This Issue looks at: Brief Market outlook, some contrarian indicators, and watch list screens

General Market Outlook: Markets fell for another week. This last week NASDAQ slipped 0.8% and the S&P 500 fell 1.1%. A few leading stocks were hit after earnings, while others were finding support and staging upside reversals. French Elections and other European crisis issues continued, and early in the week it looked like this news would devastate US markets, however on several days the markets were able to close in the upper daily ranges. More bad news towards the end of the week came from JP Morgan Chase’s $2 billion dollar trading losses which weighed heavy on the markets. For now the NASDAQ market appears to be finding support at the 2900 level and the S&P 500 at 1340-1350 level, a breach of these levels may indicate further downside for the markets. The markets may have found support at the above mentioned levels but we would need to see some confirmation of this sometime this week, until then extreme caution is advised going forward.

Technical View: From a technical standpoint the market is in a correction attempting to find support, thus we are looking to see if we can get any follow-through this week. Until such an event takes place extreme caution is advised. Perhaps the most interesting observation this week is that while the indexes closed in the upper ranges, many leading stocks did get hit, this is a bit different in what we have been seeing all year: where the indexes dropped but leading stocks stayed near their highs. Also on a relative basis defensive sectors such as healthcare, utilities and consumer staples, are acting stronger, not ideal for a bull market. There are a few fundamental positives in the market and a few interesting contrarian indicators which are discussed further below under Contrarian Indicators, and the Fundamental View.

S&P 500: The S&P 500 started the week of May 6th unremarkable considering the turmoil the markets were expecting based on the French electing the socialist party (Sunday night US equity futures were down significantly). On Monday the S&P 500 was able to close with a mild gain despite this. Turmoil in Greece weighted on the markets Tuesday and Wednesday the S&P 500 took hits on increased volume however was able to close in the upper ranges of the day (please see chart below) . The S&P 500 pretty much stayed in this range despite the news of the $2 billion dollar trading losses from JPM.

The NASDAQ: The NASDAQ market started the week with a positive note on Monday. However on Tuesday, Wednesday, and Thursday volume picked up and the market lost ground. The only positive in this scenario may be the fact that on Tuesday and Wednesday the NASDAQ tested the 2900 level on both days and closed well above this (please see chart below). For now the market has endured some more distribution; however it is finding some support for now. So we will see this week if we can get any follow-through action on this. Until then the pressure is on the tech sector!!

Contrarian indicators: Contrarian indicators are secondary indicators that could be used to give you a feel of where we may be in the fear cycle. Please note these are secondary indicators with the primary indicator being the price volume action of the market itself. So one should never make judgments on the market based solely on the below indictors

The chart below is a reprint form Investor’s Business Daily on the put-call trading volume ratio. Readings above 1.0 which is what we are seeing now often occur at market bottoms when option players are buying more puts (a bearish play) vs. calls (a bullish play). This is a contrary indicator, the option players have a more bearish sentiment, thus bullish for the market.

The chart below also reprinted from IBD shows the level of bullish investment advisors dropping off now at 38.7 near last October’s levels, another contrarian indicator. When the number of investment advisors who are bullish drop off, this is a bullish sign. Although this level is still not at the extremes of bottoms, but perhaps getting there.

And finally if we look at the AAII American Association of Individual Investor survey, the sentiment survey measures the percentage of individual investors who are bullish, bearish and neutral on the stock market short term; individuals are polled on a weekly basis. The bulls dropped to 25.4% (low of the year) neutral at 32.5% and the bears increased to 42.1% a high for the year. Again a contrary indicator may signal that the bottom is near?

Fundamental view: The market is fairly priced, as mentioned in past report fear still rules the day.

The table below is from decisionpoint.com which gives you a look a valuations on the S&P 500 which pretty much support the notion the market is fairly valued and there is no “optimism premium” built in.

We continue to receive a mixed bag of economic news, so all depends if you view the glass half full or half empty. This week we received a report on the trade deficit which expanded to $51.8 billion. Thus the headline may mislead you that this is bad. However, looking past the headline you would see that both imports and exports rose to record highs in March. Since imports increased more than exports the trade deficit expanded. What was most shocking and contrary to what one would expect is that exports to Europe hit a new all-time high! Both the import and export numbers lay testament to the fact of the growth in economies around the globe.

Despite the news headlines telling us how bad it is, on Friday the Thomson Reuters/University of Michigan’s preliminary May reading on the overall index on consumer sentiment improved to 77.8 from 76.4 in April, topping forecasts for 76.2. It was the highest level since January 2008.

Other good news comes from Scott Grannis a supply-side economist, from scottgrannis.blogspot.com. Scott tells us that April’s stronger -than-expected gains in federal tax revenues and weaker than expected growth in federal spending; the 12 month federal deficit has shrunk to $1.15 trillion down from 1.48 trillion in early 2010. He estimates that the federal budget deficit has dropped from a high of 10.4% of GDP to 7.4%. The Government is shrinking!! The chart below illustrates how spending is flattening out and revenues are increasing. Perhaps there is a light at the end of this governmental spending binge!

Stocks to look at: Often I talk about building watch lists while the market is in a correction below are examples of different screens one can run, based on different criteria. Please contact us if you have any questions regarding the screens below.

Stocks I find interesting from a strong fundamental screen include : AAPL, TCBI, QCOR,RGR, ALLT, WPI, VRX, RAX, PCLN, LULU, SXCI, ALXN, FRAN, KORS, JAZZ, LNKD,TNGO, MNST, URI and others

Stocks showing good technical action: DXPE, ORLY, SWI, LQDT and others

Stocks in Industry groups which are moving up the rankings: Residential Building (DHI, LEN, MHO, MTH, PHM, MDC), Regional Banks (TCBI, HMST, SBNY, UMBF, MBFI), Leisure Products (PII, RGR), Leisure Lodging (HOT, WYN, GET ), Finance Mortgage Services ( AGM, NSM, HLSS,) Medical biomed/ biotech (BIIB, ALXN, AMGN,VRTX, REGN,CELG) Retail Restaurants (BWLD, SBUX, YUM, PNRA, DNKN, CMG).

Stocks with strong profit margins: STWD, JAZZ, QCOR, MA, NTES, GILD, CELG, BIIB, MYGN, V, CLR, NTES, FRC, and others.

Stocks just emerging from a consolidation: WPI, TDG, BIIB, CATM, LKQX, STX, NTES

Stocks with tight weekly closes: PII, HMST, HLSS, ROST, HIBB, SHW, PPG, FLT, DG, DLTR, FDO

Stocks at possible pivot points; AMGN, UMBF, NSM, HLSS, ILG, DNKN, BBBY, CYBX, RMD, ASH, AKRX, VNTV, TGH, RXN, TRAK, AZPN, CNQR, WFM, MRC, SN, MPO,TCBI, IHG, CERN, ARBA

Stocks with relative strength hitting new highs: DDS, TNGO, VRTX, TCBI, BIIB, PII, GNC, CNQR, MNST, ORLY, TSCO, HIBB, LKQX, FDO , and others

Stocks with quarterly accelerating earnings and sales: ASH, CLMT, EQIX, FIRE, HAIN, LNKD, LQDT, MLNX, MNST, SSW, STX, WDC.

