::: Today’s Market Action :::
For the second time in as many days, the Nasdaq led the way higher and ultimately broke out of a trading range as trading volume continues to come into this market. Institutions are taking part and that can only mean more green into the foreseeable future. To begin the year I was a bit concerned that we’d see a sell off similar to the way it played out last year, but every sell attempt to begin the year was met with stiff resistance from the bulls, leaving key support levels that I discussed in the Weekend Report intact. With the Nasdaq break today and the S&P and Dow poised to do the same soon, the picture is decidedly bullish over the next few weeks.
::: Major Indices Performance – The Numbers :::
(Note: volume averages are based on the average over the past 50 days)
Data as of 4:00EST – End of Day Jan 11th 2007
Nasdaq: UP 1.04% today with volume 13% ABOVE average
Nasdaq ETF (QQQQ) UP 1.03%, volume 59% ABOVE average
Dow: UP ..59%, volume 4% ABOVE the average
Dow ETF (DIA): UP ..45%, volume 13% BELOW the average
S&P ETF (SPY): UP .44%, volume 19% BELOW the average
Russell Small Cap ETF (IWM): UP .62%, volume 1% 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. Today’s strength was confirmed by SelfInvestors Leading stocks.
Summary:
* Advancers led Decliners 320 to 103.
* Advancers were up an average of 1.85% today, with volume 12% ABOVe average
* Decliners were down an average of 1.54% with volume 49% ABOVE average
* The total SI Leading Stocks Index was UP 1.02% today with volume 21% ABOVE the average
::: Where’s the Money Flowing :::
Many investing websites provide leading industries based on price performance alone. However, without accompanying volume levels, this can sometimes be misleading. The only way that I know of to gauge industry/sector strength WITH volume levels is through the analysis of ETF’s. A couple years ago this was not possible, but as more traders/investors use ETF’s they become a much better tool for guaging the health of the market and seeing where the money is flowing (or not flowing). Using the proprietary SelfInvestors Demand Indicator score which measures price and volume movements, I’m able to quickly see which sectors/industries are seeing the greatest inflows of cash. For a detailed look at how I go about gauging sector/industry strength please see the following post: http://investing.typepad.com/tradingstocks/2006/09/wheres_the_big_.html
* Current Leading Sectors/Industries (over last 30 trading days):
Technology, Retail, Heath Care Providers, Semis, Biotech (all of the sectors you want leading in a bull market!)
* Current Lagging Sectors/Industries (over last 30 trading days):
Natural Resources, Energy, Oil, Gas
* Today’s Market Moving Industries/Sectors (UP):
Biotech, Broadband, Internet, Realty, Consumer Services
* Today’s Market Moving Industries/Sectors (DOWN):
Oil, Oil Services, Software, Commodiites, Energy
::: Stocks :::
The stocks section will be an area where I highlight one stock selected from a group of stocks moving up with volume well above average and most likely breaking out of a base or consolidation. Today’s stock is Genentech (DNA), a leader in today’s hottest sector.
ABOUT: Genentech, Inc. (Genentech) is a biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs. A number of the existing biotechnology products originated from or are based on Genentech science. Genentech manufactures and commercializes multiple biotechnology products, and receives royalties from companies that are licensed to market products based on its technology. On December 8, 2006, Lonza Group AG acquired Genentech’s mid-scale mammalian biopharmaceutical production plant in Porrino, Spain.
FUNDAMENTALS: A company that has posted outstanding profit growth of around 60% in each of the past few years. Sales growth is equally impressive with growth in the 40 – 50% range. Growth is expected to moderate some over the next couple years but remain strong at 20 – 30%. Still very impressive for a company it’s size. Margins and ROE (continuing to rise) are excellent.
TECHNICAL: With the stock going nowhere for the past year, the relative strength is poor. I expect that to change in the coming months as the stock starts a new uptrend. On both the daily and weekly charts, the stock has broken through key resistance levels while trading volume continues to rise. Institutions are beginning to put money to work in DNA once again. Next stop: $100
SELFINVESTORS RATING: With a total score of 47/60 (26/30 for fundamentals, 21/30 for technical), DNA is just considered an average breakout stock. However, given the leader status in a growth industry and much of the low score due to the low RS rating which will improve quickly, it’s a worthy mention!
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.