Some capitulation today for sure ,but not massive by any means.  We opened surprisingly strong today as the market defied the downward momentum of the day before.  Some think that the Street.com’s Doug Kass article stating that the Fed will ease momentarily had something to do with it but I doubt it.  According to StreetInsider.com, Kass stated:

"I have friends who are very close to members of the Fed, and they say that the Fed will ease momentarily.

This morning, several of those friends gave me an indication of heightened concerns regarding the domestic economy — far more than what has been expressed by the President, the Secretary of the Treasury, and the Federal Reserve in various platforms over the last week.

And they say that the Fed will ease momentarily.

Enough said."

OK whatever.. more rumor.  Countrywide going bankrupt yesterday, the Fed with surprise cut today.  These kinds of rumors can lead to short term spikes either way but it’s just noise for now. 

The recession or no recession debate continues to rage on but there are certainly more and more coming out of the wood works calling for a recession.  Goldman Sachs economists predicted a recession this year with unemployment hitting 6.5% by 2009, prompting the Fed to slash rates to 2.5% by the 3rd quarter.  Bold predictions. .. and in the blue corner is Fed President Poole, trying to put a positive spin on things saying, "2008 looks to be a year of rising growth" and "economomic forecasters expect slow expansion in the first half of the year and a quickening pace in the second half."  He went on to say that the Fed can ease without risking inflation.  "Stable inflation expectations give the Federal Reserve a lot of room for maneuver."  Kind of makes you wonder what planet these guys are living on.  I can’t wait to see how Bernanke plans to save the day tommorrow with his speech titled ‘Financial Markets, the Economic Outlook and Monetary Policy’

Enough predictions, spin, manipulation and rumor.  Time for some technical talk.  I really would have liked to see some panic selling below those key support levels I discussed last night, followed by a flood of buying.  As I mentioned to my premium members today, holding short positions became too much of a risk after lunch.  The end of day buying near the August lows of the major indices flashed the exit sign on the short side, but this move doesn’t indicate it’s time to get aggressively long for the longer haul.  I personally put on a few swing trades on the long side to take advantage of an oversold bounce, but significant risk remains on the both sides of the market.  If you’re not a trader I STILL recommend staying out of this market for now.  Your body, mind and trading account will thank you.

The time will come to put on long plays a bit more aggressively, but it’s just a bit too early yet.

::: 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 January 9th 2008

Nasdaq: UP 1.39% today with volume 35% ABOVE average
Nasdaq ETF (QQQQ) UP 2.13%, volume 53% BELOW average
Dow: UP 1.16%, with volume 43% ABOVE the average
Dow ETF (DIA): UP .88%, with volume 62% ABOVE the average
S&P ETF (SPY): UP 1.05%,  with volume 43% ABOVE the average
Russell Small Cap ETF (IWM): UP 1.01%, with volume 51% 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 do particularly well today and lagged the general market.  Today’s rally was all about laggards recovering from extreme oversold conditions.

Summary:

* Advancers led Decliners 176 to 137
* Advancers were up an average of 2.27% today, with volume 26% ABOVE average
* Decliners were down an average of 2.07% with volume 56% above the average
* The total SI Leading Stocks Index was UP .37% today with volume 39% ABOVE 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 gauging 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/si/industry_tracking/

* Current Leading Sectors/Industries (over last 30 trading days):  
Agriculture, Gold Miners, Commodities, Gold, Pharma
                                          
* Current Lagging Sectors/Industries (over last 30 trading days): 
Broadband, Technology, Aerospace/Defense, Industrial, Semis

* Today’s Market Moving Industries/Sectors (UP):
Global Technology, Regional Banks, Biotech, Technology, Real Estate

* Today’s Market Moving Industries/Sectors (DOWN):
Clean Energy, Home Construction, Internet Infrastructure, US Oil, Commodities, Internet

::: 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.  There were very few leading stocks breaking out with big volume to new highs today, but one in particular stood out – Paraxel International (PRXL).  Despite a somewhat severe market corrrection over the past few months, PRXL just keeps chugging along to new all time highs with little attention.

ABOUT: 

PAREXEL International Corporation is a bio/pharmaceutical services company, providing a range of capability in clinical research, medical communications services, consulting, and informatics and technology products and services to the worldwide pharmaceutical, biotechnology, and medical device industries. Its product and service offerings include clinical trials management, data management, biostatistical analysis, medical communications services, clinical pharmacology, patient recruitment, regulatory and product development consulting, health policy and reimbursement, industry training and publishing, medical imaging services, interactive voice response systems, clinical trial management systems, Web-based portals, systems integration, patient diary applications and other drug development services. In September 2007, it completed the acquisition of Taiwan-based APEX International Clinical Research Co., Ltd., which was subsequently renamed as Parexel Apex International.

FUNDAMENTALS: 

I’m surprised that Paraxel (PRXL) hasn’t received more attention over the years.  This is a company that has posted substantial earnings growth in each of the past several years dating back to 2002, with the exception of 2005.  Excellent earnings growth is expected to continue for at least the next 2 years according to analysts.  Estimates call for a 28% earnings jump this year and 25% next year.  While net margins aren’t exceptional and not characteristic of a homerun stock at just 5%, they are above the industry average.  Return on equity is much better at around 15%.  Overall, this is a very good company fundamentally.

TECHNICAL:  

PRXL has been in a long, steady uptrend for over 2 years now and isn’t showing signs of slowing anytime soon.  Given the fact that it has been so strong in a such a weak market is a testament to its strength.  Having said that though, it’s a bit extended so is risky at these levels.  I would look to add shares on pull backs to near the 50 day moving average.

 

SELFINVESTORS RATING: With a total score of 49/60 (24/30 for fundamentals, 25/30 for technical), Parexel (PRXL) is a good SelfInvestors leading stocks and should be put on the radar.

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 Parexel (PRXL)

Apologies for not getting the weekly report out this Sunday.  With a major move in the works for me and scrambling to get caught up after a few weeks off, it’s going to take a few more days to get back into full swing.  My priorities will change a bit this year as well.  No more all nighters getting blog posts up, updating databases, researching, etc.  

First and foremost, my health and time with friends and family will come first.  I’ve made many sacrifices over the past four years to create this site and it’s now getting much closer to the point where I’m happy with it.  That’s not to say I won’t continue to work hard and present profitable ideas here, it’s just that at times posting here may be a bit on the the light side.  Helping fill out the blog in 2008 will be the insights of 3 great bloggers, two of which you may have read late last year – Robert Williams (oil industry reports) and Barry Brush (options extraordinaire).  This year, I think you’ll also enjoy reading articles from Lance  Chastain, a serial entrepreneur bursting with insights and knowledge on personal and business success.  It will be a great contrast to the trading talk.