Stocks finding or found recent support at 10 week line: INXN, LULU, QCOR, TSCO, HD, SAVE, CPA, YUM, CRUS, DNKN, OZRK, GNC, SBH, MNST, FMC, SLXP, JAZZ, NVO, AKRX, V, ADS, FIRE, URI, CERN, GWAY, CPRT, AZO, DG, BYI, MPEL, TDC, NTES

Stock showing past and forward strong growth: BYI, FIRE, LULU, ULTA, HIBB, TSCO, SWI, SBNY, ALXN, SHFL, BBT, ROST, STX, GNC, PCLN, and others.

Summary: Technically speaking the markets are weak, however from my view point the fundamentals are strong. The economy continues to recover, however maybe not as quickly as we would like. The market is looking for a bottom; we may not be there yet. Leaders such as AAPL, PCLN, RAX, CELG, FOSL, and KORS, got hit. Other leaders such as TSCO, BIIB, FIRE, MNST, and SWI are near highs. Other quality stocks such as BWLD, ALXN, QCOR, LULU, JAZZ, URI among others saw upside reversals. Buying in this market until we get a confirmation follow-through day is very risky. Continue building watch list of stocks resisting the selloff and continue monitoring the fundamentally strongest stocks. Please feel free to contact us if you have any questions pertaining to anything we mentioned here or in past reports, or if you need a midweek update as to what is going on in the market. You can also e-mail me at georget@knowyouroptionsinc.com

At the time of this writing I and or managed accounts do hold TSCO, BIIB, CELG, JAZZ, URI, QCOR, and KORS, however this may change at anytime based on market conditions and other stocks that we do not own may be bought. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change

This Issue: Brief Market outlook

General Market Outlook: The prior week’s (week of April 22) rally attempt turned into a pretty ugly reversal this past week (week of April 29). The NASDAQ tumbled 3.7% as volume picked up towards the end of the week and the S&P 500 fell 2.4%. Regardless for the reason for the sell-off whether, European issues or slower job growth in the United States the selling was pretty intense. Many leading stocks were hit hard, a few leaders managed to stay near their highs. Earnings from US corporations continued to fair pretty well, and estimate revisions for companies yet to report rose to 7.8%. Despite this the marked got spooked and sold off. At this point extreme caution in the market is warranted. The rally attempt from the previous week failed, and the point of least resistance is to the downside for now. As earnings continue this week, we should get a clearer picture if this is a start of another downtrend or if this was the biggest shake-out of all!

The Technical View: The S&P 500 started Monday with a distribution day, followed by a bland Tuesday. On Wednesday the selling intensified with volume increasing on Thursday, and price dropping dramatically on Friday but on lesser volume. The NASDAQ had a pretty tame day on Monday, on Tuesday the volume picked up and there was very little price progress, which may be considered a “stall day”. On Thursday and Friday the volume intensified and the index fell hard adding 2 distribution days (please see chart below). While the count of distribution days on any one index does not in itself give us a sell signal on the market, the combination of distribution days on different indexes on different days, the marginal “follow-through day” the prior week, and the number of leaders dropping in volume is what raises concern in this market. Caution is advised.

Fundamental View: As mentioned in previous reports corporations are doing their job by ringing in the profits. Of the 83% S&P 500 companies who have reported 1st quarter earnings 67.5% have reported earnings above expectations. Prior to this quarter earnings were expected to be -4% which were now revised to 7.8% of companies yet to report. The estimated earnings growth for the S&P 500 for 2nd quarter currently stands at 8.8%.

Economic numbers continue to be a mixed bag; a surprise rise in the ISM Manufacturing number increasing to 54.8, and a disappointment fall of the ISM Non-manufacturing number falling 53.5 (still above 50 signaling expansion). April employment report disappointed the market coming in at 115,000 and it appears this was the negative driving force in the market. Perhaps what is most surprising is that the market ignored the upward revisions to prior months. Monthly revisions to original payroll reports have now been up for 10 straight months and have averaged an additional 40,000 per month. The market and headline news was also not buying the drop to 8.1% unemployment rate (from last April’s of 9%) citing a decreased labor force despite the fact that the labor force has grown by 700,000 over this last year.

Summary: The pick-up in selling is very real! If weakness persists raising cash and taking profits may be prudent, and each position should be assessed on an individual basis. At the same time continue building watch list of stocks resisting the selloff. Please feel free to contact us if you have any questions pertaining to anything we mentioned here or in past reports, or if you need a midweek update as to what is going on in the market. You can also e-mail me at georget@knowyouroptionsinc.com

This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change

General Market Outlook: Last week (week of April 22) the market staged what may be the start of a new rally. On Wednesday the S&P 500 staged a moderate follow-through day. For the week the S&P 500 rose 1.8% the NASDAQ rallied 2.3%. Earlier in the week volume was mild on the down days, but midweek volume picked up dramatically on the up days. These were welcome changes which we have not seen over the last few weeks. Earnings season is continuing, the market is rewarding companies with good earnings and guidance, however, the market is punishing companies who report slightly out of line, so not a super bullish scenario. Big gap ups were seen in stocks like AAPL, GNC, and SWI, big volume bounces were seen in leaders like VMW, QCOR, AZO, DG, AAP, ORLY, and others. Other encouraging signs were that the market was able to shrug off dire European economic news, a soft GDP number and rising unemployment claims in the U.S. (Please see the section titled “What Really Matters in the Market” below). While it is uncertain if the rally will stick, we believe the signs to be encouraging enough to mildly test the market with new positions.

Technical view: Before we go through the technical view, it is important to note this: No sustainable market rally ever started without a follow-through day, however not every follow-through leads to a sustainable rally. So if you go in and buy positions and see the market reversing, do not hesitate to get out, of course dependent on your risk tolerance.

S&P 500: Last Monday started with a down day on the S&P 500, however volume was mild, Tuesday the S&P 500 saw a slight uptick on mild volume. On Wednesday the S&P 500 rose 1.36% on a pickup in volume, staging an 11th day follow-through (slightly shy of the 1.4% minimum increase we would like to see). Other encouraging signs were that the S&P 500 did not give back its gains on Thursday and Friday. (Please see chart below). On this day we saw leaders like AAPL, VMW, BWLD, ULTA, GNC, TDG, and LULU among others stage impressive bounces. Through the week we also saw life coming into JAZZ, URI, MA, V, VFC, LNKD, commodity related stocks in the oil sector CLR, CXO, in the fertilizer group stocks like CF, RNF, UAN and many others. Market Condition: Cautious uptrend, marginal follow-through on rally attempt

The NASDAQ : The NASDAQ market started the week pretty ugly with a huge gap down undercutting previous lows which it made the Monday before. The NASDAQ did manage to close at the high of the daily range, and volume was softer. Tuesday was a pretty bland day. Wednesday the NASDAQ rallied a whopping 2.3% on a pickup in volume. The NASDAQ continued to move higher on Thursday and Friday on good volume. Wednesday’s rally on the NASDAQ did not qualify as a follow-through since this was only day 3, of an attempted rally. (Remember we look for a follow-through at least 4 days after a possible bottom). (Please see chart below)

Neither the S&P 500 nor NASDAQ suffered any distribution days following the follow-through. This is a very encouraging sign. Other encouraging signs include some leaders hitting new highs, a fresh batch of breakouts which are holding up so far, and many leaders finding support at their 10-week moving average lines and bouncing off these levels on volume.

