Technical forecasts have been calling for some sort of correction (me included), but the big unkown is by how much and how severe.  If the action continues anything like last week, we won’t be down for long.  Despite a round of economic numbers last week that indicate an economy slowing a bit more than expected (who really knows what the heck is going on with the number of jobs?!), the major indices managed to hold their upward trends throughout the week.  I’d call it a big victory for the bulls.  The weekly pull back occurred on light volume.. just the kind of digestion you want to see.  The longer the bulls hold their ground and keep the market in the upward trend, the greater the chance we’ll be off to the races again.  However, with the elections on Tuesday and the deteriorating action in leading stocks last week, it pays to be very cautious at this point.  The action next week will be pivotal.  Stay tuned for the After Market reports during week!

::: Model Portfolio Update :::

The Self Investors Model portfolio was not spared from the carnage of many leading stocks last week (down 5% – now 15.2% YTD), but much of the loss was due to a mistake on my part.  Yes, this is a real world model portfolio, not theoretical 🙂  Members see the triumphs and tribulations.. the good, bad and the ugly.  It did get ugly last week.  It all centered around one stock really – a quick strike profit play in North American Coatings (NGA).  As I’ve mentioned many times on the blog and in these reports I RARELY hold through an earnings report, particularly in small, unproven companies.  It was never my intention to hold NGA through its report.  As I do with all stocks, I check to see when they report earnings and keep a calendar of holdings in the portfolio.   If my sources don’t reveal a date, 99% of the time, it’s because the company hasn’t yet released the date.  I made the incorrect assumption that the company hadn’t released an exact date but would soon.  There was never an official date released, but the company did release earnings on Tuesday morning.  Of course they were very good, but the stock fell off a cliff – the theme for many companies last week.  I gave the stock some room to run and bounce, but it would never happen and I was forced to close for a large loss which accounted for roughly a 2% loss in the portfolio last week.  Needless to say, I’ve implemented a new rule: no more holding companies without an official earnings date during earnings season.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Nonmettallic Mineral & Mining             6.57%
2. Gold                                                   5.13%
3. Multimedia & Graphics Software       3.86%
4. Security Software & Services           3.11%
5. Music & Video Stores                         1.93%
6. Marketing Services                             1.85%
7. Insurance Brokers                              1.53%
8. Business Equipment                           1.50%
9. Movie Production – Theaters               1.37%
10. Synthetics                                         1.35%

– Top 10 Worst Performing Industries For the Week –

1. Home Furnishing Stores                         -6.30%
2. Internet Service Providers                     -5.65%
3. Grocery Stores                                      -5.60%
4. REIT – Residential                                   -5.55%
5. Industrial Equipment Wholesale             -4.80%
6. Water Utilities                                         -4.75%
7. REIT – Healthcare Facilities                    -4.45%
8. Drug Related Products                          -4.45%
9. General Contractors                              -4.45%

– Top 5 Best Performing ETFs For the Week –
 
1. Central Fund of Canada (CEF)               6.10%
2. Market Vectors Gold Miners (GDX)       5.32%
3. Ishares South Africa (EZA)                   5.25%
4. Ishares Gold (IAU)                                 4.95%
5. StreetTracks Gold (GLD)                       4.90%

– Worst 5 Performing ETF’s –

1. Global Equity Dividend (IGD)                            -4.00%
2. SPDR Homebuilders (XHB)                              -3.85%
3. PowerShares Clean Energy (PBW)                -3.80%
4. Turkish Invest Fund (TKF)                               -3.70%
5. PowerShares Dynamic Retail (PMR)               -3.70%

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

Many IPO’s this week, but only 3 worth watching!

1.  KBW (KBW):  This appears to be the headliner for the week.  New York City-based full-service investment bank specializes in the financial services industry, such as banks and insurance companies. KBW’s clients include over 489 financial services companies — 352 companies in the United States and 137 in Europe. And its financials have been growing and solid.  Trading set to start on Thursday.

2. ACA Capital Holdings (ACA): New York City-based company providing financial guaranty insurance products to participants in the credit derivatives markets, structured finance capital markets and municipal finance capital markets. The company also offers asset management services to specific segments of the structured finance capital markets.  The company is growing quickly with earnings doubling in the past 6 months.  Set to start trading Friday.

3. Capella Education (CPLA):  an online post-secondary education services company offering doctoral, master’s and bachelor’s degree programs in business, organization and management, education, psychology, human services and information technology.  Capella has not shown big growth in the past 6 months but is profitable   Trading set to start Friday.