What a week to start 08 though!  With today’s loss, it marks the worst start to the S&P ever.   Yikes.  The Nasdaq is already down 8% this year.  In my last market report I mentioned that the bulls and bears had drawn the lines in the sand, with the Dow and S&P carving out triangle formations and the Nasdaq holding above key support around 1550.  A break down below those levels in the Dow and S&P last Wednesday was warning signal number 1 and on Friday when the Nasdaq took out key support, that was warning signal number 2.  The lines were drawn out in the charts and the bears have won.  There isn’t any other way to say it.  Yes, this is officially a bear market.. for the most part.  More on that below.

Having said that we are reaching oversold conditions in the short term and there will be some great trading opportunities on the long side very soon.  It looked as if today we might begin a weak oversold bounce following yesterdays minor reversal off the lows.  However, rumor of a Countrywide Financial (CFC) bankruptcy filing later this week took the wind out of a mid day rally and just as the market began to recover, the AT&T CEO mentioned at a conference that the company faces softness from the consumer and that the company is disconnecting more home-phone and high-speed Internet customers for failing to pay their bills.  This isn’t earth shattering news but indicates the market was looking for an excuse to sell.  It was a dramatic reversal in the last 2 hours of trading today and volume was heavy indicating an exodus by the institutions.

The daily charts below show the breakdown out of the triangle formations in the Dow and S&P and the setup for a test of those August lows.  I’ll be looking for some kind of capitulation below those August lows as an entry point to get fairly aggressive on the long side for a few weeks.

 

.. and in the Nasdaq, it’s break after break of support over the past several days setting up a showdown at the August lows around 2400.  Again, looking for some panic selling around this area and resulting capitulation as a signal to get long.

Bear Market Emerges

While the Dow sits right on the bear/bull mendoza line, both the S&P and Nasdaq have crossed over to the grizzly side by taking out long term trend lines.  Taking a look at the monthly charts you see the break of the trends but with major support levels close by. 

Dow 12500, just 89 points aways is a critical support level.  Remember that it’s highly possible we dip below that level which could trigger some panic selling.  The important thing is how the market closes.  I wouldn’t mind seeing a big flush of sellers tomorrow.  Down another couple hundred more intraday, followed my some massive end of day buying.  That’s my signal to get back in with more aggression on the long side.

The break below of the trend line that has defined the bull market over the past nearly 5 years signals a bear market in my opinion.  While we’re oversold in the short term and sizable rally will provide more short opportunities.  New major resistance around 1450.

The Nasdaq has also signaled a bear market with a breach of the long term trend line.  Look for a drop to major support around 2400 as an opportunity to trade on the long side for a bit, but ultimately this is a bear market and short positions should play a major role in your portfolio this year.

 ::: Model Portfolio :::

** This section will now appear as a separate report to be published on Wednesdays.  I’ll have a special end of year 2007 review of the Model Portfolio up tomorrow night or Thursday morning.

Would you like to receive buy and sell alerts within minutes of each transaction of the Model Portfolio?  You can receive these along with ALL of the tracking tools and reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more highly profitable months here at SelfInvestors.com.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Gold: 9.55%
2. Drug Manufacturers – Major: 3.85%
3. Research Services: 2.30%
4. Beverages – Soft Drinks: 1.75%
5. Cigarettes: 1.65%
6. Health Care Plans: 1.50%
7. Farm Products:  1.45%
8. Specialized Health Products: 1.45%
9. Drugs Manufacturers – Other: 1.00%
10. Building Materials Wholesale: .95%

– Top 10 Worst Performing Industries For the Week –

1. Mortgage Investment: -19.15%
2. Residential Construction: -18.30%
3. Major Airlines: -16.25%
4. Surety & Title Insurance: -16.00%
5. Banks – SE: -15.25%
6. Semiconductors – Integrated Circuit: -14.50%
7. Personal Computers: -14.15%
8. Recreational Vehicles: -13.85%
9. Semiconductors – Broadline: -12.95%
10. Resorts & Casinos: -12.85%

– Top 5 Best Performing ETFs For the Week –
 
1. Market Vectors Gold Miners (GDX) 10.85%
2. Asa Limited Gold (ASA) 8.65%
3. Central Fund of Canada (CEF) 6.10%
4. Ishares Silver (SLV) 6.05%
5. US Natural Gas (UNG) 5.90%

– Worst 5 Performing ETF’s –

1. Ishares US Home Construction (ITB) -19.05%
2. SPDR Home Builders (XHB) -16.80%
3. Powershares Dynamic Semis (PSI)  -14.00%
4. Thai Fund (TTF)  -13.40%
5. Ishares Semis (IGW)  -12.75%

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

This section will now appear as a separate report on Mondays, however with the beginning of a new year and the market struggling there are no IPO’s expected to begin trading over the next few weeks.  It might not be until February until we get new IPO’s coming to market.

::: Upcoming Economic Reports (1/7/2008– 1/11/2008) :::

Monday:         None
Tuesday:       Pending Home Sales, Consumer Credit
Wednesday: None
Thursday:      Initial Claims, Wholesale Inventories, Crude Inventories
Friday:            Export/Import Prices, Trade Balance, Treasury Budget

::: Upcoming Notable Earnings Reports :::

Earnings season doesn’t begin ramping up until next week!

With the light holiday trading coming to a close we find ourselves in no man’s land but with the lines in the sand drawn.  I’m still in vacation mode and refreshing the batteries for 08 so will keep the analysis short tonight and move right into the charts. 

What you’ll see in both the Dow and S&P is channel trading over the past few weeks with price getting squeezed to a narrower point (which could eventually carve out a triangle formation).  With this formation, we have firm areas of resistance and support setting up with a breakout above or a breach below revealing much about this market.  I would guess that we’ll continue to trade fairly directionless for a couple more weeks until earnings start ramping up again. 

Note the Dow bounced off support of this trianlge formation on Friday so the odds are good for a bit of a push up this week.

You’ll see a similar formation in the S&P with price getting squeezed around 1480.  Eventually, the build in pressure must release and the it’s still up to the bulls to prove themselves.  The prevailing trend is still down, so odds are in favor of a break below out of this triangle.  Time will tell. 

In the Nasdaq, current support and resistance levels are better defined within a channel with the upper bound around 2725 (an area it’s had trouble clearing) and the lower bound of support around 2550 (an area it has bounced from on 2 occassions in November and again here in December.  The market probably won’t make any significant moves out of this channel until normal trading levels resume and the earnings season begins in the 3rd week of January.  Until then, I continue to tread lightly, not making large bets on either side.

