::: Today’s Market Action :::

Just as they have done many times before over the past few months, the bulls will not go down without a fight.  A reversal off the lows after 2 days (ok one and a half) of heavy selling isn’t all that unusual as bulls and bears fight it out.  What did surprise me was the V like, aggressive bounce off today’s low, with a finishing volume higher than yesterday’s.  That’s the kind of key reversal action you typically see near the bottom of a correction.  Does it mean we’re out of the woods and it’s time to get significantly long again?  No, but it does mean we’re headed a bit higher from here in the short term, possibly to test the highs of the previous "dead cat bounce".  It also probably signals that this correction won’t be quite as severe as once thought.  What doesn’t change is that for most of you, the best option will be to ride this out on the sidelines until the market gives us a few more clues.

::: 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 14th 2007

Nasdaq: UP .90% today with volume 12% ABOVE  average
Nasdaq ETF (QQQQ) UP 1.46%, volume 47% ABOVE average
Dow: UP .48%, volume 30% ABOVE the average
Dow ETF (DIA): UP .53%, volume 146% ABOVE the average
S&P ETF (SPY): UP .75%, volume 176% ABOVE the average
Russell Small Cap ETF (IWM): UP  1.13%, volume 133% 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 just OK today.. by no means did they see intense buying.

Summary:

* Advancers led Decliners 298 to 135.
* Advancers were up an average of 1.47% today, with volume 3% BELOW average
* Decliners were down an average of 1.07% with volume 10% ABOVE average
* The total SI Leading Stocks Index was UP  .68% today with volume 1% 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): 
Only safehavens utilities and bonds
                                              
* Current Lagging Sectors/Industries (over last 30 trading days): 
Biotech, Banks, Gold Miners, Internet Infrastructure

* Today’s Market Moving Industries/Sectors (UP):
Home Builders, Broadband, Networking, Energy, Broker/Dealers, Oil Services

* 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. 

Sorry, I’m short on time tonight – no stock of the day today.

::: Today’s Market Action :::

During times of market corrections or break outs it’s critical to trust what the charts are telling us and not get wrapped up in emotion.  Based on a few emails from members and some of the commentary on CNBC, it seems many saw the bounce over the few days as a sign that the worst was over and may have had a feeling of "missing out" as the market marched higher, albeit with little conviction or confidence.  Volume levels told a different story and it was just a matter of time before the selling resumed as institutions continue to unwind large positions.  It’s never easy to be sitting on short positions or in cash when a market moves higher several days in a row, but practicing patience and trusting the charts ALWAYS pays off eventually.

On February 27th, the market revealed to us that the bull run was over for the time being and that any bounce up was temporary (often referred to as a "dead cat bounce").  That kind of selling changes the psychology of traders where focusing on bad news becomes the norm.      I mentioned previously that any weak bounce offered opportunity.. an opportunity to raise more cash and/or initiate additional short positions before the next leg down.  The next leg down arrived today with another sizable sell off and all indications point to further selling in the coming days and weeks.  Next stop:  the 200 day moving averages.  Nasdaq ~ 2300, S&P ~ 1350 and Dow ~ 11800.  These levels aren’t too far away.. hold on to your hats!

::: 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 13th 2007

Nasdaq: DOWN 2.15% today with volume 8% ABOVE  average
Nasdaq ETF (QQQQ) DOWN 1.94%, volume 33% ABOVE average
Dow: DOWN 1.97%, volume 22% ABOVE the average
Dow ETF (DIA): DOWN 1.73%, volume 50% ABOVE the average
S&P ETF (SPY): DOWN 1.94%, volume 135% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 2.56%, volume 78% 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.  Surprisingly, leading stocks actually didn’t fare too poorly today.  While off, more than 2% volume levels indicated that there wasn’t much intensity behind the selling.

