Just when it appeared the market would begin a slide into significant deterioration, Bernanke saved the day on Wednesday with dovish comments, indicating inflation concerns continue to diminish and the economy remains strong.  It provided a catalyst for another surge that sent the bears back into hibernation for a bit longer.  However, I still wonder what can propel this market further.  The general skepticism of many traders that this rally can continue provides a nice "wall of worry" for this market to climb, but the market can only rise on Bernanke’s optimistic outlook for so long.  Until the Nasdaq can bust out of its base with volume, I’m still skeptical and maintain a cautious approach up at these levels by carrying a significant short and cash position.  Tuesday is the most important day of the week with the CPI data on tap and the potentially market moving FOMC minutes.  The market is closed tomorrow.

::: Model Portfolio Update :::

It was not a good week for the Model Portfolio.  The portfolio slipped a bit (- 0.4%), despite a week in which the overall market rose bringing the YTD performance to 6.7% (still well ahead of the S&P500).  Much of the loss for the week took place in Watts Technologies (WTS) which sold off after missing earnings badly.  I rarely hold a stock through earnings but considered WTS a core holding and a good play for the water industry.  Hoding through earnings proved to be a big mistake as the stock missed earnings by a wide margin.  Considering the poor results, I decided to abandon my long term approach with WTS and dump it for an 8% loss to use the cash elsewhere, possibly in the Water Powershares ETF (PHO) which is seeing some big money coming into it lately.  I continue to play the Quick Strike Profit trades, which continue to bring in some nice profits.  Goamerica (GOAM) was dumped for a loss of 7%, but the 15% gain in Nexceum Brands (NEXC) more than made up for it.  Since the portfolio was very much leaning towards a scenario in which the market would see further deterioration, I needed to add some more long exposure and added 3 core long plays and another QSP trade.  The QSP trade was a play on the hot solar industry.  Current allocation of the portfolio is 55% long, 25% short and 20% cash.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Toy & Hobby Stores: 8.20%
2. Farm & Construction Machinery: 7.05%
3. Medical Practitioners: 7.00%
4. Aluminum: 6.70%
5. Railroads: 5.20%
6. Steel & Iron: 5.20%
7. Internet Service Providers:  5.05%
8. Copper: 5.00%
9. Regional Airlines: 4.85%
10. Dairy Products: 4.80%

– Top 10 Worst Performing Industries For the Week –

1. Diagnostic Substances: -3.20%
2. Heavy Construction: -1.95%
3. General Entertainment: -1.85%
4. Marketing Services: -1.75%
5. Oil & Gas Drilling & Exploration: -1.45%
6. Office Supplies: -1.40%
7. REIT – Residential: -1.30%
8. REIT – Diversified/Industrial: -1.25%
9. REIT – Healthcare Facilities: -1.15%
10. Personalized Services: -1.10%

– 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. India Fund (IFN)  -3.05%
2. US Oil Fund (USO) -2.85%
3. Ishares Commodities (GSG) -2.20%
4. HLDRS Oil Services (OIH) -2.00%
5. Templeton Russia & E. Europe (TRF) -1.85%

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

No IPO’s Worth Watching for This Week

::: Upcoming Economic Reports (2/12/07- 2/16/07) :::

Monday:         None – Market Closed
Tuesday:       CPI, Leading Indicators, Crude Inventories, FOMC Minutes
Wednesday:  Initial Claims
Thursday:      None
Friday:           None

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

Monday: Silver Wheaton (SLW)

Tuesday: Ventas (VTR), Vasco Data Security (VDSI), Ituran Location and Control (ITRN), Crocs (CROX), Wal Mart (WMT)

Wednesday: Abercrombie and Fitch (ANF)

Thursday: Morningstar (MORN)

Friday: None

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

– SelfInvestors Blog –

1. Part II: Profiting From the Advanced Energy Initiative – A Look At Clean Coal, Nuclear Power Utilities & Uranium Miners
http://investing.typepad.com/tradingstocks/2007/02/part_ii_profiti.html

2. Festival of Stocks
http://investing.typepad.com/tradingstocks/2007/02/festival_of_sto.html

3. Today’s Earnings Movers – Intervac (IVAC), American Continental Lines (ACLI)http://investing.typepad.com/tradingstocks/2007/02/todays_earnings_3.html

