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)

At this point I think it’s safe to say that the market is looking for just about any glimmer of positive news in order to rally from very oversold conditions and will probably begin brushing aside some of the bad news that has become typical such as horrible existing home sales.  News out of Citigroup that it’s getting a 7.5 billion cash infusion provided some early optimism but is this really a positive?  To think a company like Citigroup would need to raise cash in a hurry from a foreign company at 11% is in my mind a harbinger of things to come.  It’s going to get worse. 

At any rate, the market pulled itself up by its boot straps from oversold conditions today and managed to stage a significant rally with enough volume to signal accumulation.  Yes, there was good volume behind today’s rally, but this is not the kind of action that marks a bottom.  Throughout the day, I was surprised at how few opportunities there were in breakouts of leading stocks.  When the market turns, there will be a wave of high quality breakouts to choose from, but we need to see a big day of capitulation or some big time institutional buying before that can happen.  Neither occurred today, so it pays to continue to tread lightly here.  We’re close, but not quite there yet.  There will be plenty of time to profit, so the important thing is to not jump in aggressively too early.  The early bird may get the worm, but he also may find himself in the belly of a bear.

::: 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 27th 2007

Nasdaq: UP 1.57% today with volume 1% BELOW average
Nasdaq ETF (QQQQ) UP 2.00%, volume 29% ABOVE average
Dow: UP 1.69%, with volume 25% ABOVE the average
Dow ETF (DIA): UP 1.46%, with volume 55% ABOVE the average
S&P ETF (SPY): UP 1.15%,  with volume 49% ABOVE the average
Russell Small Cap ETF (IWM): UP 1.27%, with volume 11% 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.  Not exactly bullish action from the leaders today.

Summary:

* Advancers led Decliners 227 to 76
* Advancers were up an average of 2.17% today, with volume 4% BELOW average
* Decliners were down an average of 2.45% with volume 57% ABOVE average
* The total SI Leading Stocks Index was UP 1.01% today with volume 11% 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):  
Bonds, Agriculture
                                          
* Current Lagging Sectors/Industries (over last 30 trading days): 
Semis, Retail, Internet, Materials

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

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

::: 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 isn’t going to grab headlines and be bantered about in discussion boards.  Danaher (DHR) is a blue collar, large cap conglomerate that straps the hard hat on every day and delivers consistent profits quarter after quarter, year after year. 

ABOUT: 

Danaher Corporation derives its sales from the design, manufacture and marketing of professional, medical, industrial and consumer products. It operates in four segments: Professional Instrumentation, Medical Technologies, Industrial Technologies, and Tools & Components. During the year ended December 31, 2006, it acquired Sybron Dental Specialties and Vision Systems Limited, in addition to other nine companies, which are manufacturers and assemblers of environmental instrumentation, medical equipment or industrial products, in the market segments of electronic test, critical-care diagnostics, water quality, product identification, and sensors and controls. In July 2007, the Company acquired ChemTreat, Inc. In July 2007, the Company completed the sale of its power quality business to Thomas & Betts Corporation. As of November 21, 2007, the Company, through its indirect wholly owned subsidiary, Raven Acquisition Corp., had acquired over 90% interest in Tektronix, Inc.

FUNDAMENTALS: 

Danaher is far from the small cap high flyers I often highlight here, but in difficult markets it’s the big, lumbering, profit machines that will weather the storms the best and Danaher is certainly one of those.  According to Morningstar, the company has posted EPS growth in 9 out of the past 10 years and isn’t yet showing any signs of slow down.  EPS growth since 1997 has come in at 20.7%, 2.7%, 35.6%, 24.6%, (9.9%), 38.8%, 20.8%, 36.5%, 20% and 26.1% last year in 2006.  Growth for 2007 is expected to remain in line with historical growth with about a 20% rise in EPS.  Revenue growth has been equally as solid over the years but it should be noted that revenue growth has been decelerating a bit in recent quarters, dropping from 22%, to 18%, 19%, 14% and 13% in the latest quarter.  Still excellent growth for a company of this size.  Combined with a very good Return on Equity of 17%, Net Margins that continue to rise as they have over the past 5 years and strong management ownership of over 20%, Danaher is top Self Investors large cap stock.

TECHNICAL:  

The chart of DHR over the past 2 years provides a great example of how you might play a leading breakout stock, adding shares on each subsequent breakout.  The first entry point was provided on a break from a long one year base at the beginning of 2006.  It provided a 2nd entry point on a break from a new base in early October 2007 and a 3rd entry on a breakout this summer to yet another all time high.  Despite a correcting market, DHR continues its bullish ways and has come away relatively unscathed over the past month and is looking poised to breakout from a flat base it’s been working on since late September.  The stock may provide a good entry on a breakout from this flat base above 86.  Remember: the stocks that hold up the best during a correction will likely lead the market with big gains once the market gets going again.

SELFINVESTORS RATING: With a total score of 50/60 (26/30 for fundamentals, 24/30 for technical), Danaher (DHR) 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 Danaher (DHR)