Rallies, But Support Near
Today marked the end of a classic suckers rally, dead cat bounce.. whatever you want it to call it. Just as we saw on Monday, the big fellas (institutions) sold into the rally toward the end of the day. The only difference between today and yesterday is that the selling today was a bit more intense although not alarming. The good news is that the indices are right at key support levels, so there isn’t reason to be overly concerned about this market falling apart at this point. We’ll just have to see how the indices trade around key support of the 50 day moving average tomorrow. At this point, it’s a bit too late to be getting into new short positions and a bit too early to initiate new longs, so sit tight for now. If we get a big move down at the open tomorrow, I will be shopping a bit on the long side.
::: 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 June 12th 2007
Distribution across all indices.
Nasdaq: DOWN .87% today with volume 5% ABOVE average
Nasdaq ETF (QQQQ) DOWN .6%, volume 38% ABOVE average
Dow: DOWN .97%, with volume 3% ABOVE the average
Dow ETF (DIA): DOWN .98%, volume 82% ABOVE the average
S&P ETF (SPY): DOWN 1.09%, volume 115% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 1.64%, volume 79% 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 while down significantly did not get hit with any conviction. Today saw constructive selling in leading stocks.
Summary:
* Decliners led Advancers 337 to 76
* Advancers were up an average of .91% today, with volume 14% ABOVE average
* Decliners were down an average of 1.72% with volume 7% BELOW average
* The total SI Leading Stocks Index was DOWN 1.24% today with volume 3% BELOW 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):
Internet, Agriculture, Technology, Aerospace/Defense, Telecom
* Current Lagging Sectors/Industries (over last 30 trading days):
REIT, Real Estate, Realty, Gold Miners, Broadband
* Today’s Market Moving Industries/Sectors (UP):
None
* Today’s Market Moving Industries/Sectors (DOWN):
Nanotech, Real Estate, Gold Miners, Oil & Gas Services
::: 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.
Very few stocks moved up with volume today – no stock of the day.
Further Reading: Stock Spam (GZGT) & Ethanol Inflation
I wanted to follow up on two articles I wrote recently, one which mentioned the recent full page ads in Fortune, Forbes, Business Week and Investors Business Daily ( I heard Smart Money was running them yesterday) promoting a questionable penny stock GuangZhou Global (GZGT). There is more to the highly irresponsible running of these ads by major financial financial pubications. As Davis Freeberg points out, the players behind GZGT and other shady businesses are at best immoral and at worst criminal. This was a follow up to an aricle called "Spam Goes Postal".
UPDATE – looks like GZGT is aware of all the attention surrounding its company. As expected the company is distancing itself from this and issued a press release yesterday that read in part:
"The Company is aware of the massive media campaign surrounding our company and our stock, good and bad. Much of what is being said is out of our control and the Company would like to distance itself from much of what is being circulated. One thing that we suggest to all potential investors is to speak to a registered investment advisor before making any investment. That being said, the fact is that we are a growing company inside one of the greatest growing wireless markets in the world. We are open and available to talk to our shareholders, brokers, and media to address any questions, comments, or concerns that they might have."
Now, how about a statement from growth stock guru, IBD, Business Week, Forbes and Fortune!
Note: this story is starting to get some traction – Techdirt has picked up on the GZGT stock spam issue as well.
————————
I also recently wrote up an article taking a look at the consequences of an ethanol solution to decreasing our dependence on foreign oil. Jim Jubak wrote a very similar article the very same day and agrees, but also points out some ways to profit from this issue.
Market Topping Action; Utilities Get Whacked Again
The market this week got a dose of reality as traders began to question the reasons for running this market up in an environment of slowing economic growth, higher interest rates, inflation concerns and a continuing housing slump. The merger mania over the past several months has been able to avert attention away from these underlying problems, but that can only prop up the market for so long. Long term rates surging last week put it on the radar and was the "headliner" of the week. That probably means it’s not going to move higher over the next several weeks, but the long term trend in rates off a 2003 low has certainly been up. How long can the almighty consumer continue their spending ways in this kind of environment? Probably not much longer.