Fundamental View: Consensus estimates for profit growth for the S&P 500 Index is only about 2% this quarter, which is low. However during the earning season expectations are increasing, as Bespoke Investment Group reports, the net revisions ratio for the S&P 500 Index has increased from -4% to +7.5% in the last four weeks. We have seen many surprises this week, and if this trend continues we may very well see a rally.

The big news this week was first Quarter GDP which came in soft at 2.2% annualized rate. The market was able to look past this.

Data from ICI (please see table below) show that in March 9.62 billion was redeemed from stock funds. Data show that year to date stock fund outflow is about 8.6 billion. Money continues to flow into bond funds. This may explain some of the low volume we often see, and demonstrates the fear in the market.

As mentioned previously fear still rules the day. This is almost evidenced as the market tries to cling to every word the Federal Reserve Chairman had to say to this week, as if to beg him to drag us higher or do something to save the economy. Unfortunately for those who look to this, they will be disappointed, the Federal Reserve cannot do anything more at this point in terms of meaningful growth.

Growth can only come from the private sector and the only way this can happen is if individuals and small businesses get to keep the money they earn. Once these small businesses get to keep their money they will best know how to allocate to growth in the economy. More quantitative easing or more government “stimulus” will not help and only continue to slow the recovery. The government has spent enough “stimulus” money and it did not stimulate very much perhaps the pockets of politicians and their crony capitalist friends. In the name of helping the little guy, the government has actually done just the opposite and crowded out the private sector. Oh well! Franklin D. Roosevelt managed to prolong the great depression through his policies and it appears we are making the same mistakes today. If anyone is interested in reading about this may I suggest reading The Forgotten Man: A New History of the Great Depression by Amity Shlaes.

What Really Matters in the Market:
I often hear comments from readers, investors and traders as to what drives the stock market. It appears to me that many people are misled by headline news and are missing what really matters. So let me spend some time giving my view and dispelling any myths.

In the stock market you are investing in entrepreneurial companies that are focused on creating new products or new ways of doing business. You are investing in companies that are creating growth and a better standard of living for all humans across the globe. The beauty of the market place is that it rewards those companies that are doing well with capital and punishes the failed companies by taking away capital. You are investing in the engine of the United States, small companies that eventually grow into big companies. (Note: you are not investing in government policies, employment rate, GDP, nor interests rates, although these may affect the general market at times.)

The reason I mention this, is that very often investors get distracted by the headlines news; Spanish debt, the action of the Federal Reserve, the budget deficit etc. And if you let these headlines distract you, you will miss out in what keeps happening in America. What is happening is that time after time for the last 100 years a few smart guys /gals with a strong entrepreneurial drive invent and discover some new way of doing business and create a new company that improves the lives of millions and billions of people around the planet. The only way you will discover these new companies is by constantly focusing on the stock market and the action of individual companies and not on the headline news. This is what we see occurring and reoccurring all the time and this will continue as long as we remain a free capitalistic society.

Now I know the cynics and naysayers will disagree with me and tell me how “it’s really different this time”, because Europe is on fire, government spending is out of control, and all you need to do is turn on any financial channel or open any newspaper and you will see all the dire news. Well I know one thing, by in large I don’t really know of very many wealthy cynics, but on the other hand I sure do know of a lot of very wealthy optimists. Take a walk through your local park and I am sure you will not run into any statues of any cynics or pessimists (unless of course you live in a communist country).

Looking through our recent history, we can see Apple Computers (AAPL) now the largest company in the world, was started by two guys in a garage. Now I am pretty sure the founders Steve Jobs and Steve Wozniak were not sitting around in the mid 1970s and saying things like “I don’t know Steve with the oil crisis on hand and inflation out of control, we really should not work on inventing this computer, let’s just go get a beer”. They had an idea and went for it undeterred by the crisis at that time.

Apple’s latest record iphone and ipad sales which improve business efficiencies and personal lives have absolutely nothing to do with, nor are they a result of quantitative easing nor were they deterred by fires in Greece. These sales are a result of genius and hard work.

In the late 1970s when Bernie Marcus and Arnie Blank got fired from their jobs at a hardware store they did not go asking for handouts nor go out and protest against banks because of high interest rates. They collected their ideas, got to work and founded Home Depot (HD) in 1978 and in the midst of a bear market went public in 1981. According to Arnie Blank: “Bernie and I founded The Home Depot with a special vision; to create a company that would keep alive the values that were important to us. Values like respect among all people, excellent customer service and giving back to communities and society.”

In 1950 Sam Walton opened his first store Walton’s 5& 10 in Bentonville Arkansas. Later Sam Walton made the decision to achieve higher sales volumes by keeping prices lower that his competitors by reducing his profit margin. By 1967 the company grew to 24 stores. In late 1971 the company went public. In the spring of 1975 the stock broke out a deep consolidation of split adjusted share to $0.08. Nice return if you bought that move. The company continued to thrive.

I think everyone is well aware of the success of these companies and how well the market place rewarded them by investors voluntarily placing their money into these companies and just making a fortune.

These same events keep occurring everyday now, and you will only find these companies by studying the action of new companies, new stocks, and putting aside the headlines.

In March of 2003 a new bull market started and if you paid attention to the headlines you would have never invested your money. The main headline then was the Iraq war. But if you watched the stocks and not the news you could have caught breakouts in GPRO, ISRG, and MNST (split adjusted broke out at $0.32 now despite all tragedies trades at $65.53).

In the spring of 2008 the negative headlines were Bear Sterns was going under, oil prices were skyrocketing. You could have focused on this, or you could have caught the break-outs in young oil explorations companies like CLR, HK, PQ, SM and others and just hit multiples in a few short months.

For example just as recently as March of 2009 when we were coming out of a financial panic the market started to move up, however the headlines were so negative we were barraged with headlines such as the consumer is dead, Europe is in a mess, Greece, Spain, Italy, Portugal etc. We just elected a president who never had any other real job, how can we possibly grow?

So at this time you could have just thrown in the towel continued to talk with your friends how bad things were or you could have gone to work like some of us or others we know and start digging for gems. You might have at that time come across a little Company called JAZZ which like the rest of the market crashed and was trading at $ 0.80 cents a share. You may have noticed on April 3rd 2009, JAZZ got a new CEO, who at that time decided to cut out all their non-profitable research and focus on two products that they were already selling. You may have noticed at that time they had an enterprise value of about $3.00 per share, and you might have thought of buying it. You then may have notice that it had a gigantic change in trading behavior on June 10th as it went from trading around $1.00 to $3-5 on volume from about 100,000 shares a day to 18 million shares. After this break-out it was averaging trading volume of about 3 million shares a day and was hitting 11 dollars by September of 2009, despite the “terrible economy.” Now if you missed this first run, but were still paying attention you may have noticed the breakout it staged in October of 2010 from the 11 dollar area after a long consolidation. Jazz now trades around $50 dollars per share so from June 10th 2009 to now you could have had a 5000% return.

In March of 2009 you might have noticed Green Mountain Coffee Roasters (GMCR) which was one of the first stocks to breakout around $10 per share then peaked out in September of 2011 at $115 per share. So you could have been focused on GMCR or you could have focused on Obama’s meddling in the Bankruptcy of General Motors.

