::: Today’s Market Action :::

The bulls can claim a small victory today – at least in the Nasdaq which carved out a reversal to close back above first level of support around 2400 with volume higher than yesterday.  That’s positive market action and indicates that we could see more of a retracement of Tuesday’s sell off before we head lower.  I don’t think we’ve seen the worse of it yet and any retracement of that sell off just offers more opportunity to lock in gains and/or get into short positions.  Looking at the bigger picture, another 5 – 10% down in the market would not be unusual and technically the bull would still be intact.  It’s going to remain wild and volatile over the next several weeks.  If you can’t stomach it, get out until the dust settles.

Here’s a look at today’s Nasdaq action.  You can see the big push off the lows this morning with volume coming in higher than yesterday.. I’m calling this a day of accumulation and good day for the bulls.  After Tuesday’s big drop and today’s amazing reversal it’s been a wild couple of days.  I’ve definitely been on my toes this week and ready for some much needed R&R this weekend.

I also wanted to post  a longer term "bigger picture" view of the S&P.. I don’t feel my last analysis of the market action provided a great big picture look.   You see the acceleration of the upward trend of the past few years in October, indicating the market got a bit ahead of itself.  The selling this week wasn’t ordinary but it certainly wasn’t extraordinary.  In fact we’re just seeing a drop to the top of the long, lumbering uptrend of the past few years where it’s attempting to find support right now.  Given the magnitude of Tuesday’s selling I don’t think we’re going to hold there but rather drop closer to the middle of that channel somewhere around the 200 day moving average.  Even then, the action could be characterized as a healthy wringing of the excesses. 

 
::: 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 1st 2007

Nasdaq saw some accumulation day despite a down day.

Nasdaq: DOWN .49% today with volume 32% ABOVE  average
Nasdaq ETF (QQQQ) DOWN .46%, volume 98% ABOVE average
Dow: DOWN .28%, volume 48% ABOVE the average
Dow ETF (DIA): DOWN .18%, volume 215% ABOVE the average
S&P ETF (SPY): DOWN .3%, volume 225% ABOVE the average
Russell Small Cap ETF (IWM): DOWN .76%, volume 798% 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 fairly hard again today, about in line with what the Russel Small Cap Index did

Summary:

* Decliners led Advancers 294 to 141
* Advancers were up an average of 1.28% today, with volume 61% ABOVE average
* Decliners were down an average of 1.56% with volume 46% ABOVE average
* The total SI Leading Stocks Index was DOWN .64% today with volume 51% 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, REIT, Materials, Bonds, Commodities (bonds make first appearance)

* Current Lagging Sectors/Industries (over last 30 trading days): 
Biotech, Home Construction, Oil Services

* Today’s Market Moving Industries/Sectors (UP):
Homebuilders and Utilities

* Today’s Market Moving Industries/Sectors (DOWN):
Internet Infrastructure, Biotech, Clean Energy, Nanotech, Retail

::: 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 LHC Group (LHCG), the highest rated home health care stock in the Self Investors database.  It broke out to a new all time high today following an excellent earnings report.

ABOUT:  LHC Group, Inc. (LHC Group) provides post-acute healthcare services primarily to Medicare beneficiaries in rural markets in the southern United States. The Company provides home-based services, primarily through home nursing agencies and hospices, and facility-based services, primarily through long-term acute care hospitals and outpatient rehabilitation clinics. LHC Group operates in Louisiana, Mississippi, Arkansas, Alabama, Texas, and West Virginia. As of December 31, 2005, the Company owned and operated 81 home nursing locations and four hospices. LHC Group also managed three home nursing agencies and one hospice as of December 31, 2005, in which it has no ownership interest. As of December 31, 2005, the Company also owned and operated five long-term acute care hospitals with a total of eight locations and four outpatient rehabilitation clinics, as well as managed the operations of one inpatient rehabilitation facility.

FUNDAMENTALS:  A bit erratic at times, but LHC Group is a company that grows every year, often exceptionally.  In 2006 proftis grew 50% which follows a tripling of profits the year before.  Growth is expected to moderate a bit in the next several quarters but remain solid in the 20% range.  Margins aren’t great, but solid and trending higher.  Return on equity is excellent at around 18%.  Management owns a significant portion of the company (35%) and more institutions are initiating positions for the first time.  It all adds up to a very bullish fundamental picture.  Home health care in general will continue to do well for many years to come as the boomers begin to age and require greater medical assistance.  LHCG is one of the best in this space in my opinion

TECHNICAL:  The technical picture is equally as bullish after the stock broke out today with big volume to a new all time high after reporting outstanding earnings and sales. 

SELFINVESTORS RATING: With a total score of 52/60 (25/30 for fundamentals, 27/30 for technical), LHCG is top rated SelfInvestors.com break out stock in a growing industry.

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 LHC Group (LHCG).

::: Today’s Market Action :::

Today’s Self Investors Leading Stocks Index said it all: 425 Decliners to 11 Advancers (see below).