::: Recommended Reading :::

This is a new section that will appear in the Weekly Report for some time but will probably be moved to separate post at some point.  Usually my responsibilities in running SelfInvestors.com prevents me from doing much reading during the trading week but if you do get a chance to read some good articles from other blogs or news outlets send them my way and I’ll post them here.  Send to support at selfinvestors.com

**

Marc Faber in an article at Daily Reckoning discusses the credit crisis and inflation.   He says, "Will rate cuts be of much help to the asset markets and the economy? I believe we are in a war between two major adversaries. On the one side we have the Fed (and other central banks) pumping liquidity into the system in a desperate attempt to support the asset markets and the economy. On the other side we have the private sector, which, as Hatzius explained, is being forced to curtail lending due to heavy losses in the credit market and to fight the Fed’s reflation efforts by widening credit spreads. Complicating matters is the fact that both adversaries have powerful allies."Will rate cuts be of much help to the asset markets and the economy? I believe we are in a war between two major adversaries. On the one side we have the Fed (and other central banks) pumping liquidity into the system in a desperate attempt to support the asset markets and the economy. On the other side we have the private sector, which, as Hatzius explained, is being forced to curtail lending due to heavy losses in the credit market and to fight the Fed’s reflation efforts by widening credit spreads. Complicating matters is the fact that both adversaries have powerful allies."

Is Starbucks a good barometer of the economy?

Pressure on revenues and cost increases contributed to the dismal performance of earnings in the third quarter of 2007. For example, Starbucks (SBUX) increased prices by an average of 9 cents a cup in July. However, customer visits to US stores fell 1% for the quarter ended September 30. Starbucks’ CFO noted that a "similar decline may occur in the fourth quarter although they will be positive for the full year". (This would seem to indicate that the economy slowed down considerably in the second half.) According to him, "unbeknownst to us, we saw economic headwinds that quite frankly came up probably stronger than I thought." Earlier, Starbucks’ CEO had remarked: "The consumer is being faced with rising costs in every sector of their lives, and so part of that is reflecting on us." An informed friend of ours suggested that declining traffic at Starbucks stores in the US is of particular concern, since Starbucks serves all income levels.

**

Bill Bonner of Daily Reckoning puts China in perspective. 

"Per-capita income in China is less than 1/10 of America’s and its per-capita greenhouse gas emission is less than 1/5 of ours. But if 1.3 billion Chinese were to consume at the level Americans do, we’d need several more Earths.

**

Jim Cramer has evolved but continues his flip flopping ways.

Cramer says, "trying to game short-term movements in stocks (is) almost impossible," Oh really?  I think many, including myself can prove him wrong on this point.

On the much publicized Fed rant:  "I’m very proud of that call," Cramer says, saying the Fed really had no idea of the severity of the crisis. Arguably, Cramer was proved right by the market turmoil that followed. "I subsequently heard from people at the Fed that it had an impact," he says.  The Fed listens to you?  In your dreams.

**

Tom Lydon of ETF Trends reviews his ETF predictions for 2007 and makes some new ones for 2008.

1. Global markets will no longer be in sync with the U.S. market, and ETFs are the way to take advantage of global growth.
2. Actively managed ETFs fail to generate excitement.
3. ETFs hit $1 trillion in assets.
4. More ETFs will appear on global exchanges.
5. Bigger players will enter the market.
6. Commodity ETFs will continue their expansion and gain even more popularity.
7. Fixed-income assets will grow.
8. U.S. investors will begin realizing that they can look abroad for their investments.
9. Individual investors will start asking their financial advisors why ETFs aren’t part of their portfolios.
10. An ETF of ETFs will finally hit the U.S. market.

**

Really there is inflation.. really there is. 

Even with gasoline prices soaring, milk still tops gas prices. The nationwide average for a gallon of whole milk is $3.80, according to the U.S. Department of Agriculture. That dwarfs the nationwide average of $2.99 for a gallon of unleaded, according to AAA.

"A lot of basic foodstuffs seem to be going up and dairy products are going through the roof," said Norris of Oakworth Capital.

It’s not just milk-drinking kids – coffee drinkers are taking a hit from higher dairy prices as well. Back in August, Starbucks Corp. (SBUX, Fortune 500) chief executive Jim Donald blamed "rising expenses, particularly higher dairy costs" for a 9-cent rise in the price of coffee drinks. For the first time in three years, Starbucks reported a 1 percent drop in customer visits to their stores, even as the value per transaction increased 5 percent.

**

Hugo Chavez is proving yet again that socialism doesn’t work.

The strength of the Venezuelan economy has long been a key factor in the popularity of President Hugo Chávez. With oil prices surging and government coffers bulging, Chávez has been able to offer generous social programs and price controls to keep basics affordable for all. But now the first cracks in the economic boom are starting to show. Inflation is surging, shortages of certain products are spreading, and the value of the bolivar, the local currency, is sliding, at least on the black market.

**

Did Bear Stearns (BSC) provide the spark that kicked off the credit crisis?

It’s too soon to tell whether authorities will find any wrongdoing. But a BusinessWeek analysis of confidential hedge fund reports and interviews with lawyers, investors, and securities experts reveals just how pivotal a role Cioffi’s funds played in the mortgage market’s dramatic rise, dizzying peak, and disastrous fall.

**

Ah, when to sell your stock?  That’s the million dollar question and the most difficult part of trading.  I would argue that it’s more art than science.  Chris Perruna provides key points from a book by Justin Mamis called appropriately "When To Sell"

A few examples include: 

1. Rule One of the professional trader is: When a stock doesn’t do what you expect it to do, sell it.
2. Stocks are bought not in fear but in hope. They are typically sold out of fear.

**

Will joint ventures bury the homebuilders?  Lennar (LEN) has the most exposure here.

**

Zach provides some excellent analysis of Wuxi Pharma Tech (WX) and Interactive Brokers (IBKR)

 ::: Self Investors Model Portfolio :::

** This section will now appear as a separate report to be published on Wednesdays.

Would you like to receive buy and sell alerts within minutes of each transaction of the Model Portfolio?  You can receive these along with ALL of the tracking tools and reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more highly profitable months here at SelfInvestors.com.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Silver: 12.05%
2. Gold: 9.70%
3. Computer Peripherals: 7.50%
4. Nonmetallic Mineral Mining: 5.65%
5. Oil & Gas Refining & Marketing: 5.45%
6. Oil & Gas Drilling & Exploratoin: 5.20%
7. Telecom Services – Domestic:  5.10%
8. Agricultural Chemicals: 5.00%
9. Oil & Gas Equipment & Services: 4.80%
10. Packaging & Containers: 4.65%