In March of 2009 you might have noticed that AAPL, despite the financial panic and market crash AAPL actually had accelerating earnings quarter after quarter!! AAPL was also one of the first movers off this bottom.

In 2010 if you were following stocks you may have noticed Las Vegas Sands emerging from a $20 price consolidation, you may have noticed the LVS’s expansion into the Asian market, you may noticed the constant upward earning revisions that were occurring in the company. Or you could have just packed it up and concentrated on the “flash crash” that shortly followed this event.

We could go on and on about other individual stocks (CMG, PCLN, BIDU, NFLX, APKT, ARUN, and others). The point I am trying to make is that you need to follow the market, not other news. Yes the Market does go through cycles, corrections and bubbles, this is normal. And on any given day headline news may affect the market, but the bottom line the American entrepreneur is still at work.

This is not a call to go out and plow your money into the market. One does need to be careful when investing and especially during a time of market turmoil, however whether in a correction or not you need to continue to study companies

That is the goal of this newsletter is to highlight companies that have the same very characteristics of past winning stocks; things such as great earnings, great sales, high profit margins, something new, and stocks that exhibit strong price and volume action. So I highly encourage the reader to go through past issues and review stocks we highlighted or mentioned.

Who will be the next knock out stock? I do not know we do not have a crystal ball. Will it be BIIB with its new treatments for MS and other neuromuscular disease? Will it be new epigenetic treatments from CELG? Will it be a new way of sharing business information from social media found in LNKD? Will it be the genius of fashion design from KORS? Will it be retailers like LULU, FRAN, TJX, and ROST? Will it be efficient banks like TCBI or SBNY? We don’t know but we do know if we keep looking at entrepreneurial companies we will find some winners.

Summary: While I always advocate following the market one cannot help but notice the slow recovery we are seeing, in terms of employment and GDP growth. The first report for first quarter GDP came in at 2.2%. It appears the private sector is doing its job as evidenced by corporate profits. Now instead of allowing and encouraging the companies to invest in their businesses the government has borrowed from this and redistributed this to unions, green companies, welfare, unemployed and pet projects. This capital if used by individuals instead of government would speed up the recovery. For every dollar the government spends that is one less dollar the private sector can use efficiently. The government continues to wage a war on successful people and tries to destroy the true American spirit. However, on the bright side Obama’s recent budget proposal called for increased spending, higher taxes, and trillion dollar deficits; the beauty not one House Democrat was willing to vote for it, maybe we will see change.

The beauty of the stock market is that the collective minds of all the participants are much better at allocating capital to winning companies. As an individual investor you can by your own volition decide whether or not you want to risk your capital to participate in this.

The biggest winners of the stock market had nothing to do with government action, nor were the entrepreneurs distracted by the completely inept government actions.

With a cautious uptrend we are willing to risk capital and “test” new positions. This week we highlight one stock FRAN. FRAN makes our screens due to high earnings growth, an aggressive expansion plan and high profit margins. Please refer to our last reports which highlighted leading stocks for educational purposes, this will give you an idea for what to watch, and if the market turns we will continue to bring forth new ideas. Please feel free to contact us if you have any questions pertaining to anything we mentioned here or in past reports, or if you need a midweek update as to what is going on in the market. You can also e-mail me at georget@knowyouroptionsinc.com

At the time of this writing I and or managed accounts do hold TSCO, BIIB, CELG, JAZZ, URI, and LNKD, however this may change at anytime based on market conditions and other stocks that we do not own may be bought. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change

(FRAN) Francesca’s Holdings Corp. Operates 300 retail boutiques in 41 states under the Francesca’s Collection trade name.

The Story: The Company expects to triple its store count over the next few years. The stores offer apparel, jewelry, accessories and gifts. They are designed to feel like independently owned, upscale boutiques, though at affordable prices. Francesca’s was founded in 1999 and went public last summer. A year ago, the company had 236 U.S. locations. Management figures that total can grow to 900 stores over time. Francesca’s has used proceeds from its initial public offering to help finance growth plans. The stock debuted July 22 at 17. Francesca’s also earns high marks for the efficiency of its operation. It had operating margins of 21.9% for all of 2011. This is well above the average for most specialty retailers. The company’s gross margins have held steady at just above 52% the last couple of years and should remain around there for the next couple of years.

Fundamentals:

• Earnings the last 3 quarters have increased +15%, +17%, +90%
• Sales for the last 3 quarters have been at +47%, +43%, +55%,
• 3 year EPS growth rate has been at 64%
• 3 year sales growth has been 62%
• 4 years of consecutive annual EPS growth
• Fund ownership increased over the last 3 quarters from 138, to 160

Notable fund owning the company include Fidelity Growth Company, T Rowe Price New Horizons, MFS New Discovery, and others.

Technicals: The stock flashed two previous buy points around the 24 dollar area. Over the last 3 weeks FRAN has found support at the 50 day moving average. It is thus working on another consolidation; the aggressive trader can take a position here using the 50 day moving average as a stop. One can also wait to see how this consolidation develops and monitor for further buy points.

This Issue looks at: General market comment

General Market Outlook: The Market got hit this week with the NASDAQ falling 2.2% and the S&P 500 dropping 2%. A few leading stocks continued to buck the trend and make new highs while the general indexes were getting hit. Earnings season started last week with mixed results. Earnings continue this week, and may set the tone for the market going forward, with some notable stocks such as IBM, CMG, URI, QCOM, UA, VMW, MCD ,YUM and many others reporting. For now caution is in play and watch to see how the market reacts to the earnings numbers and forward guidance given by the companies reporting.

Technical view: This last week started with a gap down Monday on mild volume, then the selling intensified on Tuesday, as volume surged and the NASDAQ dropped 1.8% finding support at is 50 day moving average. On Wednesday and Thursday the market rallied both days on low volume reclaiming the Tuesday drop, only to give it also all back on Friday with a slight pick-up in volume (please see chart below).

As mentioned in our last report the market went into a correction on Wednesday April 4th, and still has not recovered. At this point we are monitoring the market for a follow-through day as described by William J. O’Neil in his classic How to Make Money in Stocks. Thus far if last Tuesday was the bottom day (we will call this day 1) of this mild correction then we are looking for a rally attempt day 4 or later. This rally should come on a day when an index is up more than about 1.5% on increased volume greater than the day before. Also along with this follow-through we should see quality stocks jumping out of recent consolidations. Now if last Tuesday’s low is undercut we re-start counting the bottom day (day 1 being the new low) and subsequent rally days all over again, looking for that follow-through day. So for now all new buys are off the table and if you are still holding stocks continue monitor how they act and decide if you want to hold them if the correction continues.

While we continue to make note of the correction we also note that many leading stocks continue to do well; stocks such as MA, V, TSCO, MNST, CELG, BIIB, ULTA, CMG, UBNT, SXCI, and some others. A few leaders retreated and are now possibly forming new bases; stocks like KORS, SWI, RAX, ALXN, LULU, GNC, BWLD and others. Thus the strength of these leaders argues for a short correction or they may be the last to walk off the plank! As mentioned watch the reaction to earnings this week, this should give us some guidance to how far the correction will run.