It’s important to realize that while the market has priced in the majority of the housing slump, it has not at all priced in concerns over the consumer. With the exception of a very weak retail number in April (which appeared to be an aberration at this point) retail numbers have not been consistently weak. However, recent poor numbers from Walmart indicate that trouble may lie ahead. If and when the market begins to price in consumer concerns, it could get ugly. Wow, do you I sound bearish.. and I consider myself a bull at heart! I want stocks to go up .. really I do.
If you’ve been reading my reports over the past few years you probably know I rarely discuss the economy. Today, I just felt the need to ramble and rant a bit. The reason I don’t concern myself too much with the latest economic numbers and predictions is fairly simple. The market does a good job of pricing in these events well before they occur. So, by reading the price and volume movements of the charts of the major indices we can gauge with some degree of certainty just how well the economy WILL be doing. At the risk of sounding like a broken record, I have been mentioning for at least a few weeks that the market is getting fatigued and that all signs point to institutions selling into any rallies. Price and volume movements (higher volume selling, lower volume buying and high volume churn) over the past few weeks predicted a looming sell off of some degree.
It’s important to remember that bull runs like we had don’t just roll over and die. After all, institutions need more time to unload all those large positions and get more defensive. After we stabilize following the selling of last week, the market could very well retest those highs. However, I do think those early June highs mark a top for at least several months.
Market Action This Week: Decidedly Bearish
Outlook for the Next Month: Leaning Bearish
::: Model Portfolio Update :::
With the long overdue selling setting in, the portfolio is beginning to get in better synch with this market and beginning to close the gap of underperformance. I mentioned last week that I began getting short way too early and that hurt my performance, however I expect my current positions/strategy to begin paying dividends. During the week, I closed out two very small position in NVEC for a 2% loss and JOBS, a quick strike profit play for a 6% loss. These were replaced with 2 stronger, very small long positions in high quality names. Both held up remarkably well during the week – in fact one of the positions actually finished with a gain with volume on Thursday. Sometimes you get lucky. I did add another short position to the portfolio as well, bringing the total short allocation to about 35%. About 50% remains on the long side (15% of that is in Google) with a 15% cash position. The portfolio was off just .2% last week, but still significantly lags the S&P with a
3.5% YTD return. I’ve certainly got my work cut out for me if I’m going to whoop the S&P again this year.
::: Best/Worst Performers :::
– Top 10 Performing Industries For the Week –
1. Personal Computers: 3.30%
2. Music & Video Stores: 1.90%
3. Medical Practitioners: 1.60%
4. Data Storage Devices: 1.20%
5. Diversified Electronics: .55%
6. Discount – Variety Stores: .55%
7. Catalogue & Mail Order Houses: .35%
8. Education & Training Services: .35%
9. Consumer Services: .30%
10. Computers Wholesale: .25%
– Top 10 Worst Performing Industries For the Week –
1. Health Care Plans: -8.80%
2. Major Airlines: -6.45%
3. Diversified Utilities: -5.80%
4. Shipping: -5.75%
5. Pollution & Treatment Controls: -5.45%
6. Electric Utilities: -5.30%
7. Dairy Products: -4.90%
8. REIT – Healthcare Facilities: -4.90%
9. Manufactured Housing: -4.85%
10. Specialty Eateries: -4.80%
– Top 5 Best Performing ETFs For the Week –
1. Herzfeld Caribbean Basin (CUBA) 4.25%
2. Chile Fund (CH) 3.05%
3. China Fund (CHN) 1.55%
4. Ishares South Korea (EWY) 1.10%
5. Ishares China (FXI) 1.05%
– Worst 5 Performing ETF’s –
1. SPDR Select Utilities (XLU) -5.60%
2. Ishares Germany (EWG) -5.45%
3. PowerSharers Dynamic Utilities (PUI) -5.40%
4. HLDRS Utilities (UTH) -5.25%
5. Ishares Utilities (IDU) -5.10%
::: IPO’s Worth Watching for This Week :::
No solar IPO’s this week, but a new ethanol IPO should get some undeserved attention.