– Top 10 Worst Performing Industries For the Week –

1. Semiconductor – Memory Chips: -6.30%
2. REIT – Hotel/Motel: -5.50%
3. Electronic Stores: -4.30%
4. Water Utilities: -4.05%
5. REIT – Office: -3.95%
6. Toy & Hobby Stores: -3.90%
7. Broadcasting – Radio: -3.50%
8. Savings & Loans: -3.45%
9. Recreational Goods: -3.40%
10. Sporting Goods: -3.35%

– Top 5 Best Performing ETFs For the Week –
 
1. ASA Gold (ASA) 13.30%
2. iPath India (INP) 13.25%
3. Morgan Stanley India (IIF) 10.60%
4. Latin America Discovery (LDF) 10.20%
5. Market Vectors Gold Miners (GDX) 8.75%

– Worst 5 Performing ETF’s –

1. Mexico Fund (MXF)  -12.05%
2. Japan Small Cap (JOF) -7.85%
3. Chile Fund (CH)  -3.00%
4. Ishares Homebuilders (ITB) -2.75%
5. Market Vectors Nuclear Energy (NLR)  -2.30%

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

This section will now appear as a separate report on Mondays. 
Note: there are no IPO’s scheduled for the next few weeks, so you won’t see IPO posts on Mondays for awhile

::: Upcoming Economic Reports (12/31/07 – 1/4/08) :::

Monday:         None
Tuesday:       Holiday
Wednesday: FOMC Minutes, ISM Index, Construction Spending
Thursday:      Auto/Truck Sales, Initial Claims, Factory Orders
Friday:            Nonfarm Payrolls, Unemployment Rate, Hourly Earnings, ISM Services

::: Upcoming Notable Earnings Reports :::

None

::: In Case You Missed It – SelfInvestors Blog Entries of the Past Week :::

1. Solar Stocks Still Energized – Solarfun (SOLF) Pennant Breakout

 

In my last weekly report I urged you to Not Be Greedy and take the gift as the indices pushed higher into resistance levels with little conviction on expectations of another Fed rate cut.  Sure, a 50bp cut may have propped up the market for a bit longer, but the bulk of the rate cute hopes were priced in already.  That was your cue to take some profit and think about adding some short exposure.

As it turned out, the Fed didn’t surprise anyone by hitting the homerun with a 50bp cut (maybe due to the much hotter than expected inflation readings on Thursday and Friday), but had another trick up its sleeve, which proved to temporarily save the day and inject more liquidity, but more importantly a bit more confidence that the Fed will do anything to save the mortgage industry.  However, confidence doesn’t last long and more liquidity doesn’t always work, so this market still finds itself mired in a state of uncertainty both fundamentally and technically.  I’m not an economist and prefer not to spend precious hours debating inflation, recession or if the Fed is doing the right thing.  Those are all LAGGING indicators anyway.  Remember, LOOOOONNNGGGGG before those calling for a recession are proven right, the stock market will have already tanked and WE will have already bagged big profits on the short side and looking to get long again.

With that said, I turn to the ONLY leading indicators available.  The charts.  What are they telling us?  Generally, they tell us what the big fellas are doing.  The Banks, the Pension Funds, the Mutual Funds and increasingly so, the Hedge Funds.  Actions speak louder than words and the big fellas reveal their actions in the price and volume movements.

Unfortunately, there are times when the charts indicate more uncertainty.  Just a few days ago, there was much more certainty that the market would drop.  It was oversold and buy volume was diminishing as overhead resistance loomed.  Now that we have pulled back some, I’ve become a bit more neutral but still giving the bears the upper hand.  The onus is still on the bulls now.

In the Nasdaq below we see that the first, steeper, downward trend was cleared and we are now pulling back to what is now a new support levels (around 2600).  Despite the distribution (institutional selling) on the Fed rate cut day, the selling has actually been fairly orderly.  Notice that there wasn’t much selling intensity on Friday despite the big price move down on those higher inflation numbers.  I would have expected to volume to be more severe.  It was not, so for bulls that’s encouraging.  More orderly selling, could very well set us up for another run at key resistance levels but like I said I’m not making large bets on that just yet.  I continue to sit on a sizable cash position and hedge with short positions.

The Dow also cleared a downtrend, but pulled back below that level late in the week, so now faces stiff resistance of two downward trend lines (in black) and the 50 day moving average (blue).  Until the Dow can clear those resistance levels (above about 13700) some big volume behind it, I will not get aggressive on the long side and continue to hedge with short positions.

The financial heavy S&P of course remains the weakest of the indices and just barely nudged above its downward trend line before failing and taking out support of both moving averages.  At this point, I would certainly put the odds of testing those November lows higher than the S&P breaking out above the downward trend with heavy volume. 

While I won’t call this a bear market just yet, the bears continue to exert more control with each passing week.  Play accordingly, play cautiously.

 

 ::: Model Portfolio :::

** This section will now appear as a separate report to be published on Wednesdays.

Would you like to receive buy and sell alerts within minutes of each transaction of the Model Portfolio?  You can receive these along with ALL of the tracking tools and reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more highly profitable months here at SelfInvestors.com.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Home Health Care: 3.90%
2. Multi Media & Graphic Software: 3.65
3. Networking & Comm Devices: 2.40%
4. Semiconductor Specialized: 1.75%
5. Cleaning Products: .75%
6. Oil & Gas Drilling & Exploratoin: .35%
7. Metal Fabrication:  -.20%
8. Chemicals – Major Diversified: -.20%
9. Building Materials Wholesale: -.25%
10. Publishing – Periodicals: -.40%

– Top 10 Worst Performing Industries For the Week –

1. Major Airlines: -12.00%
2. Silver: -11.95%
3. Banks – SE: -11.60%
4. Lodging: -11.00%
5. Auto Parts Stores: -10.85%
6. Home Furnishing Stores: -10.50%
7. Toy & Hobby Stores: -10.50%
8. Surety & Title Insurance: -10.00%
9. REIT – Hotel/Motel: -9.90%
10. REIT – Residential: -9.80%

– Top 5 Best Performing ETFs For the Week –
 
1. Templeton Russia and E. Europe (TRF) 8.40%
2. US Oil (USO) 4.10%
3. Powershares Clean Energy (PBW) 3.35%
4. Ishares Commodities (GSG) 3.15%
5. Morgan Stanley E. Europe (RNE) 2.30%

– Worst 5 Performing ETF’s –

1. Herzfeld Caribbean Basin (CUBA)  -16.70%
2. Ishares China (FXI) -9.45%
3. Templeton Dragon Fund (TDF)  -9.20%
4. Ishares Taiwan (EWT)  -8.80%
5. Korea Fund (KF)  -8.75%

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

This section will now appear as a separate report on Mondays.

