::: 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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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.  Existing members with a free membership may take advantage of the no risk trial right here .  If you’re new to SelfInvestors check out all the membership options here

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

::: 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! :::

Want to take your membership to the next level?  Premium members who have been following along with buy and sell alerts in the Model Portfolio most likely had a great year in ’06 as the portfolio beat the pants off the market with a 27.6% return… it continues to do the same in ’07 and has now more than doubled since its inception a little over 3 years ago.

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::: 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

::: Today’s Market Action :::

I mentioned in the weekend report that I would get increasingly bullish if the Nasdaq broke out of that consolidation with volume.  It did that today.  As a result, I got a bit more bullish and added two more small Quick Strike Profit trades to the Model Portfolio, but the divergence of volume in the S&P and Dow was a concern.  In fact, volume continues to wane as these indices move higher.  Until, we get a big, convincing move up in those indices I’m not jumping in on the long side with both feet.  Tomorrow is a very important day with CPI data before the market opens and the FOMC minutes late morning.  Let’s see if the Nasdaq break can hold.

::: 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 20th 2007

Accumulation only in the Nasdaq today.

Nasdaq: UP .67% today with volume 7% ABOVE  average
Nasdaq ETF (QQQQ) UP .76%, volume 18% BELOW average
Dow: UP .15%, volume 6% BELOW the average
Dow ETF (DIA): UP .07%, volume 26% BELOW the average
S&P ETF (SPY): UP .21%, volume 9% BELOW the average
Russell Small Cap ETF (IWM): UP .9%, volume 67% 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 today, outperforming all the major indices.  In general, small to mid caps led the way up today which was also reflected in the performance of the Russell 2000.

Summary:

* Advancers led Decliners 301 to 136
* Advancers were up an average of 1.73% today, with volume 4% ABOVE average
* Decliners were down an average of 1.09% with volume 3% ABOVE average
* The total SI Leading Stocks Index was UP .85% 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 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): 
Materials, Aerospace/Defense, Water, Transports, Realty
                                              
* Current Lagging Sectors/Industries (over last 30 trading days): 
Oil & Oil Services

* Today’s Market Moving Industries/Sectors (UP):
Clean Energy, Retail, Consumer Services, Aerospace/Defense

* Today’s Market Moving Industries/Sectors (DOWN):
Gold & Gold Miners

::: 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 Morningstar (MORN), which broke out today to a new all time high.

ABOUT:  Morningstar, Inc. is a provider of independent investment research to investors worldwide. The Company divides its business operations into three segments: Individual, which focuses on products and services for individual investors; Advisor, which focuses on products and services for financial advisors; and Institutional, which focuses on products and services for institutional clients, including banks, brokerage firms, insurance companies, mutual fund companies, media outlets, and retirement plan providers and sponsors. Morningstar maintains a series of databases on eight types of investments used by investors. As of December 31, 2005, the Company provided data on more than 17,800 mutual fund share classes in the United States; 43,000 mutual funds and similar vehicles in international markets; 7,100 stocks; 2,600 hedge funds; 4,800 separate accounts; 50,200 variable annuity/life subaccounts; 200 exchange-traded funds; 600 closed-end funds, and 80 college savings plans.

FUNDAMENTALS:  Morningstar is a company that bled money for several years before finally becoming profitable in 2004.  Since that time, the company hasn’t looked back.  Earnings more than tripled in ’05 and will end up with another surge of 60 – 70% in 2006 once the company reports 4th quarter ’06 results on Thursday.  2007 earnings estimates call for an increase in the neighborhood of 35%.   One key characteristic that I look for in companies that could become the next home run are rising margins and ROE.  This is the case for Morningstar.  In addition, management must believe in the company because it has money on the line with 80% ownership.  All the fundamental characteristics are there for Morningstar to be big winner.

TECHNICAL:  The stock broke out from a base today to a new all time high today.  Although relative strength lags a bit with a score of 62/100, a high volume move into record territory is extremely bullish.  Perhaps this move before earnings is forecasting a trouncing of estimates on Thursday morning.  We shall see.

SELFINVESTORS RATING: With a total score of 52/60 (28/30 for fundamentals, 24/30 for technical), Morningstar (MORN) is currently a top 5 SelfInvestors.com break out stock.

A view of the weekly chart of Morningstar shows a break to new all time high.

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 Morningstar (MORN).