Summary:

* Decliners led Advancers 394 to 39.
* Advancers were up an average of 1.54% today, with volume 52% ABOVE average
* Decliners were down an average of 2.46% with volume 10% BELOW average
* The total SI Leading Stocks Index was DOWN 2.10% today with volume 4% 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://selfinvestors.com/industry_tracking/

* Current Leading Sectors/Industries (over last 30 trading days): 
Only safehavens utilities and bonds
                                              
* Current Lagging Sectors/Industries (over last 30 trading days): 
Biotech, Banks, Homebuilders, Gold Miners

* Today’s Market Moving Industries/Sectors (UP):
None today

* Today’s Market Moving Industries/Sectors (DOWN):
Broker/Dealers, Gold Miners, Construction, Clean Energy, Home Builders, Regional Banks

::: 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.  Despite all the selling today, there was a bright spot .. in Smith & Wesson (SWHC), a stock that broke out from a cup and handle base today after reporting outstanding earnings and sales growth.

ABOUT:  Smith & Wesson Holding Corporation is a manufacturer and exporter of handguns. The Company manufactures revolvers, pistols, and related products and accessories for sale primarily to gun enthusiasts, collectors, hunters, sportsmen, protection focused individuals, public safety agencies and officers, and military agencies in the United States and throughout the world. It also markets tactical rifles. The Company has manufacturing facilities in Springfield, Massachusetts and Houlton, Maine, both of which are primarily used to manufacture its products. In addition, the Company pursues opportunities to license its name and trademarks to third parties for use in association with their products and services. In January 2007, the Company completed the acquisition of Thompson/Center Arms, Inc., a designer, manufacturer and marketer of hunting firearms.

FUNDAMENTALS:  Smith & Wesson is a company with a fairly erratic history of growth but one that has found some consistency and fantastic growth over the past 5 quarters.  Quarter over quarter earnings have at least doubled in each of the last 5 quarters with quarter over quarter sales growth of around 40%.  Margins aren’t outstanding in a comparison of all companies, but when compared to other companies in its industry, it’s well above the average at around 6%.  Return on Equity is a whopping 28%, indicating strong management.  Earnings growth is expected to be outstanding through 2007 (75%) and 2008 (94%).

TECHNICAL:  Looking at the overall cup and handle base, it’s not a thing of beauty but it may work out.  The shape isn’t bad, but the sell volume in the left side and the fairly weak buy volume in the right side is a bit of a concern, but the high volume gap up break out today is a big plus.  Given current market conditions, I won’t be jumping into this one right now, but it should be near the top ‘o the watch lists for when the market gets back on its feet.

SELFINVESTORS RATING: With a total score of 50/60 (26/30 for fundamentals, 24/30 for technical), SWHC is a high quality 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 do not own a position in Smith & Wesson (SWHC)

::: 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)

It finally happened.  The much anticipated sell off.  I have been mentioning over the past few weeks that the market was pricing in perfection and that I wasn’t seeing where future upside catalysts would come from.  In last week’s report I mentioned the giddiness of the average investor in the form of a men’s room page of stock tickers.  It wasn’t going to take much to knock the market off its peak.  At bottoms, the market looks for an excuse to rally.  At the top, it focuses on the negative and looks for an excuse to sell.  Whether that was Greenspan’s comments on Monday about potential recession this year (note to Alan: hang it up and go find a nice island home somewhere), the China sell off, the deterioration sub primes… it doesn’t really matter.   At this point its important to pay attention to what the market is telling us… and that is we’re going to remain in correction mode for sometime.  Just how severe is anyone’s guess at this point, but further deterioration from here is almost gauranteed.  I’m looking for some kind of weak bounce to play out this week, then the potential for another large drop.  Play it accordingly. 

::: Model Portfolio Update :::

Despite closing several positions last week for losses, the damage was greatly minimized with some hedging through the Nasdaq UltraShort Fund (QID) and a sizable cash position.  For the week, the portfolio was off just 2.3%..  Four Quick Strike Profit positions were closed in ONT (-12%), SCUR (-5%), HOTJ (-3%) and EVOL (-3%) as well as in 2 core long plays – BITS (-9%), HWCC (-4%).  Before Tuesday’s sell off, 42% of the portfolio was allocated in cash and short positions.  By the end of the week, that was increased to 71%.  The YTD performance dropped to +7.3%, still well ahead of the -2.2% decline since Jan 1st 2007 for the S&P500.

::: PinPoint the Highest Ranked Breakout Stocks in Just Minutes Each Day! :::

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NOTE: the free trial will only be available for a few more days.. now is the time to take advantage of it!