::: Upcoming Economic Reports (12/17/07 – 12/21/07) :::

Monday:         None
Tuesday:       Housing Starts, Building Permits
Wednesday: Crude Inventories
Thursday:      GDP Final, Chain Deflator Final, Initial Claims, Leading Indicators, Philly Fed
Friday:            Personal Income/Spending, Core PCE Inflation, Mich Sentiment

::: Upcoming Notable Earnings Reports :::

Tuesday: Goldman Sachs (GS)
Wednesday: Oracle (ORCL), Heico (HEI)
Thursday: Research in Motion (RIMM)

::: In Case You Missed It – SelfInvestors Blog Entries of the Past Week :::

1. Offshore Crude Oil Exploration & Production Perspective

2. Best IPO’s Trading This Week – Xinyuan Real Estate (XIN), VanceInfo (VIT) & More

3. A Classic "Sell the News" Result to Fed Rate Cut; Stock of Day – Synchronoss Technologies (SNCR)

4.  Barry on Navigating the Emotions of Stock Options Trading

5.  Stock Market Model Portfolio Review 12.12.07

6.  Preventing Online Identity Theft With Insurance From LifeLock

Today’s somewhat dramatic sell off should not have been too much of a surprise (ok I suppose the small chance of a 50 bp would have produced a different result) so I hope EVERYONE profited accordingly.  The market sells off with heavy volume, rises to overbought conditions (more than I expected) with diminishing buy volume as the market prices in the 25 bp cut and sells off on the news and sells BIG.  In a divergence from most of the action of 2007, the market actually moved in the direction it was forecasting for once.  It does feel good to be positioned correctly and profit in a down day like this doesn’t it?

So now what?  Well .. we wait.  Remember that the first reaction to a Fed announcement is often times a false move, so it’s going to take a day or two for the Fed rate cut dust to settle and get a true sense of the technical picture. 

::: 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 December 11th 2007

Nasdaq: DOWN 2.45% today with volume 1% ABOVE average
Nasdaq ETF (QQQQ) DOWN 2.32%, volume 3% BELOW average
Dow: DOWN 2.14%, with volume 14% ABOVE the average
Dow ETF (DIA): DOWN 2.18%, with volume 32% ABOVE the average
S&P ETF (SPY): DOWN 2.74%,  with volume 23% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 3.51%, with volume 37% 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 harder than the major indices today but not as hard as the small caps that make up the Russell 2000.  If there is a bright spot today, it’s that volume wasn’t overwhelming on the sell side.
Summary:

* Decliners led Advancers 278 to 30
* Advancers were up an average of 1.56% today, with volume 62% ABOVE average
* Decliners were down an average of 3.51% with volume at the average
* The total SI Leading Stocks Index was DOWN 3.02% today with volume 6% ABOVE 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 gauging 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/si/industry_tracking/

* Current Leading Sectors/Industries (over last 30 trading days):  
Dynamic Utilities, Pharma, Commodities, Energy, Basic Materials, Agriculture
                                          
* Current Lagging Sectors/Industries (over last 30 trading days): 
Networking, Retail, Semis, Nuclear Energy, Telecom

* Today’s Market Moving Industries/Sectors (UP):
Bonds & Telecom

* Today’s Market Moving Industries/Sectors (DOWN):
Home Construction, Realty, Financials

::: 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 a day where few leading stocks rose with volume, Synchronoss Technologies (SNCR) surged above its 50 day moving average with volume and is today’s Stock of the Day.

ABOUT: 

Synchronoss Technologies, Inc. (Synchronoss) is a provider of on-demand, multi-channel transaction management solutions to communications service providers (CSPs). The Company has designed its solution to be flexible across communication services and channels (such as e-commerce, CSP stores and other retail outlets), allowing it to meet the changing and converging services offered by CSPs. Synchronoss targets complex and high-growth markets, including wireless, high-speed access (such as cable, digital subscriber line (DSL) and Wi-Max), voice over Internet protocol (VoIP), video and also target CSPG’s bundling of these services (double, triple and quadruple plays) and their intersection (video over wireless, Internet protocol television (IPTV), content activation). The Company’s ActivationNow platform automates, synchronizes and simplifies electronic order management, activation and provisioning of these services.

FUNDAMENTALS: 

Synchronoss (SNCR) is a company that grew rapidly at the beginning of the 21st century but didn’t turn it’s first profitable year until 2005 when it earned .31/share.  The company hit a brief rough patch in the middle of ’06 when it posted 2 consecutive quarters of negative growth.  However, over the past year, the company has begun firing on all cylinders and has posted accelerating earnings and sales growth in each of the past 4 quarters.  That kind of growth has led to ’07 estimates of more than a doubling of profits over ’06.  With net margins around 20%, ROE around 20% and management ownership hovering around 35%, SNCR has ALL of the components of a Self Investors leading company.

TECHNICAL:  

I typically feature leading stocks that are near a breakout or have already broken out of a sound basing pattern, but SNCR is a bit early in the formation process.  The stock spent most of October and November digesting gains after a long runup in which the stock soared more than 500% in just over a year.  A remarkable run.  This is the first significant base for the stock since going public in the summer of 2006, so there is quite a bit of room left to run.  Currently, it’s carving out a cup base with the bottom of the base finding support right at the 200 day moving average.  Sell volume has begun to dry up and buyers are beginning to exert some control again.  Today, it was up more than 10% at one point before it sold off after the Fed rate cut, leading to a high volume reversal on the daily chart.  This kind of action typically indicates the stock will need to at the very least spend some time sideways and at worst retest the lows of the base.  Either way, you want to see the stock carve out a nice looking handle formation with quiet volume, then result in a big breakout above today’s high (42.58).  It’s probably at least a week or two away from attempting a breakout, but SNCR is without a doubt one leading stock you’ll want to put at the top of your watch list.

SELFINVESTORS RATING: With a total score of 51/60 (27/30 for fundamentals, 24/30 for technical), Synchronoss (SNCR) is a highly rated Self Investors leading 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 Synchronoss Technologies (SNCR)

I’m gonna keep this short and sweet.  Don’t be greedy, it’s just that easy.  The market sustained significant technical damage during the latter half of October and the first few weeks of November.  Consider the 7% retracement of that sell off over just the past 2 weeks a gift, offering a 2nd chance to lighten the load on the long side.  Bull markets die hard and offer multiple chances to get out with big profits in the bag.  I’m not saying this is a bear market just yet, but the roles have been reversed and the onus is now on the bulls to prove themselves.  Until then, I’m treating this is as a bear market in the making and the action over the past couple weeks as just a tradeable rally, nothing more.  Buy volume is waning, key resistance levels loom and the bulls are pinning their hopes on another Fed rate cut to save the day.  Perhaps the Fed cuts by 50 basis points, Jim Cramer emphatically declares  Dow 14,500 by the end of the year and we rally several hundred points.  I would have no problem missing that move knowing that I’ve already recovered all losses from the Oct/Nov sell off and if I don’t make another cent in December, had a  great year in a difficult market.  At this point, my portfolio is neutral with a sizable cash position but am watching closely to move more cash to the short side.

