The bullish fervor was in full force today, with a blow out quarter from Amazon fueling the fire. Kind of takes you back to the hay day of the late 90’s when moves of $5 – $10 was the rule, rather than the exception. Ok, not quite, but with new all time highs in the Dow, the S&P500 approaching all time highs and the Nasdaq breaking out with force today, there should be cause for some excitement. The sell off of February 27th is long forgotten and new (much higher) support levels are in place. At this point, those new support levels could provide a floor for the market to stage a summer rally. However (at the risk of sounding like a broken record), keep in mind the parabolic rise over the last few weeks with absolutely no pause for a rest. If you have some big gains avoid the greed and lock in some profit. If you missed much of this move like I have, don’t chase it. There are very few good entry points out there right now, particularly in the small to mid caps as this has been a predominantly large cap fueled rally. They will emerge though. Patience.
::: 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 April 25th 2007
Accumulation in all indices.
Nasdaq: UP .92% today with volume 25% ABOVE average
Nasdaq ETF (QQQQ) UP 1.33%, volume 13% BELOW average
Dow: UP 1.05%, volume 2% ABOVE the average
Dow ETF (DIA): UP .88%, volume 34% ABOVE the average
S&P ETF (SPY): UP .92%, volume 1% BELOW the average
Russell Small Cap ETF (IWM): UP .29%, volume 17% 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 (smaller, high growth) just did OK today – they significantly lagged the performance of the major indices and the advancers over decliners ratio was just barely above 2:1 (not impressive on a big move today).
Summary:
* Advancers led Decliners 276 to 123
* Advancers were up an average of 1.69% today, with volume 9% ABOVE average
* Decliners were down an average of 1.66% with volume 49% ABOVE average
* The total SI Leading Stocks Index was UP .65% 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 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):
Semiconductors, Broadband, Biotech, Networking, Utilities
* Current Lagging Sectors/Industries (over last 30 trading days):
Agriculture, Home Builders
* Today’s Market Moving Industries/Sectors (UP):
Oil Services, Internet, Networking, Transports, Energy
* Today’s Market Moving Industries/Sectors (DOWN):
Internet Infrastructure, Health Care Providers
::: 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 for the most part off the radar of Wall St. with just one analyst covering it, technically bullish and poised for a break out.
ABOUT: Internet Gold Golden Lines Ltd. is a communications company that provides Internet access and related value-added services, international telephony, e-advertising, content and e-commerce services throughout Israel under the brand name smile. The Company launched its International Telephone Service (ITS) under the brand 015 in August 2004. The license to provide ITS was granted for 20 years. It has two focused businesses: Communication and Media. Communications provide Internet services and international telephony services, such as Internet Access, Value Added Services, International Telephony, and IT Integration businesses focus on the provision of services and support to individual and business end-users. Media provides Website content provision, portal operating, search engines, lead-generation, e-Commerce and Paid Content. In January 2007, the Company’s wholly owned subsidiary, Smile.Communications Ltd., completed the acquisition of 012 Golden Lines Ltd.
FUNDAMENTALS: Internet Gold (IGLD) is an Israeli company that appears to be on the verge of a major growth spurt. While a small company that has been turning a profit for several years now, not until the last 3 quarters has the company shown explosive growth. The growth at the end of 2006 was enough to help double their profits over the previous year. 2007 is expected to be even bigger with an earnings estimate calling for 130% growth. I like the fact that management owns 70% of the company which indicates they have a strong vested interested in seeing the company succeed. Net margins aren’t impressive at 7% but it is improving quickly. Return on Equity is excellent at around 16%.
TECHNICAL: IGLD is in the process of carving out the right side of a fairly short base, but one that is looking quite bullish. Based on the big, high volume drop in the weekly chart at the beginning of March, the base is probably too short to work through that technical damage. I’d be hesitant to initiate a position on a break out from this current base and would rather catch it on a pull back from any break out. The company reports earnings on May 8th which could very well be the catalyst this stock needs to soar to new heights. Put it on the radar.
SELFINVESTORS RATING: With a total score of 50/60 (24/30 for fundamentals, 26/30 for technical), Internet Gold (IGLD) is a very good break out candidate.
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 Internet Gold (IGLD).