It seemed like deja vu with today’s sell off.  I mentioned in the weekend report the ominous sign of the stock tickers page in the men’s bathroom and how it reminded me of the discussion overheard on the plane days before the May meltdown.  In May, Indian businessman were seen throwing themselves off bridges after obliterating their financial future with large speculation at the top of a frothy market.  Now we may be witnessing the same in China after the government reiterated that it would take steps to curb this rampant speculation.  It’s a shame that this behavior happens again and again, despite lessons learned.  But greed is just as strong as fear, maybe more so.  In our own markets the news proved to be the tipping point for a market in great need of a correction.  The underlying concerns were there with the subprimes and slowing growth (in addition to the supposed assasination attempt on Cheney).  It seemed everyone was waiting for a correction, but nobody could have predicted the magnitude of it.  I was prepared with some hedging with buying of QID and a couple shorts and planned to continue to ease into a predominantly short portfolio.  So much for that idea!  I never got that far and got hurt today… it could have been worse.  Funny how the market surprises EVEN WHEN you’re prepared for its move in a certain direction.

Here’s a look at the weekly 2 year charts which puts everything into perspective a bit better.  That was some move today – you can see how it dwarfs the rest of the chart.  It almost looks like a mistake!  Notice the declining volume as the Dow made its move higher.. it was running out of gas.  One thing to keep in mind is that it’s probably much too early to be catching the falling knife.  There will undoubtedly be many opportunities for day/swingtrading on both sides of the market, but based on today’s move we’re most likely headed much lower.  The next level of support in the Dow is the 11750 area which is another 400 – 500 points down.  It’s an area of convergence where the 50 day moving average and the previous break out point.  I might be looking for some longer term holdings at that point.  It could happen tomorrow.. .. 

In the Nasdaq, there is some support very near by in the 2400 range but I can’t imagine that’s going to hold.  Not with the amount of momentum to the downside today.  It will most likely blow through that level at some point tomorrow.  The 50 day moving average around 2300 is a much more likely area for the Nasdaq to begin finding some support. 

Similar chart here for the S&P – in all likelihood it’s going to drop to its next support levels around 1325 – 1340.. another 5% or so.  Just how fast that will happen is anyone’s guess but chances are very good that it will within the next couple of weeks..

::: 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 Feb 27th 2007

Yeah there was just a wee bit of distribution today.

Nasdaq: DOWN 3.86% today with volume 37% ABOVE  average
Nasdaq ETF (QQQQ) DOWN 4.11%, volume 181% ABOVE average
Dow: DOWN 3.29%, volume 75% ABOVE the average
Dow ETF (DIA): DOWN 3.75%, volume 307% ABOVE the average
S&P ETF (SPY): DOWN 3.91%, volume 334% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 4.53%, volume 197% 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 surprise here – leading stocks got crushed.

Summary:

* Decliners led Advancers 425 to 11 (Wow! just 11 advancers today – I did double check my database to make sure there wasn’t some error.  That is correct.)
* Advancers were up an average of 2.12% today, with volume 109% ABOVE average
* Decliners were down an average of 4.66% with volume 76% ABOVE average
* The total SI Leading Stocks Index was DOWN 4.49% today with volume 77% 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://investing.typepad.com/tradingstocks/2006/09/wheres_the_big_.html

* Current Leading Sectors/Industries (over last 30 trading days): 
Utilities, Materials, Clean Energy, Gold
                                              
* Current Lagging Sectors/Industries (over last 30 trading days): 
Retail, Global Dividend

* Today’s Market Moving Industries/Sectors (UP):
Just Bonds!

* Today’s Market Moving Industries/Sectors (DOWN):
Gold Miners, Clean Energy, Gold, Broker Dealers, Financial

::: 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.

Last May on a flight to Mexico I couldn’t help but overhearing a couple behind me spending about 30 minutes discussing how well the market has been doing.  They appeared to be average investors with who might follow the market once or twice a week.. It caught my attention.  When the average investor begins getting excited about the market, it’s time to watch closely for a top, at least in the short term.  Within days of that dicussion, the market began to fall off a cliff particularly in the emerging markets (India comes to mind).  This brings me to a situation which caught my attention Friday night while enjoying a few at a local German pub.  In the bathroom there are often pinups of the latest sports page or interesting current events.  NEVER before have I seen a page of stock quotes… not here or in any bar.  Is the average investor getting a bit too giddy?  Time will tell.  What are you seeing out there?  It pays to pay attention. 

::: Model Portfolio Update :::

I mentioned to premium members in a Stock Watch report last week that I would be hesitant to initiate additional longer term core holding positions at this time and instead would focus on the Quick Strike Profit (QSP) plays that continue to be extremely profitable.  Last week, 2 more QSP trades were closed for sizable gains – a quick one day gain of 28% in Movie Star (MSI) and another decent gain in Chinese solar play Canadian Solar (CSIQ) of 17%.  Three additional QSP plays were added during the week, one of which is sitting on an 18% profit in just one day.  As always I dont just tout the big winners here.  There were losses as well.  I took small losses in QSP trade Vivo Participacoes (VIV) (-6%) and a short position in Zygo (ZIGO)(-5%).  With a few big QSP gains in the portfolio last week,  the YTD performance surged nearly 3% to 9.6%, well ahead of the S&P’s 2.3% rise YTD.  My current allocation stands at 58% long, 17% short and 25% cash.

