Apologies for getting the report out so late tonight. IE7 froze (surprise, surprise) and half the report wasn’t saved. Is it just me or do others find themselves using Fire Fox almost exclusively? I know I won’t ever write a web based report in IE again! Note to Microsoft: if you’re going to release a browser prone to freezing at least provide a built in auto save feature! Enough of my rant…
::: Today’s Market Action :::
It’s becoming a common expectation that when Bernanke speaks, the market rises. It’s also a common expectation that the market punishes the masses. Although I wouldn’t call today a punishing, the market sold off hard enough to set up some kind of retracement of the rally we saw last week. Bernanke, while positive on the overall economy and not yet overly concerned about the subprime market, did issue a reminder that inflation was still a concern and implied that the markets’ reaction following the recent Fed rate decision may have been a bit too optimistic.
From a technical standpoint, volume levels came in higher than in past days, but it wasn’t above average. I’d call it a healthy consolidation of recent gains. At this point, we can’t rule out a possible under cutting of the previous lows to test the 200 day moving averages (which would look something like a W double bottom base). A couple more days like today and I’d be dipping my toes into the "long" end of the pool. For now, I remain confortable with a portfolio biased to the short side with a significant amount of cash on the sidelines waiting for the right opportunities.
::: 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 March 28th 2007
Nasdaq: DOWN .83% today with volume 1% BELOW average
Nasdaq ETF (QQQQ) DOWN 1.07%, volume 8% ABOVE average
Dow:DOWN .78%, volume 1% BELOW the average
Dow ETF (DIA):DOWN .72%, volume 46% ABOVE the average
S&P ETF (SPY): DOWN .73%, volume 59% ABOVE the average
Russell Small Cap ETF (IWM): DOWN .60%, volume 15% 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 about in line with the rest of the market today .. selling but with light volume.
Summary:
* Decliners led Advancers 298 to 115.
* Advancers were up an average of .95% today, with volume 3% ABOVE average
* Decliners were down an average of 1.38% with volume 11% BELOW average
* The total SI Leading Stocks Index was DOWN .72% today with volume 4% BELOW 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://selfinvestors.com/industry_tracking/
* Current Leading Sectors/Industries (over last 30 trading days):
Utilities, Energy, Software, Commodities
* Current Lagging Sectors/Industries (over last 30 trading days):
Biotech, Home Builders, Internet Infrastructure
* Today’s Market Moving Industries/Sectors (UP):
Oil & Gold
* Today’s Market Moving Industries/Sectors (DOWN):
Biotech, Home Builders, Internet Infrastructure, Agriculture
::: 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 Houston Wireless and Cable (HWCC)
ABOUT: Houston Wire & Cable Company (HWC), formerly known as HWC Holding Corporation, through its wholly owned subsidiaries, HWC Wire & Cable Company, Advantage Wire & Cable and Cable Management Services Inc., distributes specialty electrical wire and cable to the United States electrical distribution market through 11 locations in 10 states throughout the United States. The Company offers products in most categories of specialty wire and cable, including continuous and interlocked armor cable; control and power cable; electronic wire and cable; flexible and portable cords; instrumentation and thermocouple cable; lead and high temperature cable; medium voltage cable, and premise and category wire and cable. HWC also offers private branded products, including its LifeGuard low-smoke, zero-halogen cable. On March 23, 2006, the Company changed its name to Houston Wire & Cable Company and its operating subsidiary, Houston Wire & Cable Company, changed its name to HWC Wire & Cable Company.
FUNDAMENTALS: With tremendous earnings growth (.01/share in ’03, .23 in ’04, .60 in ’05 and 1.47 last year), it’s easy to be impressed with Houston Wireless. Throw in large management ownership (50%), many new institutions initiating positions, ROE off the charts and it has all the characteristics of a big time winner. If there are a couple minor negatives, it’s the net margin which is " just" a respectable 10% and earnings growth estimates for ’07 which is expected to slow considerably over last year. Not too surprising after the torrid growth of the past few years.
TECHNICAL: Technically, the quality doesn’t deviate. After breaking out of a base in mid February, the stock has been bouncing along the 50 day moving average and ultimately carving out what is now a bullish triangle pattern that it looks ready to emerge from with gusto.
SELFINVESTORS RATING: With a total score of 52/60 (27/30 for fundamentals, 25/30 for technical), HWCC is currently one of the highest rated breakout stocks that I track.
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 Houston Wireless & Cable (HWCC)