::: Upcoming Economic Reports (11/6/06- 11/10/06) :::

Monday:        Public Debt
Tuesday:       Consumer Credit, Retail Sales,
Wednesday:  Petroleum Status, Mortgage Apps
Thursday:      Money Supply, Trade Balance, Import Price Index, Wholesale Trade
                       Consumer Sentiment (prelim), Jobless Claims
Friday:            None

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

Monday: NONE

Tuesday: Fuel Tech (FTEK), True Religion (TRLG), Allis Chalmers (ALY)

Wednesday: Tenaris Steel (TS), Ctrip.com (CTRP), Hologic (HOLX)

Thursday: Comtech Group (COGO), EZCORP (EZPW)

Friday: NONE

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

– SelfInvestors Blog –

1. Round of Profit Taking Begins, Leading Stocks Deteriorate
http://investing.typepad.com/tradingstocks/2006/11/round_of_profit.html

** Anything you’d like to see in this report or have suggestions?  Just hit your reply button and respond.  I’m all ears!

::: Today’s Market Action :::

If there has been any question about whether a correction from these lofty levels would ensue, today’s action probably put those questions to rest.  In the weekend review email I mentioned that the Nasdaq was showing signs of a top (resistance, 3 straight weeks of weakening action)and that the correction begins now.  On Monday and Tuesday, the bulls held their ground just as they have over the past several days, preventing significant selling.  However, new fears are creeping into the market.  The lower than expected GDP on Friday, the Chicago PMI at a 14 month low yesterday and a much larger drop in the Manufacturing ISM this morning to 51.2% (anything below 50% indicates contraction), there are fears that perhaps the economy may be slowing a bit too much.  That provided an excuse to lock in some nice profits and that trend should continue over the next couple weeks. 

It should be noted that the Nasdaq led the way down today, with semiconductors providing leadership to the downside.  Distribution (institutional selling) occurred in the Nasdaq, but not in the S&P and Dow.  Technically, the Nasdaq is currently sitting right on support of its upward trend line but has the momentum to take out that level and ultimately test the area around 2250, where the 50 and 200 day moving averages converge.  Both the Dow and the S&P looked relatively healthy today, despite the selling and some room before  testing their upward trend lines.  Be sure to check out the blog later this evening or in the morning – I’ll have a full report detailing the health of the market, complete with annotated charts.

::: 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 Nov 1st 2006

* Only the Nasdaq qualified as distribution selling today

Nasdaq: DOWN 1.37% today with volume 6% ABOVE  average
Nasdaq ETF (QQQQ): DOWN 1.36%, volume 29% ABOVE the average
Dow: DOWN .42%, volume 8% ABOVE average
Dow ETF (DIA): DOWN .55%, volume 1% ABOVE the average
S&P ETF (SPY): DOWN .75%, volume 10% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 1.90%, volume 9% BELOW the average

::: SelflInvestors Leading Stocks :::

The most concerning thing about today’s action was the performance of Self Investors Leading stocks.  This is an index comprised of 360 of the fastest growing companies leading the market higher.  They did not fare well today.  In fact it was one of the worst performances in a few months.

Summary:

*Decliners led Advancers 311 to 49.
* Advancers were up an average of 1.07% today, with volume 18% ABOVE the average
* Decliners were d own an average of 2.39% with volume 18% ABOVE average
* The total SI Leading Stocks Index was DOWN 1.92% today with volume 18% 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 guage 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: 
Retail, Consumer Servics, HomeBuilders, Software, Biotech  (Biotech is a fairly recent new addition.
                                              
* Current Lagging Sectors/Industries: 
A BIG SHIFT is underway.. for the first time in a few months commodities are being replaced by Semiconductors!  Broadband is also appearing on the Laggers list for the first time.  The list in order of weakness – Semis, Broadband, Clean Energy

* Today’s Market Moving Industries/Sectors (UP):
Gold and Utilities bucked the trend with nice gains today.  Looks like the gold bottom has officially been put it and it’s beginning another leg up.

* Today’s Market Moving Industries/Sectors (DOWN):
The list is long today – Semis, Clean Energy, Biotech, Oil Services, Retail & Global Dividend

** 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 .. there were no stocks worth highlighting today.  Yes, it really was an ugly day for leading stocks.