Fundamental view: Fear is still the name of the game. Headlines out of Spain on its borrowing cost remind us about the European government debt issues, and when Spain falls out of the headlines just as Greece did I am sure the news headlines will be dominated by Italian problems. And of course we cannot forget about that huge slowdown in China who’s first quarter GDP grew at a slow 8.1% (which would be welcomed anywhere else). I think it is only reasonable that eventually China’s growth has to slow from it s recent red hot pace. Of course we cannot forget to mention the U.S. Department of Justice suing AAPL and publishers for allegedly price fixing of ebooks, which seemed to put pressure on AAPL, and of course the NASDAQ market.

Corporate profits are still at record highs, the Federal Reserve continues to be extremely accommodative. Earnings in the coming weeks will set the tone.

While the market is in a correction, it is worth screening for stocks, and making a few lists because the winners will be found on these lists:

1. Fundamentally strong stocks
2. Stocks near new highs
3. Stocks with a strong relative strength
4. Good acting recent IPOS
5. Stocks that just came off their highs; are they crashing, or forming a new consolidation?

Summary: Thus with the market in correction continue to watch how the leaders act, look for the follow-through day, and watch the market do not let the good or negative headlines distract you. If you paid attention to all the headlines and shenanigans in Washington, you would never invest or even want to live here! Watch the market! Please refer to our last reports which highlighted leading stocks for educational purposes, this will give you an idea for what to watch, and if the market turns we will continue to bring forth new ideas. Please feel free to contact us if you have any questions pertaining to anything we mentioned here or in past reports, or if you need a midweek update as to what is going on in the market. You can also e-mail me at georget@knowyouroptionsinc.com

At the time of this writing I and or managed accounts do hold TSCO, BIIB, CELG, and LNKD, however this may change at anytime based on market conditions and other stocks that we do not own may be bought. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change.

This Issue looks at: General market comment

General Market Outlook: This week the distribution day count in the general indexes continued to climb, thus putting the market in correction. Despite this, some leading stocks continue to act well, so we have an interesting divergence at this time. It appears the general market “knew” we were in for a poor employment report on Friday. This week may be rocky based on Friday’s employment report which disappointed adding only 120,000 jobs in March. The NASDAQ slid 0.4%, the S&P 500 slid 0.7% and the DOW fell 1.1%. For now caution is the name of the game, any new buys are off the table until the correction ends.

Technical view: This week added 2 more distribution days on the S&P 500 and NASDAQ markets, putting the market in correction after Wednesday’s close (S&P chart shown below). Thus far we have had a 3 ½ month climb in the markets so naturally we were due for some type of correction. The question now, is this a mild 3-5%, a more intermediate 6-19%, or will we fall into a full blown bear market of greater than 20%, only time will tell.

Despite some leading stocks acting well, historically, the amount of selling we have seen in the general indexes puts us in an extreme cautionary stance. Until we see a bottoming day and a follow-through day (last observed December 20th) we switch to purely a defensive mode following a few very simple rules:

1) Avoid any new buys until we see a follow-through day.

2) Close out any losses that you have

3) Start taking gains in your leading stocks if they start weakening, all depends on your cost basis.

“Market in correction” does not necessarily mean you have to sell everything you own but you should take a cautionary stance, monitor your positions and grab gains if they start falling with the general market. Following the above rules will also give you fresh cash to deploy to new leaders when the market surfaces from the correction. Corrections are also not a time to walk away from the market, corrections give you a new opportunity to see which stocks are the strongest and these will usually lead the next phase up. Thus, during this correction you should take the time to study stocks and run screens to find the next potential leaders. For example:

If I screen for “Fundamentally” strong stocks I come up with names like AAPL, VRX, KORS, JAZZ, RAX, RGR, SXCI, ALXN, UA, SWI, PCLN, CXO and others.

If I screen for “Technically” strong stocks I get names like ATLS, RGR, URI, AAPL, PCYC, UBNT, FIRE, ALLT, JIVE, PKT, ALXN,URI, GNC and others.

If I screen for stocks with a “Relative Strength at new highs” I get names like LULU, MA, MNST, ULTA, HIBB, ISRG, RNF, CELG, PCLN, TSCO, ALLT, BNNY, PKT, SBUX, CMG, and many others.

If I screen for strong recent “IPOS” I get names like BNNY, BV, EPAM, TNGO, KORS, JIVE, FRAN, SAVE, RNF, UBNT and many others.

The point is that the new leaders will show up in these lists and other screens. While the market is in correction this is a good time to look for the next opportunity by running screens like these daily. So for now these are some of the names I would be looking at. Readers of this letter should probably recognize many of the names highlighted above.

Summary: The market is in correction, any new buys are off the table until we get a follow-through day, and this may happen as early as Wednesday this week or many months from now. Continue to monitor your positions and the market; during this time we will continue to highlight interesting stocks and the market condition. Please feel free to contact us if you have any questions pertaining to anything we mentioned here or in past reports, or if you need a midweek update as to what is going on in the market. You can also e-mail me at georget@knowyouroptionsinc.com

At the time of this writing I and or managed accounts do hold KORS, TSCO, MNST, SWI, RAX, BIIB, CELG, SLXP, and LNKD, however this may change at anytime based on market conditions and other stocks that we do not own may be bought. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change.

This issue looks at: TNGO, LNKD.

General Market Outlook: The markets got a boost last Monday due to comments from Fed Chairman Ben Bernanke, the NASDAQ rose 54 points up 1.8%. However, through the rest of the week the selling intensified with increased volume adding another 2 distribution and stall days to the NASDAQ and S&P 500. Despite this for the week the NASDAQ rose 0.8%, the S&P 500 rose 0.8% and the DOW rose 1%. For now caution is the name of the game, continue to monitor your individual stocks to observe if this is a mild digestion of recent gains, or a start of a larger correction.

Technical view: The markets opened the week with nice gains on Monday due to dovish comments from Fed Chairman Ben Bernanke justifying the continuation of a very accommodative monetary policy, the rally lasted for one day, and then the market reversed and kind of sold-off through the week. At this time this brings the number of distributions days (heavier volume selling days) to 4 on the NASDAQ and 5 on the S&P 500 (please see charts below). Despite the heavier selling that has built up in the market, all the indexes managed to close above their 10 day moving average lines. This last week was the end of the first quarter, and some of the selling may be due to fund managers grabbing profits to close out the quarter, or may be a start of a mild correction, at this point only time will tell. The reason we get concerned about the distribution days, is that clustered distribution days over a few weeks always preceded a market downturn as quantified and described by legendary investor William J. O’Neil founder of Investor’s Business Daily. On the positive side many leading stocks continue to act well, a healthy IPO market is in place, market internals remain healthy, and the 200 day moving average line for all indexes has begun to slope higher in recent weeks, which is a positive sign. A few leading stocks did get hit on Wednesday of last week, but managed to recover a bit through the end of the week.

The change to “Cautious Uptrend” does not mean to hit the panic button, but proceeding with caution is very important. The best way to monitor the market under these conditions, is to first monitor the general indexes, look how leading stocks are acting, then look at the stocks that you own and see if they are still acting constructively. At this point if any stocks you own are under question it might be a good time to sell some your laggards and raise cash which you can later deploy into your leading stocks at fresh buy points. If you feel real uncomfortable you can also take some profits and in the words of Jesse Livermore “sell down to the sleeping level”.