1. GeoVera Insurance Holdings (GEOV): The company focuses on providing specialty homeowners and residential earthquake insurance. GeoVera sells its products in states prone to these natural disasters in the northwestern and southeastern US. First established in 1993 as a division of United States Fidelity and Guaranty Company, GeoVera distributes its products through a network of more than 1,600 brokers and agents. The company has seen rapid growth over the past couple years. Trading set to begin on Wednesday.
2. Biofuel Energy (BIOF): The ethanol upstart is set to begin construction on the company’s first two (out of six total) plants, in Nebraska and Minnesota, is under way and should be completed in early 2008. Its remaining facilities (Iowa, Illinois, Kansas) are scheduled to begin construction in 2007; the sixth will serve as an alternate plant. Annually, BioFuel’s plants are expected to produce 575 million gallons of ethanol and 1.8 million tons of distillers grain (ethanol manufacturing process byproduct used in animal feed). The company is partnering with agribusiness giant Cargill, which gives it reliable corn supplies, an established logistics/transportation network, and marketing expertise. Trading set to begin on Tuesday.
::: Upcoming Economic Reports (6/11/07 – 6/15/07) :::
Monday: None
Tuesday: Treasury Budget
Wednesday: Fed Beige Book, Export/Import Prices, Retail Sales, Crude Inventories
Business Inventories
Thursday: PPI, Initial Claims
Friday: CPI, Capacity Utilization
::: Notable Upcoming Earnings Reports I’ll Be Watching This Week :::
Monday: Jos Bank (JOSB)
Thursday: Goldman Sachs (GS), Bear Stearns (BSC)
::: In Case You Missed It – SelfInvestors Blog Entries of the Past Week :::
1. Unintended Consequences of the Ethanol Boom
https://selfinvestors.com/tradingstocks/news/unintended-consequences-of-the-ethanol-boom/
2. Selling Intensifies But Critical Support Near
https://selfinvestors.com/tradingstocks/weeklyafter-stock-market-review-archives/selling-intensifies-but-critical-support-near/
3. Precarious Economy; Stock of Day – Intercontinental Exchange (ICE)
https://selfinvestors.com/tradingstocks/weeklyafter-stock-market-review-archives/precarious-economy-stock-of-day-intercontinental-exchange-ice/
4. More Distribution, But Relatively Healthy Selling
https://selfinvestors.com/tradingstocks/weeklyafter-stock-market-review-archives/more-distribution-but-relatively-healthy-selling/
5. IPO Lockup Dates (June 5 – 8)
https://selfinvestors.com/tradingstocks/ipos/ipo-lockup-dates/ipo-lockup-dates-june-5-8/
6. Stock Spam in Major Financial Publications!
https://selfinvestors.com/tradingstocks/news/stock-spam-promotion-in-major-financial-publications-guangzhou-global-gzgt/
Unintended Consequences of the Ethanol Boom
While the US government foolishly turns to ethanol as part of the solution to reduce our dependence on foreign oil, the rapidly rising cost of corn is having devastating unintended consequences. A shortage of tequila and pricey tortillas. You may want to stock up on supplies now for next year’s Cinco de Mayo party.