4. Today’s Earnings Movers – Icon (ICLR), theKnot.com (KNOT)http://investing.typepad.com/tradingstocks/2007/02/todays_earnings_5.html

5. Trading Spot Price of Uranium
http://investing.typepad.com/tradingstocks/2007/02/a_diversified_w.html

6. After Market Report – A Weak Bounce Ahead of Bernanke; Stock of Day Icon (ICLR)http://investing.typepad.com/tradingstocks/2007/02/after_market_re_1.html

7. Today’s Earnings Movers – Break Out In Titanium Metals (TIE), Ansoft (ANSS) Adds to Yesterday’s Break Out http://investing.typepad.com/tradingstocks/2007/02/todays_earnings_6.html

8. Market Loves Bernanke, Broad Rally With Volume; Stocks of Day – Titanium Metals (TIE)http://investing.typepad.com/tradingstocks/2007/02/market_loves_be.html

9. Today’s Earnings Movers – Top Chines Plays Baidu.com (BIDU) and 9Limited (NCTY) Sell Off; Strayer Education (STRA), Navigaorts (NAVG) Break Out
http://investing.typepad.com/tradingstocks/2007/02/todays_earnings_7.html

10. Today’s Earnings Movers – Chipotle Mexican Grile Breaks Out
http://investing.typepad.com/tradingstocks/2007/02/todays_earnings_8.html

::: Today’s Market Action :::

Leave it to the calm and upbeat Bernanke to spoil the bears attempt to send this market into the much anticipated, all so elusive correction.  I’m not sure what the stats are on this but I’m sure that 80 – 90% of the time that Bernanke provides commentary on the economy, the market gets a boost.  Today, it was a big boost.  A broad market rally with volume a bit better than yesterday.  Oh and in case you missed the headlines on CNBC all day, the Dow is at another record high.  I’ve been leaning to the bearish side over the past couple and played the odds of the market taking out support very soon.  Once again, that isn’t happening so I’m forced to take a more neutral position by adding a couple long plays.  If the Nasdaq can break above 2509 with volume I’ll take it a step further – paint me bullish. 

::: 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 14th 2007

Volume wasn’t great in S&P and Dow but there was accumulation across all indices today.

Nasdaq: UP 1.16% today with volume 5% BELOW  average
Nasdaq ETF (QQQQ) UP 1.69%, volume 17% ABOVE average
Dow: UP .69%, volume 1% ABOVE the average
Dow ETF (DIA): UP .67%, volume 2% BELOW the average
S&P ETF (SPY): UP .66%, volume 4% ABOVE the average
Russell Small Cap ETF (IWM): UP .09%, volume 45% 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 didn’t beat out the Nasdaq in price performance but volume was very good.

Summary:

* Advancers led Decliners 296 to 126
* Advancers were up an average of 1.82% today, with volume 19% ABOVE average
* Decliners were down an average of 1.31% with volume 22% ABOVE average
* The total SI Leading Stocks Index was UP .87% today with volume 20% 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, Utilities
                                              
* Current Lagging Sectors/Industries (over last 30 trading days): 
Commodities, Oil

* Today’s Market Moving Industries/Sectors (UP):
Broad rally today – semis, transports, broadband, clean energy, technology and broker/dealers all up with volume today

* Today’s Market Moving Industries/Sectors (DOWN):
Oil, Commodities, Real Estate

::: 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 Titanium Metals (TIE), one of the highest rated stocks currently tracked by SelfInvestors.com

ABOUT:  Titanium Metals Corporation (TIMET) is a producer of titanium sponge, melted products and a variety of mill products for aerospace, industrial and other applications. For the commercial aerospace industry, the Company supplies titanium products to manufacturers of commercial airframes. Outside of aerospace markets, the Company manufactures a range of products for customers in the chemical process, oil and gas, consumer, sporting goods, automotive, power generation and armor/armament industries. Approximately 15% of the Company’s sales revenue, during the year ended December 31, 2005, was generated by sales into industrial and emerging markets. TIMET markets and sells its products in the United States, the United Kingdom, France and Italy.