Fundamental view: Despite the market’s advance fear still rules the day. Investors are still shocked from events stemming from dot-com bust, Enron scandal, Sarbanes-Oxley, 9/11, bird flu, Iraq, Afghanistan, subprime meltdown, price of crude oil, Iran, Greece, all of Europe, tsunami, MF Global bankruptcy , budget deficits, and I apologize if I missed a few. Cognitive science teaches us that this prolonged state of fear that we have been exposed to can have a very debilitating effect on societies and individuals. Investors are convinced if it was not for the super accommodative policies of the Fed, the economy would once again slip into a recession. The Fed’s own statements pretty much feed this fear. This fear is evidenced by the low 2% yield on the 10-yr Treasury, indicating the market is still very pessimistic on the future, but as mentioned two weeks ago, these bonds may be ready to break.

Money continues to flow out of stock funds and into bond funds. If we look at the table below we see fund outflows for February from US stock funds was more than double the $423 million outflow in January of $1.2 billion. Bond and Income funds had inflows of $34.13 billion. On the positive side the fund outflows from stocks are much smaller than what we saw all of last year in the $10-30 billion range.

Economic data continue to improve claims for unemployment on an unadjusted basis are down 10.5% from a year ago levels. Real GDP growth for the 4th quarter came in at 3% annual rate, the report contained information on corporate profits which increased at a 3.5% annual rate and are up 7% from a year ago. Overall profits are at record highs, and businesses have record amounts of cash on their balance sheets. New orders for durable goods were up 2.2% in February, orders are up 12.2% in the past year. Orders for “core” capital goods are at a new all time record high and up 9.5% from a year ago.

It is unclear what it would take to eliminate the pessimistic and fear premium in the market. Economic conditions are improving and as usual the government is interfering and slowing things down, thus conditions are not ideal. Perhaps investors should stop focusing on the government to mend the economy and take a look at changes we are seeing in the private sector as evidenced by all the recent economic data we have highlighted in past reports. Government does not and cannot create growth but individuals do and this is the driving force of the U.S. economy.

Summary: From the technical view the market is under pressure and may slip into a brief correction, this would not be unwarranted due to the recent upside run we had just witnessed. On the fundamental side in spite of government meddling the economy is still growing. Continue to watch your stocks for any signs of increased selling pressure. Concentrate on the leaders and look at the best stocks this will tell you the story of the market. This week I did annotate two charts one on TNGO and one for LNKD, for educational purposes, it is at the end of this report. You can review previous stocks mentioned on our website. Please feel free to contact us if you have any questions pertaining to anything we mentioned here or in past reports, or if you need a midweek update as to what is going on in the market. You can also e-mail me.

At the time of this writing I and or managed accounts do hold KORS, TSCO, MNST, SWI, RAX, BIIB, CELG, INVN, SLXP, and LNKD, however this may change at anytime based on market conditions and other stocks that we do not own may be bought. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change

(TNGO) Tangoe Inc. Develops on demand lifecycle management software for enterprise communications assets and services.

The Story: Tangoe helps companies track and manage fixed-line and wireless assets, monitor usage patterns for compliance with company policies and pinpoint questionable billing. Tangoe has been making acquisitions targeting telecom expense management (TEM) niches, such as mobile device management. The rise of wireless devices, especially smart phones is making it harder for company IT department to get a handle on telecom spending. Research firm Gartner estimates TEM revenue will rise 18% this year to $1.06 billion. According to a Gartner analyst, “wireless is exploding faster than organizations can respond, which is helping fuel the growth of TEM to manage mobile proliferation”. TEM has been moving from primarily a software market to an outsourcing and managed services market, that trend is going to pick up over the next 18-24 months. Tangoe’s expected sales growth this year would give it about 10% of the market.

Fundamentals:

• 8 solid quarters of triple digit earnings growth +167%, +167%, +400%, +500%, +150%, +200%, +167%, +100%
• Sales have been greater than 40% for 4 quarters at +40%, +56%, +59%, +57%,
• Return on Equity of 32%
• Management is vested owning 37% of shares
• Fund sponsorship jumped in the last two quarters from 100 to 133 funds notable funds such as MFS New Discovery and Wasatch Micro Cap owning shares,
• Forward earnings estimates for 2012 and 2013 of +62%, +36%

Technicals: Tangoe recently formed a square box on base pattern, look to see if it can take out the 19.90 high on volume it may be playable there. Tangoe already broke out of a first base in mid February. Recently it went on and is forming a “square box” base. It tried to break out from here this week but reversed. However Tango is holding the 10 day moving average and if it bounces from here this may be playable as long as it holds the 10 day moving average or otherwise wait for the breakout past the 19.90 level. If the general market stays weak may need to see if it comes into the 50 day moving average, and how it acts here. (The term “pocket pivots” annotated in the chart above and as I have used this term in the past is coined and described in Trade Like an O’Neil Disciple, written by Gil Morales and Dr. Chris Kacher, a must read for all investors.)

(LNKD) LinkedIn Corp. provides a social networking platform enabling members to share their professional identity online via Linkedin.com

The Story: Founded in 2003, LinkedIn connects the world’s professionals to make them more productive and successful. With more than 150 million members worldwide, including executives from every Fortune 500 company, LinkedIn is the world’s largest professional network on the Internet. The company has a diversified business model with revenues coming from member subscriptions, marketing solutions and hiring solutions. Headquartered in Silicon Valley, LinkedIn has offices across the globe. LinkedIn may be a play on the new social media hysteria coming from the anticipated Facebook IPO.

Recent News: 3/21/2012 “The” Goldman Sachs upgraded it to a top rating and raised its price target to $135 from $80. The investment bank said LinkedIn is becoming a top tool for recruiters since the site already boasts more that 150 million resumes. It also sees LinkedIn garnering more revenue from corporate subscriptions as well as from internet and mobile ads.

Fundamentals:

• Earnings have been sporadic over the last few quarters +600%, +700%, +50%, +43%, 0%, +140%,
• Sales have been in the triple digits for 6 quarters at +107%, +108%, +110%, 120%, +126%, +105%
• Return on Equity of 11%
• Funds sponsorship has increased over the last two quarters form 186 funds to 316 funds, notable funds include T Rowe Price growth Stock, Fidelity Contrafund, Morgan Stanley Institutional mid Cap growth among others.

Technicals: LNKD has tried to break out several times and reversed back into the base. However the base structure does show many days of accumulation. Recently LNKD gapped up, and if it is going to work for now it should hold the low of the gap around the 97 level. It looks like this will depend on the general market and of course keep your eye on it as the Facebook IPO approaches. Generally a play on the social media hype!

This Issue looks at: General overview

General Market Outlook:  The market is in a continued uptrend, some of the indices showed fatigue while the NASDAQ and leading stocks continue to act well. This last week, the NASDAQ rose 0.4%, the S&P 500 fell 0.5%, and the DOW fell 1.1%. It is very possible that this short consolidation continues downward, but instead of trying to guess a top or predict a downturn it is best to look at what the market is saying and what the leaders are doing. Right now the uptrend continues and leading stocks continue to act well, and we are also seeing support in the recent IPO market.  Any evidence of heavy selling did not materialize this week; for the now the trend continues up.