According to MSNBC “The switch to corn will contribute to an expected scarcity of agave in coming years, with officials predicting that farmers will plant between 25 percent and 35 percent less agave this year to turn the land over to corn. “
Seriously though, this is just one ripple affect on food prices. The demand for ethanol will undoubtedly lead to inflation across the entire food supply as acreage for other food supplies shrink and feed for animals skyrockets. How bad is it? It has become so expensive to feed their livestock corn based feed that one farmer is feeding his livestock cookies, licorice, cheese curls, candy bars, french fries, frosted wheat cereal and peanut-butter cups! Another farmer in Idaho is feeding them tater tots! See the entire article over at the Wall Street Journal (paid) According to the National Chicken Council (via HPJ.com) “The price of corn has driven the cost of feeding chickens up 40 percent. Chicken is the most popular meat with consumers.”
Ethanol induced food inflation could potentially have a significant impact on the economy and at worst be the catalyst for a global recession. If that weren’t enough, how about the destruction of our environment which lasts a lifetime? In Southeast Asia, vast areas of tropical forest are being cleared and burned to plant oil palms destined for conversion to biodiesel. Soybeans and especially corn are row crops that contribute to soil erosion and water pollution and require large amounts of fertilizer, pesticides, and fuel to grow, harvest, and dry. They are the major cause of nitrogen runoff — the harmful leakage of nitrogen from fields when it rains — of the type that has created the so-called dead zone in the Gulf of Mexico, an ocean area the size of New Jersey that has so little oxygen it can barely support life (via ForeignAffairs.org) Well at least someone is profiting from the destruction – just take a look at the charts of leading fertilizer producers Terra Nitrogen [TNH] and Potash [POT]. It’s a lose and lose situation for the environment.
Granted, to ease the pressure to produce corn, the administration is promoting such biofuels as cellulosic ethanol, which can be made from wood chips, switchgrass and corn-plant parts such as stalks and leaves. But the process of making ethanol from those sources still is still very much in its infancy and not very practical. Biofuels could be made efficiently from a variety of other sources, such as grasses and wood chips, if the government funded the necessary research and development. But in the United States, at least, corn and soybeans have been used as primary inputs for many years thanks in large part to the lobbying efforts of corn and soybean growers and Archer Daniels Midland Company (ADM), the biggest ethanol producer in the U.S. market. ADM owes much of its growth to political connections, especially to key legislators who can earmark special subsidies for its products. Vice President Hubert Humphrey advanced many such measures when he served as a senator from Minnesota. Senator Bob Dole (R-Kans.) advocated tirelessly for the company during his long career. As the conservative critic James Bovard noted over a decade ago, nearly half of ADM’s profits have come from products that the U.S. government has either subsidized or protected. – ForeignAffairs.org
I highly recommend reading the entire article How Biofuels Could Starve the Poor. It really lays out the case against using ethanol (particularly corn based) and how government is protecting inefficient ways of producing ethanol to preserve corporate profits at the risk of the environment and the economy. But what the heck right? After all it would be political suicide to denounce the use of ethanol. Anything for a few votes.
On a final note, here’s a good piece 20/20 did on the myth of ethanol.
Selling Intensifies, But Critical Support Near
I mentioned that the selling of the past two days was relatively orderly and healthy action. That was not even close to the case today. But you have been ready (if you’ve been reading these reports 🙂 right!? After all, with price and volume movements indicating that the big fellas were selling into rallies over the past few weeks, it was just a matter of time before the dip buyers cried uncle and the bottom fell out.. That’s where we’re at. Now we turn our attention to critical support areas nearby.
In a chart of the Nasdaq below, you can see that after 3 days of selling we are now quite close to the critical support area right around those February highs. I actually expected the sell volume to be a bit heavier today, but it’s probably still enough to test that critical level of support tomorrow at some point.
The S&P nearly hit that 50 day moving average today. Looks to me like a runaway train and will ultimately take out that level of support at some point tomorrow (doesn’t mean it can’t finish above though). Keep in mind, that we could see another 30 point drop in the S&P500 and still be in great shape technically! That’s how overbought this market waswhy I’ve been preaching caution. It’s a long ways down!
::: 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 June 7th 2007
Heavy distribution across all indices.