The Dow has cleared some very important resistance of the short downward trend and the 50 day moving average but faces another significant obstacle at resistance around 13700.  Notice the declining buy volume as traders await the Fed decision Tuesday.  If the Dow can clear 137000 with big volume I might be willing to get in the bullish camp a bit, but until then there is reason for skepticism.

The S&P has just edged up above that 50 day moving average but is right at resistance of the downward trend and has little momentum at its back.  This time around, it may take a heck of a lot more than a Fed rate cut to get above resistance with any oomph.

Like the Dow, the Nasdaq has cleared a downward trend but still faces stiff resistance around 2725.  Holding above this downward trend, then surging above 2725 with volume would be big for the bulls and could signal another lengthy rally.

 ::: Model Portfolio :::

** This section will now appear as a separate report to be published on Wednesdays.

Would you like to receive buy and sell alerts within minutes of each transaction of the Model Portfolio?  You can receive these along with ALL of the tracking tools and reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more highly profitable months here at SelfInvestors.com.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Residential Construction: 14.40%
2. Auto Parts Stores: 10.70
3. Trucking: 8.50%
4. Heavy Construction: 8.00%
5. Copper: 7.60%
6. Electronic Stores: 7.50%
7. Trucks & Other Vehicles:  7.35%
8. Technical Services: 7.10%
9. Agricultural Chemicals: 6.90%
10. Recreational Vehicles: 6.70%

– Top 10 Worst Performing Industries For the Week –

1. Business Equipment: -8.90%
2. Publishing – Books: -2.80%
3. Credit Services: -2.30%
4. CATV Systems: -2.20%
5. Textile Manufacturing: -1.90%
6. Biotechnology: -1.80%
7. Textile – Apparel Clothing: -1.40%
8. Specialty Eateries: -1.15%
9. Rental & Leasing Services: -1.05%
10. Marketing Services: -1.00%

– Top 5 Best Performing ETFs For the Week –
 
1. Ishares Home Construction (ITB) 10.80%
2. iPath India (INP) 9.30
3. Turkish Invest Fund (TKF) 9.25%
4. Morgan Stanley India (IIF) 9.15%
5. Greater China Fund (GCH) 9.15%

– Worst 5 Performing ETF’s –

1. HLDRS Biotech (BBH) -4.50%
2. Ishares Lehman 20+ Treasury (TLT) -2.80%
3. US Natural Gas (UNG)  -2.60%
4. ING Global Equity Dividend (IGD) -2.10%
5. Ishares Lehman 7-10 Yr Treasury (IEF)  -1.40%

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

This section will now appear as a separate report on Mondays.

::: Upcoming Economic Reports (12/3/07 – 12/7/07) :::

Monday:         Pending Home Sales
Tuesday:       Fed Rate Decision, Wholesale Inventories
Wednesday: Export/Import Prices, Trade Balance, Treasury Budget, Crude Inventories
Thursday:      Retail Sales, PPI, Initial Claims, Business Inventories
Friday:            CPI, Industrial Production, Capacity Utilization

::: Upcoming Notable Earnings Reports :::

None this week.

::: In Case You Missed It – SelfInvestors Blog Entries of the Past Week :::

1. Sucker Rally or Climbing to the Peak of the Wall of Worry; Hot IPO – WSP Holdings (WH)

2. Indices Approach Key Resistance As Buy Volume Wanes

3. Home Builders Close to Bottom; Top Plays NVR and Toll Bros (TOL)

After two days of very orderly selling with light selling volume the bull looked ready to charge again with ferocity.  The set up was there and the bull charged but it was a half hearted, tired attempt at resistance levels of the major indices.  How could I make a statement like that on a day the Dow rose nearly 200 points with volume higher than the day before (technically accumulation)?  Volume continues to wane as we get closer to key resistance levels.  I want to see massive buying before I’m convinced the market has hit a longer term bottom rather than a short term pause point in a bear market.  I’m not there yet.

The market continues to focus on the positive news as it brushed aside the Fannie Mae dividend cut and cheered the ADP employment report as well as increased productivity and factory orders.  The market is also pricing in some kind of a Fed cut and imminent news of some government meddling into the subprime mess.  Fortunately the meddling won’t be sweeping according to the New York Times:

"The agreement, to be formally announced Thursday by President Bush, is expected to contain numerous limitations that would exclude many — if not most — subprime borrowers, according to industry executives who have seen it. It would exclude those who are delinquent on their payments — about 22 percent of all subprime borrowers, according to First American LoanPerformance, an industry research firm.

The plan is also expected to exclude any borrower whose introductory rate expires before Jan. 1. About $57 billion in subprime loans are scheduled to be reset at higher rates in the final three months of this year, according to estimates by First American LoanPerformance."

What happens when the Fed finally concedes it can’t continue cutting rates at this pace?  Then what are we left with?  As a technical trader I try not to focus on those things but rather focus on what’s in front of me.  What buyers and sellers are telling me.  Today’s move certainly sets us up for further strength into the open tomorrow but lets remember that the indices have just a bit of breathing room left before hitting very strong resistance levels and buy volume continues to subside.  With a glance at the action in leading stocks recently, I continue to see more volume on the sell side than on the buy side AND Pharma and Bonds are showing up as leading sectors right now.  Not exactly the stuff bull markets are made of is it?  If you’ve recovered much of your losses from the Oct/Nov sell off, you might want to consider locking in some of those gains soon.

Resistance in the Indices:
Nasdaq: 2725
S&P500: 1490 – 1500
Dow: 13500 – 13600
Russell 2000: 800

::: 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 December 5th 2007

Nasdaq: UP 1.78% today with volume right at the average
Nasdaq ETF (QQQQ) UP 1.78%, volume 18% BELOW average
Dow: UP 1.48%, with volume 1% BELOW the average
Dow ETF (DIA): UP 1.53%, with volume 23% BELOW the average
S&P ETF (SPY): UP 1.67%,  with volume 15% BELOW the average
Russell Small Cap ETF (IWM): UP 1.92%, with volume 20% 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 were about in line with what the major indices did today, but notice the volume behind rising stocks versus declining stocks.  This has been the trend of late and is a bit of a red flag.