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

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In addition to alerting you to the best opportunities on the long side, short opportunities are used to make money during a downturn.  To really accelerate returns, a new feature of Self Investors implemented in the middle of ’06 are Quick Strike Profit plays which provide explosive profit potential in just a matter of days.  That’s just one of many premium features….

There are literally dozens of breakout stocks to watch every day.  How about a database of stocks all ranked according to fundamentals and technicals, complete with pivot points, earnings date, % change from breakout and moving averages, future earnings estimates and relative strength rating?  How about Stock Watch reports highlighting long and short opportunities for the coming week?  It will save you hours of research every week and drastically improve your results.

Try it out for yourself for 30 days!  You have everything to gain and nothing to lose.  Sign in to your account here: http://www.selfinvestors.com/amember/member.php and take advantage of the no risk trial.  If you’re not an existing registered member you may signup here: http://selfinvestors.com/amember/signup.php 

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Recreational Goods: 9.00%
2. Textile Manufacturing: 5.75%
3. Music & Video Stores: 5.60%
4. Pollution & Treatment Controls: 5.35%
5. Silver: 5.30%
6. Copper: 4.90%
7. Heavy Construction:  4.75%
8. Healthcare Information Service: 4.25%
9. Industrial Metals & Minerals: 4.05%
10. Sporting Goods Stores: 3.70%

– Top 10 Worst Performing Industries For the Week –

1. CATV Systems: -9.35%
2. Toy & Hobby Stores: -9.25%
3. Residential Construction: -5.15%
4. Medical Equipment Wholesale: -3.65%
5. Beverages – Brewers: -3.60%
6. Mortgage Investment: -3.55%
7. Major Airlines: -3.45%
8. Semiconductor – Memory Chips: -3.25%
9. REIT – Hotel Motel: -3.25%
10. Regional Airlines: -2.35%

– 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. Herzfel Caribbean Basin (CUBA)  -8.25%
2. Morgan Stanley India (IIF) -6.70%
3. India Fund (IFN) -5.25%
4. Ishares Home Construction (ITB) -4.40%
5. Chile Fund (CH) -3.45%

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

Again, there are No IPO’s Worth Watching for This Week

::: Upcoming Economic Reports (2/26/07- 3/2/2007) :::

Monday:         None
Tuesday:       Durable Orders, Consumer Confidence, Existing Home Sales
Wednesday:  GDP (prelim), Chicago PMI, New Home Sales, Crude Inventories
Thursday:      Initial Claims, Personal Income/Spending, Construction Spending, ISM, Auto/Truck
                       Sales
Friday:           Michigan Sentiment (rev.)

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

Monday: Focus Media Holdings (FMCN), Range Resources (RRC), Ceradyne (CRDN), Nordstrom (JWN)

Tuesday: Tower Group (TWGP), LKQ Corp (LKQX), Western Refining (WNR), CTC Media (CTCM), China Medical Tech (CMED), Wynn Resorts (WYNN),

Wednesday: LHC Group (LHCG), Tenaris (TS), NATCO Group (NTG), Joy Global (JOYG), HEICO Corp (HEI),

Thursday: North Gate Minerals (NXG), Verifone Holdings (PAY), Dell (DELL)

Friday: None

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

– SelfInvestors Blog –

1. Today’s Earnings Movers – Break Outs in Vasco Data Security (VDSI) and ANSYS (ANSS)http://investing.typepad.com/tradingstocks/2007/02/todays_earnings_9.html

2. After Market Update – Nasdaq Breaks Out As Small/Mid Caps Lead the Way; Volume Waning on S&P and Dow; Stock of Day – Morningstar (MORN)
http://investing.typepad.com/tradingstocks/2007/02/after_market_up.html

3. Today’s Earnings Movers – Hecla Mining (HL) Near Another Break Out
http://investing.typepad.com/tradingstocks/2007/02/todays_earnings_10.html

4. Today’s Earnings Movers – Break Out in VCA Antech (WOOF)http://investing.typepad.com/tradingstocks/2007/02/todays_earnings_11.html

5. Uranium Miners Moving – Energy Metals (EMU) Gets Cramer Push; Uranerz Energy (URZ) Now is the Better Play
http://investing.typepad.com/tradingstocks/2007/02/uranium_miners_.html

6. Today’s Earnings Movers – Morningstar (MORN), RTI International (RTI) and Commscope (CTV) Add to Recent Break Outs http://investing.typepad.com/tradingstocks/2007/02/todays_earnings_12.html

7. Two Innovative Ways to Search for Investing/Trading Information – ChaCha & TheLion
http://investing.typepad.com/tradingstocks/2007/02/2_innovative_wa.html