FUNDAMENTALS:  TIE has consistently been one of the highest rated stocks that I’ve tracked over the past couple years and it remains so with a slow down nowhere in site..  This is a company that became profitable for the first time in ’04 and is coming off a year in ’06 in which proftis nearly tripled.  Rising profit margins and ROE indicate this is a company that continues to run on all cylinders.  TIE receives a near perfect fundamental score of 30/30.

TECHNICAL:  After running up more than 40 fold in 3 years, TIE needed to carve out a big base in order to shake out the weakest holders of the stock and begin a new run.  The time for a new run is now.  After reporting outstanding earnings yesterday, the stock broke out this morning and looks poised to tackle the all time high around 45.  Given the steep base, I’d be looking to take my profit up around those levels.

SELFINVESTORS RATING: With a total score of 54/60 (29/30 for fundamentals, 25/30 for technical), TIE is one of two highest rated break out stocks.

Full Disclosure/Disclaimer: The stock of the day is by no means a buy recommendation.  Please do your own research and make a personal decision based on your own tolerance for risk.  I currently do own a position in TIE.

::: Today’s Market Action :::

In a bit of reversal of fortunes, it was industries beaten down recently (oil, metals) that outperformed while the techs, led by an Intel earnings disappointment and another Cisco downgrade that provided the catalyst for some tech profit taking.  Actually it was a bit more than profit taking today as volume came in significantly higher than average and higher than yesterday.  While one day of distribution won’t derail a market rally, this most likely sets up at least a bit more selling in the coming days and the possibility of a retest of key support levels.  It won’t pay to panic at this point, but some caution should be exercised.

::: 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 Jan 17th 2007

Nasdaq: DOWN .74% today with volume 13% ABOVE average
Nasdaq ETF (QQQQ) DOWN .82%, volume 11% ABOVE average
Dow: DOWN .04%, volume 4% ABOVE the average
Dow ETF (DIA): UP .04%, volume 10% ABOVE the average
S&P ETF (SPY): UP .04%, volume 28% BELOW the average
Russell Small Cap ETF (IWM): DOWN .43%, volume 43% BELOW 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 didn’t not get dragged down with the Nasdaq today, an encouraging sign for the bulls.

Summary:

* Advancers led Decliners 213 to 211.
* Advancers were up an average of 1.21% today, with volume 6% ABOVE average
* Decliners were down an average of 1.43% with volume 1% BELOW average
* The total SI Leading Stocks Index was DOWN .1% today with volume 3% ABOVE  the average

::: Where’s the Money Flowing :::

Many investing websites provide leading industries based on price performance alone. However, without accompanying volume levels, this can sometimes be misleading.  The only way that I know of to gauge industry/sector strength WITH volume levels is through the analysis of ETF’s.  A couple years ago this was not possible, but as more traders/investors use ETF’s they become a much better tool for 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): 
Technology, Broker/Dealers, Retail, Heath Care Providers, Semis
                                              
* Current Lagging Sectors/Industries (over last 30 trading days): 
Natural Resources, Energy, Oil, Commodities

* Today’s Market Moving Industries/Sectors (UP):
Oil, Home Construction, Oil Services, Energy, Gold, Commodities

* Today’s Market Moving Industries/Sectors (DOWN):
Technology, Transports, Semis, Broadband, Retail

::: Stocks :::

Sorry, as much as I’d like to highlight a stock of the day today, there weren’t big moves in high quality stocks interesting enough to highlight here today.

What a difference a week makes.  With a light economic calendar last week and earnings not yet in full force, I didn’t expect the market to make any significant moves.  However, a big plunge in crude helped fuel a break out from a 6 week consolidation in the Nasdaq as big money moved from oil and other commodities into technology related areas.  The bulls clearly remain in charge with key support areas still intact to begin the new year, but with earnings season beginning to ramp up this week and inflation data on Wednesday and Thursday, expect some volatile moves ahead. 

