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Our research draws its market bias from a combo of Fundamental and Technical evidence. Economic and earning trends are matched against our analysis of price and volume charts, giving us an indication of how friendly or unfriendly the market is behaving. The goal is to identify top growth stocks... More
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  • Consumer Staples Show Some Shine

    Major indexes testing their 50-day moving averages to the upside was somewhat expected.

    The Dow and S&P 500 reversed and closed slightly in the red after touching these key averages.

    The Nasdaq, which came just shy of its 50-day average, was hardly changed on the day.

    Volume was average across the indexes as traders continued to evaluate what last week's correction means to their strategies.

    We're likely to stay Bears until the 50-day averages are conquered. Uncertainty of strength in the broader market has us mostly on the sidelines.

    Beginning Thursday, we're looking for at least one of the major indexes to power at least 2% higher, or so, on heavy volume to give us an indication of Follow Through.

    Any rally without this confirmation of institutional sponsorship will be suspect. The reason we wait a few days from Thursday's low is to give shorts time to cover so as not to confuse it with real buying.

    Breakouts may not be completely out of fashion as top-earnings-growers Hasbro (NASDAQ:HAS) and Maidenform Brands (NYSE:MFB) launched from 52-week bases to  which give us a shade of confidence that others on our list will follow.

    Going into Wednesday's trading, Affymax's (OTCPK:AFFY) volume boost suggests it could be next. Akamai (NASDAQ:AKAM) is also close.

    It should be noted that these breakouts are "high-risk" without a confirmation in trend from the broader market. Though bad markets do in fact have their successful breakouts, the odds of them producing at least 20% price advances in the following months will decrease when the broader trend is down.

    Larger, slower stocks in, or near, New High territory include Consumer Staple names like Sara Lee (SLE), Campbell Soup (NYSE:CPB), Pepsico (NYSE:PEP) and Altria Group (NYSE:MO).

    Consumer Staple's ability to climb in the next couple weeks will be watched closely for an indication of how well it could pull everything else higher. Further confidence may come from S&P 100 names, like McDonalds (NYSE:MCD) and Wells Fargo (NYSE:WFC), which don't appear to have topped.

    Strength from these widely considered "safer" investments shows some defensive playing from large funds. It also indicates less willingness from funds to bid aggressive names higher. 

    We expect to have a better understanding of the nature of this market by the end of the week. Stay tuned. Dan

    Disclosure: Short CMC
    May 11 6:26 PM | Link | Comment!
  • Wait-And-See Mode


    Monday's sharp rally appears to be a strong vote of confidence to the European Union's plan to remedy its credit crisis.

    We're waiting to see if the enthusiasm will stick, as true trends to news reactions aren't always clear the first day.

    The major indexes closed up just under the critical resistance levels of their 50-day moving averages, which until successfully conquered will likely hold our Sell Bias in check.

    Volume for Monday was strong, but not in comparison to the previous two trading days that illustrated a massive exit of institutional-grade money from the market.

    Beginning Thursday, we'll be on the lookout for a Follow Through Day on at least one of the major indexes, where a rally of about 2% of or so on volume significantly greater than the previous day would suggest institutions are stepping up to support the Bull.

    We wait a few days to allow short sellers time to cover their shares so as not to confuse it with real buying.

    A lack of breakouts from top names in the market could also be reason for caution. Until we see that type of Leadership resume we're going to be suspicious of any chances of a sustained rally from here.

    Looking at the largest stocks in the market, nearly every member of the S&P 100 shot higher - but hardly any new highs to speak of.

    Consumer Staples type stocks, like Altria (NYSE:MO) and Pepsi (NYSE:PEP), show good potential to achieve highs soon. Success from this group would indicate funds may be more interested in bidding up less risky, defensive type investments.

    Our course of action over the next few sessions is to simply watch what happens.

    Jumping when the odds aren't there is simply not out thing.

    Disclosure: Short CMC
    May 10 5:48 PM | Link | Comment!
  • Thriving On Chaos

    A heavy whacking of stocks was a great endorsement for our Sell Bias.

    We took the opportunity to cover some of our short positions amidst the rush of the steepest one-day losses on the major indexes since 1987.

    We're not so sure how much selling pressure remains as the indexes rebounded sharply from their 200-day averages.

    What many are attributing to a "trading error", with rumor of a major firming hitting the $B rather than $M amount, may just be a accidental blip in the bigger chart pattern picture.

    But it's long been our opinion that many funds have been waiting for an opportunity to lock-in gains with sell-stop orders, not matter how hard and fast they were hit.

    This massive bull leg has seen little in the way of corrections until today. Our game-plan now is to play defense and wait for the market to show us discernible odds before adding positions - long or short.

    Good news for growth stock buyers is our list of potential breakouts was little damaged today. Stay tuned for our weekly analysis.

    Disclosure: Long QQQQ June 47 Calls

    Disclosure: Long QQQQ JUN 47 CALLS, Short MFE, CMC

    Disclosure: Long QQQQ JUN 47 CALLS, Short MFE, CMC
    May 06 5:50 PM | Link | Comment!
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