Nasdaq: DOWN 1.77% today with volume 20% ABOVE average
Nasdaq ETF (QQQQ) DOWN 1.55%, volume 155% ABOVE average
Dow: DOWN 1.48%, with volume 24% ABOVE the average
Dow ETF (DIA): DOWN 1.46%, volume 147% ABOVE the average
S&P ETF (SPY): DOWN 1.80%, volume 119% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 2.0%, volume 83% 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. No suprise that leading stocks got whacked today, down more than 2% with considerable volume. Decliners over advancers nearly 10:1!
Summary:
* Decliners led Advancers 376 to 38
* Advancers were up an average of .83% today, with volume 56% ABOVE average
* Decliners were down an average of 2.46% with volume 17% ABOVE average
* The total SI Leading Stocks Index was DOWN 2.16% 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):
Networking, Agriculture, Aerospace/Defense, Water/Resources, Technology, Broker/Dealers
* Current Lagging Sectors/Industries (over last 30 trading days):
Realty, Gold Miners, REIT’s, Global Dividend, Broadband, Biotech
* Today’s Market Moving Industries/Sectors (UP):
Agriculture – that’s impressive!
* Today’s Market Moving Industries/Sectors (DOWN):
Home Construction, Utilities, Gold Miners, Realty
::: 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.
No stock of the day today – just one stock in my entire database of over 400 leading companies moved up signficantly with volume today: Green Mountain Coffe (GMCR).
Precarious Economy; Stock of Day – Intercontinental Exchange (ICE)
My how quickly hopes and predictions have changed. Wasn’t it just several days ago the market was rocking and rolling higher to new highs on predictions of rate cuts? With bond yields rising, prospects for a Fed rate cut all but gone, inflation still a major concern, still no signs of an improving housing sector and GDP growth expectations revised lower, all of a sudden traders may be questioning the run we’ve had. The bottom line is that the economy is in a precarious position and we don’t really know how bad inflation will be or how long housing will slump. With big profits in hand, the big fellas will most likely continue taking some chips off the table and hold steady for a more defined picture of inflation, of housing, of our economy.
On a technical note, the selling today wasn’t severe panic selling. It was actually quite orderly considering the run up we’ve had. The S&P did take out support of its upward trend line again, but the Dow is holding at that level .. for now. Considering there was distribution in the Dow today (none in the Nasdaq and S&P), it appears there is enough momentum to take out that level of support soon. All in all, it was another healthy, constructive day of selling.
::: 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 June 6th 2007
Ony distribution in the Dow today, however significant distribution across all of the major index tracking ETF’s – QQQQ, SPY and DIA
Nasdaq: DOWN .92% today with volume 5% ABOVE average
Nasdaq ETF (QQQQ) DOWN 1.07%, volume 71% ABOVE average
Dow: DOWN .95%, with volume 4% ABOVE the average
Dow ETF (DIA): DOWN 1.1%, volume 45% ABOVE the average
S&P ETF (SPY): DOWN 1.07%, volume 56% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 1.11%, volume 55% 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 were hit a bit harder than the major indices today, but sellling volume wasn’t severe.
Summary:
* Decliners led Advancers 348 to 66
* Advancers were up an average of 1.04% today, with volume 17% ABOVE average
* Decliners were down an average of 1.71% with volume 1% ABOVE average
* The total SI Leading Stocks Index was DOWN 1.27% today with volume 3% 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, Transports, Agriculture, Networking, Aerospace/Defense
* Current Lagging Sectors/Industries (over last 30 trading days):
Realty, Broadband, Biotech
* Today’s Market Moving Industries/Sectors (UP):
None
* Today’s Market Moving Industries/Sectors (DOWN):
Global Dividend, Oil & Gas Services, Real Estate, Transports, Utilities
::: 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 Intercontinental Exchange (ICE), which is threatening a breakout from a nice looking second stage base.