Following a lengthy market run like the one we’ve had over the past couple months (which is rivaling the run off the market bottom back in ’03) I tend to get a little defensive and begin looking for any clues that the run is over, at least in the short term.  Those clues come in the form of technical analysis and only technical analysis.  In fact it’s during these times I try to read less about the various opinions on what the market will do and focus more on what the charts are indicating.  Granted, for those of us who are technical analysts or "chartists" it’s not always easy to trust the charts, but essential.

So what are the charts telling me and what am I "trusting"?  For the S&P and Dow, I’m fairly neutral.  The charts aren’t showing signs of significant weakness at this point and there are no significant resistance levels in sight.  What concerns me most is the Naz and the deteriorating action in the semiconductors which appear to have much more room to run.. to the downside.  In the Nasdaq, it faces formiddable restance at the April highs.  If you take a look at the weekly chart, what you’ll see is 3 straight weeks of weakening technical action.  By all indications, with the Nasdaq leading the way, the market begins to digest its gains now.

That being said, I don’t believe any correction from here will be severe and that any dips will provide anxious buyers who may have missed the bulk of the rally with an opporunity to get their feet wet.  I know I will be looking for an orderly pull back to begin leveraging gains with margin.  Remember that many investors are still stung by the 2000 crash and remain skeptical about the ability of the market to make them money with tolerable risk.  It wasn’t until recently that more friends of mine (who don’t follow the market) have begun to make comments about the market, but none of them are yet putting money to work.  We haven’t reached that frenzied stage. 

::: Model Portfolio Update :::

Despite half of the gains for the week being erased in just the last few hours of trading on Friday, it was a good week for the Self Investors Model Portfolio, beating the overall market with a 1.2% gain, bringing the year to date gain to over 20% for the first time this year (20.3%).  6 new long positions were initiated, 4 of which closed the week with sizable gains.  5 long positions were closed in DIVX, ATHR and LTM ahead of earnings, as well as 2 quick strike profit plays in DSCO and OIIM, which stalled and failed to produce quick strike profits.  Only the DIVX and LTM trades provided a profit with 11% and 5% gains respectively.  It’s almost always my policy to sell ahead of an earnings report and DIVX reports Monday.  Selling LTM ahead of earnings proved to be a bad idea as the company reported a great quarter and soared the next day.  I’ll be looking to reinitiate the position with any pull back.  I did reinitiate a long position in ATHR following its earnings report, which was outstanding.  Also closed during the week was a short position in Q, which failed to follow through to the downside following a high volume gap down on October 11th.  I covered for a small 3% loss as the stock broke out of consolidation on October 24th.  I continue to hold 11 positions, 8 of which are profitable.  Current allocation is 85% long and 15% cash.  I expect to move more to cash next week and possibly put on a short trade or two.

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::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Music & Video Stores                       11.76%
2. Broadcasting Radio                            6.63%
3. Nonmetallic Mineral Mining                  6.60%
4. Confectioners                                     5.70%
5. Shipping                                              5.50%
6. Apparel Footwear                              5.20%
7. Cement                                                5.05%
8. Sporting Goods                                   4.95%
9. Silver                                                   4.80%
10. Toys & Games                                  4.35%

– Top 10 Worst Performing Industries For the Week –

1. Insurance – Tite                                      -5.55%
2. Computer Based Systems                     -5.27%
3. Research Services                                -4.80%
4. Printed Circuit Boards                            -3.65%
5. Drugs – Generic                                     -3.05%
6. Medical Laboratories & Research          -2.90%
7. Information & Delivery Service               -2.60%
8. Drug Delivery                                          -2.40%
9. Semiconductory – Memory Chips            -2.20%

– Top 5 Best Performing ETFs For the Week –
 
1. HLDRS Internet (HHH)                            6.65%
2. Powershares Oil Services (PXJ)           3.90%
3. HLDRS Oil Services (OIH)                      3.70%
4. Ishares Singapore (EWS)                       3.55%
5. Turkish Invest Fund (TKF)                       3.20%

– Worst 5 Performing ETF’s –

1. Japan Small Cap (JOF)                                    -3.45%
2. HLDRS Broadband (BDH)                                -2.50%
3. Ishares Software (IGV)                                   -1.70%
4. Powershares Dynamic Semiconductor(PSI)   -1.50%
5. HLDRS Software (SWH)                                 -1.40%

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

3 Sattelite IPO’s to Watch!

1. GlobalStar (GSAT): California based provider of mobile voice and data communications services via satellite.  The company operates about 43 in orbit satellites and 25 ground stations offering voice and data communications services to about 236,500 customers in over 120 countries. GlobalStar is profitable and growing quickly.  Set to start trading Thursday.