Summary:

* Advancers led Decliners 247 to 60
* Advancers were up an average of 2.55% today, with volume 4% BELOW average
* Decliners were down an average of 1.64% with volume 57% ABOVE average
* The total SI Leading Stocks Index was UP 1.73% today with volume 8% ABOVE 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 gauging 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/si/industry_tracking/

* Current Leading Sectors/Industries (over last 30 trading days):  
Pharma, Bonds, Utilities
                                          
* Current Lagging Sectors/Industries (over last 30 trading days): 
Semis, Networking, Retail, Telecom

* Today’s Market Moving Industries/Sectors (UP):
REITs, Real Estate, Broadband, Networking, Energy

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

::: 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.  The leading stocks that moved significantly with volume today are too extended past a proper entry point to highlight for Stock of the Day, but you might want to take a look at the list of movers for trading ideas.  Stocks are listed in order of best Total Rank (fundamentals + technicals) 

Chicago Mercantile (CME)
Vimpel Communications (VIP)
Millicom International Cellular (MICC)
Airgas (ARG)
AsiaInfo Holdings (ASIA)
Vocus (VOCS)
Versant (VSNT)
AeroVironment (AVAV)
VistaPrint (VPRT)
Darling International (DAR)
Harsco (HSC)
Rick’s Cabaret (RICK)
General Dynamics (GD)

The much anticipated oversold bounce came in with a fury as oversold bounces often do and it didn’t take much to ignite the bulls as more of the mortgage mess became priced in.  On Tuesday, news of a 1.4B Wells Fargo write down and Freddie cutting its dividend in half and raising 6B in capital failed to send the markets into a tailspin on Wednesday morning, which set the market up for a bull stampede.    The bulls may have been reaching a bit, but they found a glimmer of hope in comments made from Fed Vice Chairman Kohn who reiterated concerns about economic uncertainty saying ""These uncertainties require flexible and pragmatic policy-making .. ". The sentiment was echoed by Bernanke the following day, further cementing hopes of another rate cut at the Fed December 11th meeting.

So is this just a short lived suckers rally or something more?  Is this the beginning of another major leg up as the market climbs a monumental wall of worry?  By Investor Business Daily standards, the action on Wednesday was enough to confirm a new rally but this should not be a green light to get overly aggressive on the long side.  What is critical in my mind is how we digest the gains of last week.  A light sell volume pull back would go a long way in lending validity to this market surge and provide opportunity to slowly add long exposure.  As I mentioned in my after market report on Wednesday, the magnitude of the rise last week into key resistance levels has allowed for a decent area to put on a few short positions as a hedge, but I think the next two weeks will be critical in determining where this market is headed over the longer haul.  The government bail out plan is expected to be revealed soon and the Fed has indicated they are remaining vigilant and not afraid to take further action. 

Don’t fight the Fed (or this administration) certainly continues to be at play in this market.  It’s just more of the same.  Subprime and economic uncertainty tempered by government intervention and what will probably be a flood of overseas investment in US assets should keep the markets gyrating for many more months to come.  It still pays to be cautious and sitting on a decent sized pile of cash at this point.

::: Model Portfolio :::

Despite a tumultuous Oct/Nov in the market, the SelfInvestors Model Portfolio is getting back close to highs of the year with a 3.1% rise for the week, bringing the year to date gain to 27%.   Oversold conditions and a resulting bounce got me into a few high quality long positions in leading companies which resulted in gains of 7%, 8% and 9% but the magnitude of the bounce ran the indices right smack into key resistance levels, so I hedged the portfolio with a few short positions towards the end of the week.  With the volatility and uncertain market, I will continue to keep the portfolio sitting on a sizable cash position of around 50% (it’s currently at 46%) as well as hedge with short positions.  It’s a strategy that has worked extremely well in 2007 and I don’t anticipate deviating from it too much over the next several months.  The current allocation of the portfolio is 41% long and 13% short.

Would you like to receive buy and sell alerts within minutes of each transaction of the Model Portfolio?  You can receive these along with ALL of the tracking tools and reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more highly profitable months here at SelfInvestors.com.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Mortgage Investment: 17.50%
2. Hospitals: 12.25%
3. Pollution & Treatment Controls: 11.60%
4. Cement: 8.90%
5. Technical & System Software: 8.50%
6. Agricultural Chemicals: 8.45%
7. Business Equipment:  8.35%
8. Building Materials Wholesale: 8.20%
9. Heavy Construction: 8.00%
10. Farm & Construction Machinery: 7.45%

– Top 10 Worst Performing Industries For the Week –

1. Jewelry Stores: -12.75%
2. Silver: -5.71%
3. Drug Stores: -2.90%
4. Housewares & Accessories: -2.20%
5. Movie Production – Theaters: -2.05%
6. Oil & Gas Refining & Marketing: -1.90%
7. Gold: -1.80%
8. Networking & Comm Devices: -1.30%
9. Oil & Gas Equipment & Services: -1.10%
10. Sporting Goods Stores: -1.05%

– Top 5 Best Performing ETFs For the Week –
 
1. PowerShares Golden Dragon (PGJ)  12.50%
2. Chile Fund (CH) 12.30%
3. Templeton Dragon Fund (TDF) 11.30%
4. India Fund (IFN) 10.30%
5. MSCI Inida (INP) 9.85%

– Worst 5 Performing ETF’s –

1. US Oil (USO) -8.90%
2. US Natural Gas (UNG)  -8.50%
3. HLDRS Oil Services (OIH) -6.00%
4. Central Fund of Canada (CEF) -5.75%
5. Ishares Commodities (GSG) -5.65%

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

1.  WSP Holdings (WH): The Chinese manufacturer, which conducts business through various subsidiaries, produces seamless casing, tubing, and drill pipes. Referred to collectively as OCTG (Oil Country Tubular Goods), its products are used by the oil industry for oil and natural gas exploration, drilling, and extraction purposes. WSP sells domestically to leading Chinese oil companies, as well as internationally, covering oilfields in North America, the Middle East, Africa, and Russia. Operating one drill pipe production line and eight threading lines, it creates approximately 572,000 tons of seamless OCTG annually. Trading set to begin on Thursday.

2.  Titan Machinery (TITN):  sells and rents new and used agricultural and construction equipment through its 33 retail locations located in North Dakota, South Dakota, Minnesota, and Iowa. Farming equipment includes excavators, seeders, tillers, and tractors; it offers such construction machinery as earthmoving equipment and cranes. Titan primarily deals in products manufactured by CNH which are sold under the Case and New Holland brands; other brands on offer include K-Tec and Grove. The company also sells parts and provides maintenance and repair services.  Trading set to begin on Wednesday.