ABOUT: IntercontinentalExchange, Inc. (IntercontinentalExchange) operates as an electronic global futures and over-the-counter (OTC) marketplace for trading an array of energy products. The Company also operates as a soft commodities exchange. IntercontinentalExchange offer an integrated electronic platform for side-by-side trading of energy products in both futures and OTC markets. Through its electronic trading platform, the CompanyGÇÖs marketplace brings together buyers and sellers of derivative and physical commodities contracts. Intercontinental Exchange also offers open-outcry trading in Board of Trade of the City of New York, Inc.GÇÖs (NYBOT) regulated futures and options markets. The Company conducts its OTC business directly and its regulated energy futures business through its wholly owned subsidiary, ICE Futures. It operates in three segments: energy futures, OTC and market data. On January 12, 2007, IntercontinentalExchange acquired NYBOT.
FUNDAMENTALS: ICE is a company with a tremendous acceleration in earnings growth over the last 3 years with year over year growth 67%, 140% and 150%. The ramp up in growth isn’t expected to continue, but ’07 and ’08 earnings growth still call for a very impressive growth rate of 40 – 50%. Net margins are a whopping 45% and ROE, while below industry averages is excellent at around 24%. With many new positions added over the past year, institutions like what they see in the company. It’s clear why ICE has been one of the highest rated stocks in the SelfInvestors.com database for a long time.
TECHNICAL: ICE broke out of its first base since going public back in October of 2006 and quickly doubled in price. Since February, it’s been digesting those gains constructively with a tight, healthy looking base. Today, the stock briefly broke out of a nice handle formation near the end of the day before pulling back a bit. It still looks poised to bust through that level (153.36) and tackle all time highs of 167 very soon.
SELFINVESTORS RATING: With a total score of 52/60 (27/30 for fundamentals, 25/30 for technical), ICE is currently the second highest rated stock in the SelfInvestors.com Breakout Tracker.
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 own a small position in Intercontinental Exchange (ICE)
More Distribution, But Relatively Healthy Selling
Continuing the trend of the past few weeks, the market looked tired again today as concerns about rising bond yields and the diminishing possibility of a rate cut left traders with an itch to take some profits off the table. While technically it was another day of distribution, it wasn’t as bad as it could have been. Selling volume wasn’t all that severe in the S&P and Dow and the Nasdasq finished well off the lows. I’d call this relatively healthy selling today and wouldn’t mind seeing a few more of these in the coming days to wring out the excess a bit. Enjoy the rest of your night.
::: 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 June 5th 2007
Distribution across all indices but not at all severe – actually quite healthy considering the run we’ve had.
Nasdaq: DOWN .27% today with volume 10% ABOVE average
Nasdaq ETF (QQQQ) DOWN .13%, volume 44% ABOVE average
Dow: DOWN .59%, volume was 2% BELOW the average
Dow ETF (DIA): DOWN .42%, volume 31% ABOVE the average
S&P ETF (SPY): DOWN .4%, volume 22% ABOVE the average
Russell Small Cap ETF (IWM): DOWN .40%, volume 40% 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 held up quite well today and were about in line with the Nasdaq.
Summary:
* Decliners led Advancers 266 to 148
* Advancers were up an average of 1.22% today, with volume 24% ABOVE average
* Decliners were down an average of 1.15% with volume 6% BELOW average
* The total SI Leading Stocks Index was DOWN just .3% today with volume 4% 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, Transports, Agriculture, Networking, Nanotech, Aerospace/Defense
* Current Lagging Sectors/Industries (over last 30 trading days):
Bonds
* Today’s Market Moving Industries/Sectors (UP):
None today
* Today’s Market Moving Industries/Sectors (DOWN):
Real Estate, Home Construction, Utilities
::: 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.
Sorry, short on time tonight so no stock of the day, but take a look at these top rated stocks that moved with volume today – Sunpower (SPWR), Health Grades (HGRD) and Internet Gold (IGLD)
* Internet Gold was a recent Stock of the Day pick.