2. ORBCOMM (ORBC):  New Jersey based provider of commercial wireless messaging systems optimized for narrowband commuications in over 75 countries.  The company operates 30 low Earth orbit stallites that allow its customers and end users to track, monitor, control, and communicate cost effectively with fixed and mobile assets located anywhere in the world.  The company is not yet profitable but growing.  Trading set to start Friday.

3.  RRSat Global Communications (RRST): Israel based satellite provider of content and distribution services to the television and radio broadcasting inustries.  Its clients inlude more than 265 television channels and over 80 radio channels in more than 150 countries.  The company is profitable and growing.  Trading set to start on Wednesday.

::: Upcoming Economic Reports (10/30/06- 11/3/06) :::

Monday:        Personal Income
Tuesday:       Consumer Confidence, Chicago PMI, Retail Sales, Employment Cost Index
Wednesday:  ISM Manufacturing, Construction Spending, Petroleum Status, Mortgage Apps
Thursday:      Money Supply, Factory Orders, Productivity & Costs, Jobless Claims
                       Monster Employment Index
Friday:            ISM Non Manufacturing, Employment Situation

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

Monday: GOL Intelligente Airlines (GOL), General Cable (BGC), Novatel (NGPS), BlackRock (BLK)

Tuesday: UnderArmor (UARM), Chipotle Mexican Grill (CMG), Cummins (CMI)

Wednesday: Guess (GES), Baidu.com (BIDU), Diodes (DIOD), Garmin (GRMN),
                      Las Vegas Sands (LVS), Natco Group (NTG), Kenexa (KNXA), Amdocs (DOX)
                      Smith Micro (SMSI), Steve Madden (SHOO)

Thursday: Tower Group (TWGP), Investment Technology Group (ITG), Ness Tech. (NSTC)
                  Digene (DIGE), Intercontinental Exchange (ICE), American Reprographics (ARP)
                  Perficient (PRFT), Cognizant Technology Solutions (CTSH)

Friday: none

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

– SelfInvestors Blog –

1. Nasdaq Takes out Multi Year Highs, But Pay Tomorrow’s Close is Critical
http://investing.typepad.com/tradingstocks/2006/10/nasdaq_takes_ou.html

2. Mastering the Emotions of Trading
http://investing.typepad.com/tradingstocks/2006/10/mastering_the_e.html

From now on I’ll be sending the market reports after the market closes instead of during the trading day.  There is just too much going on particularly in these trading conditions to put those reports  together for you.  So the MidDay Market Report now becomes the After Market report.  As usual these reports will not be sent every day, but rather on days like today when the market makes a significant move.

::: Today’s Market Action :::

It was just a matter of time before any news that could be construed as negative or outright negative would provide an excuse to digest the remarkable gains over the past couple months.  The lower than expected GDP number before the bell, pushed down by a huge drop in residential construction activity started things off in the red.  However, the bulls held their ground remarkably well and for a bit it appeared there was a chance that another sell off attempt would be averted.  But the research note out of Goldman Sachs indicating they are cutting growth forecasts for motherboard shipments proved to be just the excuse needed for significant profit taking.  All was not lost however.  Volume levels indicated that today’s selling was not particulary intense and is just the kind of action you want to see after a run up.  A few more days like today would be good for the sustainability of the upward trend. 

If you haven’t yet had a chance, you may like to see the annotated charts of the daily and weekly charts of the Nasdaq over at the blog.  Was the technical action over the previous two weeks forecasting today’s move?  Hmm… http://investing.typepad.com/tradingstocks/2006/10/nasdaq_takes_ou.html

::: Major Indices Performance – The Numbers :::

(Note: volume averages are based on the average over the past 50 days)
Data as of 4:00EST

* Despite above average selling, there were no indications of distribution (institutional selling) in any of the major indices today.  This is just the kind of selling you want to see following big market gains.  Too many distribution days can derail a market rally.

Nasdaq: DOWN 1.2% today with volume 19% ABOVE  average
Nasdaq ETF (QQQQ): DOWN 1.42%, volume 23% ABOVE the average
Dow: DOWN .6%, volume 23% ABOVE average
Dow ETF (DIA): DOWN ..47%, volume 27% ABOVE the average
S&P ETF (SPY): DOWN .63%, volume 14% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 1.17%, volume 17% ABOVE the average

::: SelflInvestors Leading Stocks :::

SelfInvestors Leading Stocks did not hold up well today which is a bit of a concern.