Technical View:  The NASDAQ market continues to lead, and despite the fact that is slightly off its recent highs, it is still above its 10 day moving average (see chart below). When the market looks undecided it is worth looking at what the leading stocks are doing, and this can give you a good picture as to what the big money is doing in the market. Right now judging from what leaders are doing it does not appear funds are dumping shares. AAPL continues to flirt with the 600 price mark. Stocks such a LULU, CELG, MNST, RAX, SWI, CMG, PCLN, INVN, MA, FIRE, SBUX, ALXN, GNC had an all time closing daily highs this week. Old time tech stocks like CSCO and INTC popped into new recent highs, IBM and EMC also flirting near recent highs. The “cloud stocks” such as FFIV, CRM, RAX, and VMW continue to act well.  We are also seeing support coming in from recent IPO (initial public offerings) stocks acting well; stocks such as KORS, INVN, TNGO, FRAN, UBNT, GNC, RNF, and UAN are the new merchandise in this market. This coming week also hosts a number of new IPOS this week, and we will watch their action.  Midweek the banks, financials and homebuilders came under pressure from mixed economic news, however they were able to rebound off their lows on Friday, this can be evidenced in ETF charts of  KRE, XLF and XHB. Big Banks such as USB, WFC, BAC and JPM continue to act well as do regional banks such as TCBI, SBNY, MBFI and CRBC among others.  All these issues were able to close off their lows on Friday. Thus, with leadership in the NASDAQ, lack of heavy selling, participation from financials and a constructive IPO market, the trend for now remains up. However as always keep your eye on the action of the general indices, leaders, and your own stocks to tell you how to play this market.

Fundamental view: While still nowhere near ideal there is improvement in the jobs market. The claims for unemployment insurance declined 5,000 last week to 348,000; the lowest level since March 2008, continuing claims for regular state benefits dropped 9,000 to 3.35 million the lowest since August 2008. New claims for unemployment are down more that 10% from the same time last year. Housing numbers this last week gave us a mixed picture, but did have a positive slant. Housing starts came in near expectations and are up 34.7% from a year ago. Building permits are up 34.3% from a year ago. Existing home sales fell 0.9% in February but they are still up 8.8 percent from a year ago. New home sales fell 1.6% in February but still are up 11.4% versus a year ago.

On the negative side of things, the commerce department reported that year-over-year growth in real disposable income is below 1%, a level typically associated with a recession; it was just 0.6% in January.  However on the positive side, the Federal Reserve issued a report on households’ financial obligations which were 15.93% of after-tax income, the lowest since 1984. Thus when you get keep getting mixed economic news it is always best to stay focused on what the stocks market is doing.

Summary: From the technical and fundamental side of things many individual stocks continue to act well. Continue to watch the action of leading stocks and look for signs of possible add on points. Also continue to monitor the market for any signs of weakness.  Please feel free to contact us if you have any questions pertaining to anything we mentioned here or in past reports, or if you need a midweek update as to what is going on in the market. You can also e-mail me at georget@knowyouroptionsinc.com

At the time of this writing I and or managed accounts do hold  KORS, TSCO, MNST, SWI, RAX, BIIB, CELG, INVN, FIRE, SLXP, FIO, and LNKD, however this may change at anytime based on market conditions and other stocks that we do not own may be bought. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change.

This Issue looks at: Brief overview, mention of banking issues MBFI, SBNY, CRBC, TCBI, WFC, BAC, SLXP, TLT, TBT

General Market Outlook: The market is in a continued uptrend. The markets scored weekly gains with the S&P 500 rising 2.4% for the week, closing above 1400, the NASDAQ rose 2.2% closing above 3000, the DOW rose 2.2% closing above the 13,000 level. The NYSE Composite index rose 2.1% for the week after suffering two weekly losses. The Dow Jones Transportation Index which was lagging also participated by rising 3.7% for the week. Any evidence of heavy selling did not materialize this week; for the now the trend continues.

Technical view: In previous reports we mentioned how regional banks as an industry group were climbing up the ranks of market leadership. This week we saw a huge move by financial stocks namely regional banking stocks (please see the chart of the Regional Banking ETF KRE below). KRE scored an impressive 6.1% gain for the week. Other notables for the week were the number of new highs being reached, led by the banking sector with 25 stocks making 52 week all time highs, followed by retail (16 new highs) and medical stocks (12 new highs). Overall on the NASDAQ we had 140 new highs and 9 new lows.  In the banking sector notable breakouts occurred in MBFI moving past a 20.91 buy point on Thursday and Friday with increases of 128% and 267% respectively. SBNY broke-out on Friday with an 88% increase in volume past a 64.28 buy point. CRBC moved up 10.6% for the week, extending from a short 3 week consolidation on a weekly volume increase of 152%. TCBI continued to inch higher in average trade.

In the larger bank space we saw a breakout in WFC on Tuesday on a 100% increase in volume. BAC rose 21% for the week on a 48% increase in volume. The Banking – Super Regional industry group as rated by Investor’s Business Daily was basically dead last 7 months ago, it rose to the number 80 spot 6 weeks ago and now occupies the number 21 spot out of 197 Industry groups. I bring this up since many market pundits were concerned that financial were not participating in this rally – now we have it!

The building sector continues to do well, as does the retail and medical sector. A notable breakout in the medical sector was SLXP which broke out on Tuesday past a 50.28 buy point on a 988% increase in volume. In the “cloud Space” stocks such as FFIV, CRM, VMW, RAX, SWI, continue to act well.

Also the big news for the market and what can be a game changer for stocks in a positive way, is the sell-off we finally witnessed in bonds this week. This may drive more money into stocks.  A chart of the bond ETF TLT and the inverse bond ETF TBT are shown below. Note how the TLT breaks down and the TBT breaks-out!

Fundamental view: As mentioned previously corporate profits are at record highs, monetary policy is very loose, and the market is undervalued. With investment advisors getting less bullish, we have our wall of worry to climb. This week the Fed acknowledged that they are seeing an increase in economic growth and somewhat higher inflation; indicating most likely no more quantitative easing.

Summary: From the technical and fundamental side of things many individual stocks continue to act well. Continue to watch the action of leading stocks and look for signs of possible add on points. Also continue to monitor the market for any signs of weakness.  Please feel free to contact us if you have any questions pertaining to anything we mentioned here or in past reports, or if you need a midweek update as to what is going on in the market. You can also e-mail me at georget@knowyouroptionsinc.com

At the time of this writing I and or managed accounts do hold LEN, KORS, TSCO, MNST, SWI, RAX, BIIB, CELG, JAZZ, INVN, FIRE, SLXP, however this may change at anytime based on market conditions and other stocks that we do not own may be bought. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change

This Issue looks at:  Market review, ETFs, and a few actionable ideas.

General Market Outlook: The market’s uptrend continues, the general indices appeared to be in a sort of stall mode over the last few weeks. However, quality stocks continue to go higher and exhibit constructive action. This week we had another heavy selling day on Tuesday with a rebound towards the end of the week in light volume, not quite the ideal situation you would like to see.  The amount of selling in the market did pick up this week, but that was not evident in shares of leading stocks. For the week the NASDAQ rose 0.4%, the S&P 500 inched up 0.1%, and the DOW dropped 0.4%.

Technical view:   This week we did see another distribution day (selling on heavier volume) on Tuesday,  this brings our count to 3 distribution days on the NASDAQ (please see NASDAQ chart below), and 4 on S&P 500  and Investor’s Business Daily counts 6 distribution days on the NYSE Composite. Naturally, this should bring some concern and put us on high alert. But what is interesting is that despite this selling, the NASDAQ’s advance decline line rose this week, and the NYSE advance decline line hit a new high. The advance decline line plots the number of rising stocks vs. losers on a day to day basis (please see charts below).