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Rubber & Plastics: .98%
2. Oil & Gas Pipelines: -.34%
3. Health Care Plans: -.93%
4. Lumber/Wood Production: -1.57%
5. Confectioners: -1.66%
6. Electric Utilities: -1.77%
7. Insurance Brokers:  -1.92%
8. Property & Casulty Insurance: -2.42%
9. Gas Utilities: -2.61%
10. Manufactured Housing: -2.62%

– Top 10 Worst Performing Industries For the Week –

1. Hospitals: -16.51%
2. Silver: -12.54%
3. Drugs Generic: -10.19%
4. Industrial Metals & Minerals: –9.71%
5. Gold: -9.25%
6. Recreational Goods: -9.13%
7. Medical Laboratories & Research: -9.01%
8. Investment Brokerage – Regional: -8.86%
9. Investment Brokerage – National: -8.82%
10. Drug Related Products: -8.77%

– Top 5 Best Performing ETFs For the Week –
 
1. Morgan Stanley China (CAF)  5.80%
2. Japan Equity (JEQ) 4.90%
3. Korea Fund (KF) 4.85%
4. China Fund (CHN) 4.75%
5. Ishares Japan (EWJ) 4.30%

– Worst 5 Performing ETF’s –

1. Morgan Stanley China (CAF)  -12.93%
2. Ishares Malaysia (EWM) -12.28%
3. Ishares Silver (SLV) -11.36%
4. Latin America Fund (LDF) -11.13%
5. Japan Small Cap (JOF) -10.73%

:::  IPO’s Worth Watching for This Week :::

1. Xinhua Finance Media (XFML): based in Shanghai, is a media company that provides financial news and data in China. The company has ties to Xinhua News Agency, the state-controlled news agency of China.  Trading set to start on Friday.

2. Sourcefire (FIRE):  provides network security technology designed to detect and block hackers. It is best known for Snort, one of the industry’s leading open source intrusion detection products.  Trading set to start on Friday.

::: Upcoming Economic Reports (3/5/2007- 3/9/2007) :::

Monday:        ISM Services
Tuesday:       Productivity, Factory Orders
Wednesday:  Fed Beige Book, Consumer Credit, Crude Inventories
Thursday:      Initial Claims
Friday:           Avg Work Week, Hrly Earnings, Nonfarm Payrolls, Trade Balance, Unemployment
                      Rate, Wholesale Inventories

::: Notable Upcoming Earnings Reports I’ll Be Watching This Week :::

Monday:  None
Tuesday: Fuel Teck (FTEK), Heely’s (HLYS), Iconix Brands (ICON)
Wednesday: American Eagle Outfitters (AEOS), Copa Holdings (CPA), Companhia Vale do Rio
                      (RIO)
Thursday: Gmarket (GMKT), Omrix Biopharmaceuticals (OMRI), Costco (COST), Hovanian (HOV)
Friday: None

::: Latest Blog Entries – In Case You Missed Them! :::

– SelfInvestors Blog –

1. Market Correction Now? Now What?http://investing.typepad.com/tradingstocks/2007/02/market_correcti.html

2. After Market Report – The Straw That Broke the Markets’ Back http://investing.typepad.com/tradingstocks/2007/02/market_crash.html

3. Highly Rated Bitstream (BITS) and Joy Global (JOYG) Break Down After Earnings
http://investing.typepad.com/tradingstocks/2007/02/trading_earning.html

4. Dealer Trak Holdings (TRAK) & LHC Group (LHCG) Break Out to New Highs After Earnings http://investing.typepad.com/tradingstocks/2007/03/trak_lhcg_break.html

5. Nasdaq Accumulation – Small Victory for Bulls; Top Home Health Care Play LHC Group (LHCG) Breaks Out
http://investing.typepad.com/tradingstocks/2007/03/nasdaq_accumula.html

6. Worden of Telechart On the Sell Off – The "Bravado Stage"  http://investing.typepad.com/tradingstocks/2007/03/worden_telechar.html

7. Today’s Earnings Movers – AMN Healthcare (AHS) Break Out Fails
http://investing.typepad.com/tradingstocks/2007/03/healthcare_fail.html