Summary:

* Advancers led Decliners 276 to 69.
* Advancers were up an average of 1.57% today, with volume 62% ABOVE the average
* Decliners were d own an average of 2.18% with volume 25% ABOVE average
* The total SI Leading Stocks Index was DOWN 1.43% today with volume 33% ABOVE the average

* Where’s the Money Flowing *

Many investing websites just provide leading industries based on price performance alone.. without the volume, this can be misleading.  The only way that I know of to guage 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: 
Retail, Consumer Servics, HomeBuilders, Biotech, Software  (Biotech is a fairly recent new addition)
                                              
* Current Lagging Sectors/Industries: 
A BIG SHIFT is underway.. for the first time in a few months commodities are being replaced by Semiconductors!  Broadband is also appearing on the Laggers list for the first time.

* Today’s Market Moving Industries/Sectors (UP):
Nothing moved up with volume today

* Today’s Market Moving Industries/Sectors (DOWN):
Semis were the big loser today, followed by Home Builders, Broadband and Software

** 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.  Today’s stock is Netgear (NTGR), provider of consumer routers and other networking hardware.  It busted out to new all time highs today on a strong outlook in its earnings reports which was followed by a series of upgrades.

ABOUT:  NetGear, Inc. designs, develops and markets networking products for home users and for small business. The Company’s product offerings enable users to share Internet access, peripherals, files, digital multimedia content and applications among multiple personal computers (PCs) and other Internet-enabled devices. NETGEAR sells its products primarily through a global sales channel network, which includes traditional retailers, online retailers, direct market resellers, value-added resellers and broadband service providers. The Company’s product line consists of switches, adapters, and wired and wireless devices that enable Ethernet networking, broadband access and network connectivity. These products are available in multiple configurations to address the needs of the Company’s customers in each geographic region, in which its products are sold.

FUNDAMENTAL: Very good consistent growth every since ’02 and expected to remain that way.  Sales growth has been accelerating for the last several quarters.  If there is one strike against the company, it’s that Margins and ROE are below industry averages.

TECHNICAL: Gapped up out of base to record all time highs with near record volume.  A bit extended now, but may offer a better entry should the market digest gains over the next couple weeks.

SELFINVESTORS RATING: With a total score of 48/60 (24/30 for fundamentals, 24/30 for technical), NTGR is a solid SelfInvestors breakout stock.

::: Today’s Market Action :::

We have a victor in last weeks stalemate between the bulls and bears – the bulls are making a statement today with some volume behind it.  Typically the market is quiet in the days ahead of a Fed meeting, so the action is unusual and highlights the continued underlying strength the market is showing.  Perhaps this market is forecasting a rate cut in the future?  I doubt that will happen this time around, but it’s not out of the question early next year.

As always, pay close attention to the close today.  While the action is decidedly bullish up until this point, I would be on the lookout for a reversal that would provide further evidence of a short term top.  It should be noted that the market has taken out intraday support levels, so the potential for a reversal today is there.

(Note: volume averages are based on the average over the past 50 days)
Data as of 2:00EST

Nasdaq: UP .56% today with volume 5% BELOW  average
Nasdaq ETF (QQQQ): UP 1.05%, volume 21% ABOVE the average
Dow: UP .86%, volume 23% ABOVE average
Dow ETF (DIA): UP ..82%, volume 15% ABOVE the average
S&P ETF (SPY): UP .52%, volume 6% BELOW the average
Russell Small Cap ETF (IWM): UP .32%, volume 23% BELOW the average

::: SelflInvestors Leading Stocks :::

SelfInvestors Leading Stocks are up today, but volume levels don’t indicate robust buying today which is a bit of a red flag. 

Summary:

* Advancers leading Decliners 222 to 108.
* Advancers are up an average of 1.39% today, with volume 10% BELOW the average
* Decliners are down 1.00% with volume 3% ABOVE average
* The total SI Leading Stocks Index is UP .61% today with volume 6% BELOW the average

* Where’s the Money Flowing *

Many investing websites just provide leading industries based on price performance alone.. without the volume, this can be misleading.  The only way that I know of to guage 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. 

* Leading Sectors/Industries:  Retail, Consumer Servics, HomeBuilders, Biotech, Software
                                                 (Biotech makes its first appearance on the leaders board)

* Lagging Sectors/Industries – Remains just as it has for past several weeks: Oil, Gold, Natural Resources

* Today’s Market Moving Industries/Sectors (UP) – Retail and Consumer Services are leading this market higher today.. it’s a bit of a concern that tech isn’t participating much

* Today’s Market Moving Industries/Sectors (DOWN) – Oil Services and Homebuilders are seeing some significant selling 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.  Today’s stock is CTC Media (CTCM), a Russian TV broadcaster breaking out to new all time highs.