3.  Triple S Management (GTS):  the reigning heavyweight when it comes to Puerto Rico‘s managed care. With nearly one million members, the territory’s #1 health insurance company operates under the Blue Shield name and caters to 25% of the island’s population. In addition to traditional managed care products, Triple-S offers life, accident and disability, and property and casualty insurance. Following its 2006 acquisition of Great American Life Assurance Company (GA Life), the company is also Puerto Rico‘s leading provider of life insurance policies. Triple-S’s products are sold through independent agents and brokers, as well as its internal sales team. The company was founded in 1959 by a group of doctors.  Trading set to begin on Friday.

4.  VisionChina Media (VISN):   through China Digital Mobile Television, operates an advertising network that consists of some 33,000 digital television displays located on buses in more than a dozen major Chinese cities. The displays receive mobile digital broadcasts from local TV stations of real-time content — such as news, stock quotes, weather and traffic updates, sports highlights, and public interest messages — sprinkled with paid advertisements. This location-based content and advertising reaches about 26 million consumers each day.  Trading set to begin Thursday.

::: Upcoming Economic Reports (12/3/07 – 12/7/07) :::

Monday:         ISM Index, Auto/Truck Sales
Tuesday:       None
Wednesday: Productivity (rev), Factory Orders, ISM Services, Crude Inventories
Thursday:      Initial Claims
Friday:            Nonfarm Payrolls, Unemployment Rate, Consumer Credit

::: Upcoming Notable Earnings Reports :::

Tuesday:  Versant (VSNT)

Thursday: Gildan Activewear (GIL), Verifone Holdings (PAY)

Friday:  OYO Geospace (OYOG)

::: In Case You Missed It – SelfInvestors Blog Entries of the Past Week :::

1. Contrarian Indicators Show Tradeable Rally Imminent

2. Self-Directed Portfolio Advantages/Disadvantages

3. Accumulation Day, But No Indication of Bottom Yet; Stock of Day – Danaher (DHR)

4. Bidz.com (BIDZ), Citron Research (Stocklemon.com) Soap Opera Continues

5.  Nothing More Than An Oversold Bounce?

6.  Trade of the Day – Short Setup in Sadia (SDA)

Wow, talk about tradeable rally!  Like most oversold rallies they usually spring quickly and before you can blink we get a more than 500 point rally in the Dow.  So much for bottom marking capitulation or a rush to the buy button by institutions.  Now don’t get me wrong, this was a strong rally today with enough oomfff to push us up to key resistance levels, but at this point I think that’s all this is.  The oversold conditions were there, the fear was there, the panic selling was not.  We just didn’t get the kind of panic selling where everyone throws in the towel.  For a longer term bottom, that needs to happen. 

The rally today provided some great trades on the long side, but the magnitude of the rally today just gets us that much closer to key resistance levels which I’ll discuss more below.  There is really only about another 2% left to the upside before the technicals start screaming you better short this thing.  I’m going to play this market one of two ways over the next few days.  If we bolt again soon and test those resistance levels right away, you better believe I’m putting on some shorts.  If the market finds some rationality and digests these gains in a reasonable manner I’ll look to put on another long trade or two.  From a longer term perspective, keep in mind the bottoming action over the past few days was not dramatic and not does not bode well for the long side.. but hey, it’s December, bulls have regained their footing and the foundation might just be laid for a holiday rally before the bears resume control, so keep your bias to the bull side for now and begin looking for small positions in top tier stocks.  Let’s have a look at the charts:

The tech heavy Nasdaq is by far the strongest index and where you should focus your long plays.  Tech typically does well at the end of the year and this year looks to be headed in that direction as well.  Volume was strong, but just not impressive for a move of this magnitude.  There was certainly quite a bit of short covering to this rally and considering we never got the all out panic selling to mark a good sustainable bottom I wouldn’t be making any bets that we’re going to be seeing 2007 highs anytime soon.  I think what this rally does is give us enough gusto to eventually kiss that downward trendline goodbye.  That’s how I’m playing it.  If the Nasdaq begins testing resistance around 2700 – 2725 I’m going to begin getting aggressively short.  Some digestion of these gains would provide a good opportunity to continue trading this rally on the long side.

The financial heavy S&P is of course the weakest and still has some room to run before even testing that 200 day moving average, so to declare that the bull is running again would be a big mistake.  Much technical damage needs to be repaired yet.  If we don’t digest these gains in a hurry, I’m going to start getting short.  Notice that the conviction behind the rally in August dwarfs this rally.  Think we’re going to carve out another V base and shoot to new all time again?  Think again.  There will be strong resistance in the S&P between 1480 and 1500.

Volume in the Dow was above average but again lackluster considering the price move.  It most likely marks a temporary bottom though and any pullback from here would offer additional opportunities to put on a few long trades.  There will be considerable resistance in the 13500 – 13600 range, which would be a good area to consider short positions.

::: 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 November 28th 2007

Nasdaq: UP 3.18% today with volume 12% ABOVE average
Nasdaq ETF (QQQQ) UP 3.04%, volume 30% ABOVE average
Dow: UP 2.55%, with volume 23% ABOVE the average
Dow ETF (DIA): UP 2.71%, with volume 19% ABOVE the average
S&P ETF (SPY): UP 3.2%,  with volume 29% ABOVE the average
Russell Small Cap ETF (IWM): UP 3.79%, with volume 24% 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 performed outstanding today as small caps led the way and performed about in line with what the Russell did.  286 Self Investors Leading Stocks were up an AVERAGE of 4.19%.. now that’s what I call leadership!

Summary:

* Advancers led Decliners 286 to 17
* Advancers were up an average of 4.19% today, with volume 12% ABOVE average
* Decliners were down an average of 1.63% with volume 120% ABOVE average
* The total SI Leading Stocks Index was UP 3.87% today with volume 18% ABOVE 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 gauging 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/si/industry_tracking/

* Current Leading Sectors/Industries (over last 30 trading days):  
Dynamic Utilities, Biotech, Pharma, Bonds, Health Care  (leadership in medical/healthcare emerging!)
                                          
* Current Lagging Sectors/Industries (over last 30 trading days): 
Semis, Retail, Networking, Nuclear Energy

* Today’s Market Moving Industries/Sectors (UP):
Home Construction, Regional Banks, Materials, US Real Estate, Basic Materials

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

::: 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 real short on time tonight so not stock of the day, but have a look at these Self Investors Leading stocks above the 50 and 200 day moving averages that moved up with big volume today.

 In order of total rank (fundamentals + technicals)

Double Take Software (DBTK)
Shanda Interactive (SNDA)
Axsys Technologies (AXYS)
Credicorp (BAP)
SunPower (SPWR)
Kirby Corp (KEX)
GFI Group (GFIG)
Dynamic Materials (BOOM)
FCStone Group (FCSX)
Interactive Intelligence (ININ)
Banco Itau (ITU)
Chicago Bridge & Iron (CBI)