::: Model Portfolio Update :::

I mentioned in a previous report I would remain relatively cautious this month until the market reveals more clues about where it’s headed.  Following last week’s breakout I may begin getting aggressive again and leveraging with margin on the long side.  Last weeks was a relatively quiet one with one sale of a quick strike profit trade in RMKR for a loss.  I was playing ultra conservatively and anticipated a breakdown of the stock following a move below support of the 50 day moving average.  Of course in hind sight it was a bad move as the stock vaulted higher the very next day and hasn’t looked back.  It continues to look very bullish.  On the long side I initiated to new long plays, both of which are highly ranked and were bouncing off the 50 day moving average.  The positions are up 12% and 7% respectively in just the past week.  After 2 trading weeks, the Self Investors Model Portfolio has picked up where it left off in ’06 with a nice gain of 5.5%, compared to just 1% for the S&P 500.  I’m currently 91% long and 9% cash.

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

Want to take your trading to the next level?  SelfInvestors.com Premium members who have been following along with buy and sell alerts in the Model Portfolio most likely had a great year as the portfolio beat the pants off the market in ’06 with a very good 27.6% return.  In addition to alerting you to the best opportunities on the long side, short opportunities are used to make money during a downturn.  That’s just one of many premium features….

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

Try it out for yourself for 30 days!  Sign in to your account here: http://www.selfinvestors.com/amember/member.php and take advantage of the no risk trial.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Resorts & Casinos: 8.05%
2. Aluminum: 7.75%
3. Medical Practitioners: 7.35%
4. Home Furnishing Stores: 7.00%
5. Investment Brokerage: 6.80%
6. Personal Computers: 6.80%
7. Major Airlines: 6.45%
8. Broadcasting – Radio: 5.90%
9. Air Services – Other: 5.75%
10. Apparel Stores: 5.70%

– Top 10 Worst Performing Industries For the Week –

1. Major Integrated Oil & GAs: -1.50%
2. Music & Video Stores: -1.25%
3. Manufactured Housing: -1.05%
4. Long Distance Carriers: -1.00%
5. Diversified Communications Services: -.80%
6. Photographic Equipment & Services: -.75%
7. Farm Products: -.70%
8. Oil & Gas Refining & Marketing: -.60%
9. Electric Utilities: -.55%
10. Mortgage Investment: -.45%

– Top 5 Best Performing ETFs For the Week –
 
1. Ishares Broker Dealers (IAI) 6.00%
2. Templeton Dragon Fund (TDF) 5.95%
3. Turkish Invest Fund  (TKF) 5.00%
4. Ishares Silver (SLV) 4.95%
5. Ishares Realty (ICF) 4.85%

– Worst 5 Performing ETF’s –

1. US Oil Fund (USO)  -6.70%
2. HLDRS Utilities (UTH) -3.85%
3. Japan Small Cap (JOF) -1.95%
4. Latin America Discovery Fund (LDF) -1.80%
5. Ishares Commodity (GSG) -1.60%

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

The IPO Calendar is typically quiet at the start of a new year – no IPO’s worth watching again for this week.

::: Upcoming Economic Reports (1/15/07- 1/19/07) :::

Monday:        Market Closed
Tuesday:       None
Wednesday:  PPI, Capacity Utilization, Industrial Production, Fed Beige Book, Crude Inventories
Thursday:      CPI, Building Permits, Housing Starts, Initial Job Claims, Philly Fed, Leading
                       Indicators
Friday:           Consumer Sentiment (prelim)

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

Tuesday: Ameritrade (AMTD), Intel (INTC), New Oriental Education (EDU)
Wednesday: Apple (AAPL), Lennar Corp (LEN), Southwest Airlines (LUV), Witpro (WIT)
Thursday: Meridian Biosciences (VIVO)
Friday: Citigroup (C), General Electric (GE), Motorola (MOT), Satyam Computer (SAY), Schlumberger (SLB)

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

– SelfInvestors Blog –

1. After Market Report: That’s a Nasdaq Breakout; Stock of Day – Genentech (DNA)
http://investing.typepad.com/tradingstocks/2007/01/after_market_re.html

2. Top Stock Picks and ETF Trends for 2007 (video is a humorous reprieve from the typically dry market material, but perhaps a bit crass – you’ve been warned 🙂
http://investing.typepad.com/tradingstocks/2007/01/ill_be_back_soo.html