ABOUT:  CTC Media, Inc., operates the CTC Network, a Russian television network offering entertainment programming targeted principally at the 6-54 year-old market segment, and the Domashny Network, a Russian television network targeted principally at 25-60 year-old women. CTC’s signal is broadcasted by over 300 television stations and local cable operators, including 14 owned-and-operated stations and 17 unmanned repeater transmitters. Domashny’s signal is broadcasted by approximately 100 television stations and local cable operators, including four owned-and-operated stations and two unmanned repeater stations. The signals of CTC and Domashny cover approximately 100 million people and 50 million people in Russia, respectively. The Company organizes its operations into four business segments: CTC Network, Domashny Network, CTC Television Station Group and Domashny Television Station Group.

FUNDAMENTAL: Big time growth for the last several years – sales and earnings have doubled in the past 2 years.  Not too shabby for a television network!  ROE is very good while margins are outstanding and soaring.

TECHNICAL: Today the stock is clearing its first significant base since going public in June.  The base isn’t what I’d call exceptional but probably good enough in a strong market. 

SELFINVESTORS RATING: With a total score of 51/60 (27/30 for fundamentals, 24/30 for technical), CTCM is considered a top breakout stock

::: Today’s Market Action :::

We have a victor in last weeks stalemate between the bulls and bears – the bulls are making a statement today with some volume behind it.  Typically the market is quiet in the days ahead of a Fed meeting, so the action is unusual and highlights the continued underlying strength the market is showing.  Perhaps this market is forecasting a rate cut in the future?  I doubt that will happen this time around, but it’s not out of the question early next year.

As always, pay close attention to the close today.  While the action is decidedly bullish up until this point, I would be on the lookout for a reversal that would provide further evidence of a short term top.  It should be noted that the market has taken out intraday support levels, so the potential for a reversal today is there.

(Note: volume averages are based on the average over the past 50 days)
Data as of 2:00EST

Nasdaq: UP .56% today with volume 5% BELOW  average
Nasdaq ETF (QQQQ): UP 1.05%, volume 21% ABOVE the average
Dow: UP .86%, volume 23% ABOVE average
Dow ETF (DIA): UP ..82%, volume 15% ABOVE the average
S&P ETF (SPY): UP .52%, volume 6% BELOW the average
Russell Small Cap ETF (IWM): UP .32%, volume 23% BELOW the average

::: SelflInvestors Leading Stocks :::

SelfInvestors Leading Stocks are up today, but volume levels don’t indicate robust buying today which is a bit of a red flag. 

Summary:

* Advancers leading Decliners 222 to 108.
* Advancers are up an average of 1.39% today, with volume 10% BELOW the average
* Decliners are down 1.00% with volume 3% ABOVE average
* The total SI Leading Stocks Index is UP .61% today with volume 6% BELOW the average

* Where’s the Money Flowing *

Many investing websites just provide leading industries based on price performance alone.. without the volume, this can be misleading.  The only way that I know of to guage 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. 

* Leading Sectors/Industries:  Retail, Consumer Servics, HomeBuilders, Biotech, Software
                                                 (Biotech makes its first appearance on the leaders board)

* Lagging Sectors/Industries – Remains just as it has for past several weeks: Oil, Gold, Natural Resources

* Today’s Market Moving Industries/Sectors (UP) – Retail and Consumer Services are leading this market higher today.. it’s a bit of a concern that tech isn’t participating much

* Today’s Market Moving Industries/Sectors (DOWN) – Oil Services and Homebuilders are seeing some significant selling 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.  Today’s stock is CTC Media (CTCM), a Russian TV broadcaster breaking out to new all time highs.

ABOUT:  CTC Media, Inc., operates the CTC Network, a Russian television network offering entertainment programming targeted principally at the 6-54 year-old market segment, and the Domashny Network, a Russian television network targeted principally at 25-60 year-old women. CTC’s signal is broadcasted by over 300 television stations and local cable operators, including 14 owned-and-operated stations and 17 unmanned repeater transmitters. Domashny’s signal is broadcasted by approximately 100 television stations and local cable operators, including four owned-and-operated stations and two unmanned repeater stations. The signals of CTC and Domashny cover approximately 100 million people and 50 million people in Russia, respectively. The Company organizes its operations into four business segments: CTC Network, Domashny Network, CTC Television Station Group and Domashny Television Station Group.

FUNDAMENTAL: Big time growth for the last several years – sales and earnings have doubled in the past 2 years.  Not too shabby for a television network!  ROE is very good while margins are outstanding and soaring.

TECHNICAL: Today the stock is clearing its first significant base since going public in June.  The base isn’t what I’d call exceptional but probably good enough in a strong market. 

SELFINVESTORS RATING: With a total score of 51/60 (27/30 for fundamentals, 24/30 for technical), CTCM is considered a top breakout stock

::: Today’s Market Action :::

With the market looking tired up at key resistance levels, it’s no wonder the market was a bit skiddish about the inflation data this morning despite the fact that much of the rise was due to the largest increase in auto prices in 15 years.  Clearly, the market was looking for an excuse to sell and it got it’s reason.  Despite heavy selling today, the bulls are showing their teeth once again after homebuilders sentiment improved a bit – possible indicating the housing market has stabilized. 

However, it’s going to take quite an end of day push here to avoid a day of distribution, which would be the first in nearly a month.  You never like to see heavy selling when the market is pulling back from its highs, but considering the magnitude of the rise over the past several weeks, one or two should be expected and even welcomed to help keep this market in order.  Orderly advances help to sustain a lengthy rally, so profit taking is up here is welcomed.   For more of my notes on the current health of this market, please see the latest blog post:  http://investing.typepad.com/tradingstocks/2006/10/market_priced_f.html

(Note: volume averages are based on the average over the past 50 days)
Data as of 2:45EST

Nasdaq: down .95% today with volume 12% ABOVE  average
Nasdaq ETF (QQQQ): down 1.13%, volume 21% ABOVE the average
Dow: down .33%, volume 1% BELOW average
Dow ETF (DIA): down ..43%, volume 15% ABOVE the average
S&P ETF (SPY): down .5%, volume 27% ABOVE the average
Russell Small Cap ETF (IWM): down .59%, volume 7% ABOVE the average

::: SelflInvestors Leading Stocks :::

SelfInvestors Leading Stocks are down significantly today, but volume levels indicate just normal profit taking.

Summary:

* Decliners leading Advancers 251 to 64.
* Advancers are up an average of 1.06% today, with volume 20% ABOVE the average
* Decliners are down 1.35% with volume 12% BELOW average
* The total SI Leading Stocks Index is down .90% today with volume 5% BELOW the average

* Where’s the Money Flowing *

Many investing websites just provide leading industries based on price performance alone.. without the volume, this can be misleading.  The only way that I know of to guage 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. 

* Leading Sectors/Industries:  Retail, Software, Consumer Services, Homebuilders

* Lagging Sectors/Industries – Remains just as it has for past several weeks: Oil and Gold – although I don’t expect to see these industries on the list for too much longer.

* Today’s Market Moving Industries/Sectors (UP) – Utilities and Pharma are bucking the trend today with good moves up; global dividend plays also faring well

* Today’s Market Moving Industries/Sectors (DOWN) – Semiconductors (on the Intel downgrade) and Energy plays seeing significant selling 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.  Today’s stock is Chicago Mercantile Exchange(CME), which this morning announced a merger with CBOT Holding’s to create a futures trading powerhouse.

ABOUT:  Chicago Mercantile Exchange Holdings Inc. (CME) offers market participants the opportunity to trade futures contracts and options on futures contracts, primarily in four product areas, including interest rates, stock indexes, foreign exchange and commodities. CME’s key products include Eurodollar contracts and contracts based on United States stock indexes, including the S&P 500 and the NASDAQ-100. The Company also offers contracts for the principal foreign currencies and for a number of commodity products, including cattle, hogs and dairy. Its products provide a means for hedging, speculation and asset allocation relating to the risks associated with interest-rate sensitive instruments, equity ownership, changes in the value of foreign currency and changes in the prices of commodity products. CME’s customer base includes professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, supranational entities and governments.

FUNDAMENTAL: They don’t get too much better than CME with consistent growth each and every quarter of around 30 – 50% quarter over quarter.  That goes for sales and earnings.

TECHNICAL: Cleared a long base and vaulted to a new all time high on Oct 9th and remains in that range but something to be careful of is fact that it has formed a late stage base, so is more vulnerable to failure.  Perhaps the CBOT purchase will give it the strenght for another leg up.

SELFINVESTORS RATING: With a total score of 51/60 (29/30 for fundamentals, 22/30 for technical), CME is considered a top breakout stock

Last week the stars were aligned for another rise in the market.  Strong earnings reports indicating a strong consumer, manufacturing remains robust all while inflation remains in check.  Add some positive comments out of the Fed and you have a recipe for more market green.  However, last week was just a little taste…an appetizer before the meat of earnings and economic reports flooding the market beginning this week.  In addition the market faces much stronger resistance areas than the areas I discussed in the last report – the headline number Dow 12,000 and the April highs of the Nasdaq around 2375.  Perhaps this is the week that the market digests recent gains?  The market is still showing few signs of slowing down, but with the Dow butting up against 12,000 and the Nasdaq inching closer to its April highs, CPI and PPI data in addition to high profile earnings out of Apple and Google maybe.. just maybe this is the week that consolidation begins.  I would certainly continue to play cautiously up at these levels and look at significant selling in the market to add to existing positions or initiate new ones.

::: Model Portfolio Update :::

The Model Portfolio regained its footing this week but still lagged the overall market, rising just 1.1% with gains tempered by a couple short plays I continue to hold.  It’s frustrating not to fully capitalize on the move in the market the past two weeks, but I have no regrets and know that the time will come to get significantly aggressive on the long side and begin leveraging with margin.  That time is not now. 

During the past week, I initiated 2 new short positions and 4 new long positions.  One long position in GOL Intelligente Airlines (GOL) was sold for a small 2% loss following a high volume drop below support of the 50 day moving average.  Considering the stock still has support at its 200 day moving average around 32, I considered holding the position.  However, given the huge selling volume and earnings coming up, I opted to unload this lagging position.  No other positions were closed out during the week.  With last weeks rise in the portfolio, the YTD return stands at 17.6% with current allocation of 64% long, 28% short and 8% cash.

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::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Building Materials Wholesale             8.29%
2. Copper                                               8.25%
3. Industrial Metals & Minerals                7.30%
4. Metal Fabrication                                5.55%
5. Sporting Goods Stores                      5.45%
6. Gold                                                    5.40%
7. Semiconductor – Specialized              5.15%
8. General Contractors                           5.00%
9. Steel & Iron                                         5.00%
10. Technical & System Software          4.95%

– Top 10 Worst Performing Industries For the Week –

1. Catalog & Mail Order Houses              -7.75%
2. Long Distance Carriers                       -6.30%
3. Health Care Plans                                -3.20%
4. Specialized Health Services                -3.15%
5. Investment Brokerage                         -2.45%
6. REIT – Hotel/Motel                                 -2.15%
7. Personal Products                                -2.10%
8. Regional Airlines                                   -1.80%
9. Processed & Packaged Goods             -1.65%
10. Confectioners                                     -1.35%

– Top 5 Best Performing ETFs For the Week –
 
1. Turkish Invest Fund (TKF)                    12.50%
2. Ishares South Africa (EZA)                   7.45%
3. PowerShares China (PGJ)                     6.70%
4. PowerShares Clean Energy (PBW)       6.25%
5. Templeton Russia & E. Europe (TRF)     5.50%

– Worst 5 Performing ETF’s –

1. Korean Fund (KF)                                -2.25%
2. Ishares South Korea (EWY)                -1.85%
3. Lehman 20 Yr Treasury (TLT)             -1.25%
4. HLDRS Internet (HHH)                            -.90%
5. Japan Equity (JEQ)                                 -.75%

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

There are lots of IPO’s coming to market this week, but only one is worth watching on Friday.

1. ExlService Holdings (EXLS): Provider of offshore business process outsourcing services for the banking, financial services, and insurance sectors.   ExlService is a small but profitable and growing company.  Set to start trading Friday.

::: Upcoming Economic Reports (10/16/06- 10/20/06) :::

Monday:        NY Empire Manufacturing Index
Tuesday:       Industrial Production, PPI, Retail Sales
Wednesday:  Housing Starts, CPI, Real Earnings, Petroleum Status, Mortgage Apps
Thursday:      Money Supply, Leading Indicators, Philly Fed Survey, Jobless Claims
Friday:           None

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

Monday: None

Tuesday: CBOT Holdings (BOT)

Wednesday: Alliance Data Systems (ADS), Apple Computer (AAPL), Etrade (ET), Raymond James Financial (RJF), SEI Investments (SEIC), CyberSource (CYBS), General Dynamics (GD)

Thursday: Google (GOOG), TradeStation (TRAD)

Friday: none