We can see strength in the market continuing in sectors such as retailers, homebuilders, technology and even financials as evidenced by charts of the ETF’s below.

Technically speaking, while the general indices are seeing some selling pressure the uptrend continues, and is supported by the internals and some underlying ETFs as highlighted above and individual stocks that continue to act well. It is possible at this juncture that the market can bust open either way. So it is most important to watch you stocks for any signs of weakness. Also what was interesting we mentioned last week that the small caps got hit the hardest, however this week the Russell 2000 small Cap index was able to recover somewhat (please see chart below).

Fundamental view: As mentioned previously corporate profits are at record highs, monetary policy is very loose, and the market is undervalued.  Markets are still fearful, and news from Europe or Iran can still hang heavy on the markets.

Economic data continue to improve and on the jobs front, it all depends if you want to take a “the glass is half-full or half-empty approach”. Employment continues to improve although at the slowest pace since the great depression. It is 49 months long still trying to recover to peak employment, and at this pace it does not look like we ever will. However despite this you need to remember to keep your eye on your individual stocks.

Earlier this week Laszlo Birinyi (a well-known market bull) had this to offer: “As I’ve often said, the negative case is always more articulate, it’s always more rational, more reasonable because we see it. The market is looking ahead, and I contend what stocks are telling us is a possibility, and I think a fairly good possibility, that something positive is going to develop and perhaps we are underestimating the economy. Don’t disregard the possibility of something good happening.”

Summary: From the technical and fundamental side of things many individual stocks continue to act well. Continue to watch the action of leading stocks and look for signs of possible add on points. Also continue to monitor the market for any signs of weakness.  Please feel free to contact us if you have any questions pertaining to anything we mentioned here or in past reports, or if you need a midweek update as to what is going on in the market. You can also e-mail me at georget@knowyouroptionsinc.com

In this issue we I go through a shortened list of things that may be actionable this week, (for educational purposes) if the market cooperates with us.

At the time of this writing I and or managed accounts do hold LEN, KORS, TSCO, MNST, CXO, CLR, SWI, RAX, BIIB, CELG, JAZZ, however this may change at anytime based on market conditions and other stocks that we do not own may be bought. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change.

Most of these stocks have very sound fundamentals, thus I am quickly going over their technical action. Please note these are not buy or sell recommendations just observations for educational purposes.  If you decide to act on any of these, if it is within your own personal risk tolerance limits, always keep a 5-8% stop loss from your point of entry.

BIIB, found support at its 50 day line traded in some very tight action then on Thursday had a “pocket pivot” moved up on a slight increase in volume. It can be bought here using the 114 area as a stop or wait and see if it breaks out on volume form the new base it is forming now.

CELG, continues to trade tightly, past the original breakout point of in the 68 area, however now has formed a 3 weeks tight pattern and additional buy point may be at 75.21, holding right below here, moved up nicely on Thursday and Friday, recently found support at its 50 day moving average.

ALXN, formed a three weeks tight pattern look to see if it can break past the 87.53 on volume.

JAZZ, retreated this week on news of a secondary offering, still in the buy zone using the 50 day moving average as a stop or the 44.44 low.

FFIV, Also formed a three weeks tight area with a 129.76 entry, or can be bought here using the 119 area a stop.

RAX, Can be added here using the 49 area as a stop.

INVN, may be the hottest play, volatile, found support at the 50 day line, if retreats to the 15-16 area can be buyable with a tight stop.

TIBX,  tried to break out of a classic cup with handle base, it is in the buy zone above 30, problem is this was a low volume breakout.

CXO, look to see if it can recapture its 50 day line on volume, it might then come back in play.

CLR,   retreated from the highs look to see if it forms any pocket pivots in this area.

AREX, bounced off its 50 day average on volume, playable here using a standard stop loss.

CJES perhaps the most undervalued energy play due to fear of fracking legislation, if this issue ever becomes clear this may be an interesting play at these levels, recaptured the 50 day average on decent volume.

KORS, hot IPO broke out of a short consolidation 27.58 area, formed a possible high tight flag pattern and flew higher. Friday sold off after the market close due lock up period being waived, and owners selling more shares, wait and see how the market responds here, it might find support at the 10 day moving average or there might be a big sell-off.

DG, continues to trade tightly with slow upside progress in the buy zone.

TSCO, in the building construction retail group , recently broke out and trading tight, may be forming another consolidation, had a pocket pivot on Wednesday playable here using the 10 day average as a stop.

V, formed a three weeks tight formation look to see if it can take out the 119.36 high on volume.

SBNY, forming another very tight base can cheat in here or wait for a breakout.

SHFL, may be payable using the 15 area as a stop.

BYI, forming another short base with a 46.65 buy point.

LNKD flashed anther pocket pivot at Thursday, buyable using the usual stop loss.

ZNGA broke out past the 11.50 area, went higher than got hit after earnings, reversed higher playable at the 14 dollar area.

FIRE huge gap up after earnings, formed a rare short stroke pattern, no entry now but worth watching.

Lastly a few home builders retreated from their highs recently, then on Thursday and Friday had a nice bounce or recaptured their 50 day moving average. These stocks do not have the fundamentals that one looks for (due to the whole housing crisis) however technically they are acting well. These would include LEN, DHI, RYL, MTH, PHM, might be a bottom fishers paradise!

This Issue looks at: Flow of funds, Socionomics, Bank of Israel, and FIO, CDNS and others.

General Market Outlook: The market’s uptrend continues, while the crowd waits and calls for at least a minor correction this still has not materialized. It would be only natural for a pullback at this point, and even welcome, but rather that try to predict this; we try to just read what the market is telling us.  Right now the market is telling us that the big players in the market are not giving up shares of leading stocks. For the week the NASDAQ rose 0.4%, the S&P 500 rose 0.3%, and the DOW slipped 0.1%.

Technical view: Talking to other investors, money managers, and floor traders, everyone is trying to anticipate a correction and pullback. A pullback would only make sense at this point; however, once again the objective data tells us that institutions are not ready to give up shares of leading stocks. Although this week we did see another distribution day (selling on heavier volume) this brings our count to 2 distribution days on the NASDAQ and S&P 500 over the last 3 weeks (please see NASDAQ chart below). This is not indicative of institutions heading for the door.  The DOW continues to struggle with the 13,000 level while the S&P 500 and NASDAQ inch forward. Corrections are healthy for the market and are welcome because they give you a chance to separate the leaders from the laggards. Since December we have not had a correction, instead over the last three weeks we are seeing perhaps a bit of a stall and sometimes volume dwindling on the upside in the general indices. Small cap stocks are getting hit, large cap leaders continue to act well.  Despite Wednesday distribution day, and small cap stocks getting hit,  we continue to see volume come into the leading issue as they hit new highs or trade near new highs, leaders such as AAPL, MNST, KORS, TSCO, JAZZ, VPHM, CELG, LULU, BWLD, UA, AZO to name a few. Thus the market may just be rotating money into large cap leaders.  For now the market is moving forward in an orderly fashion and we continue to “sit-tight” while looking for additional entry points into leading issues. Of course it is never really a time to sit back and relax, thus we continue to look for evidence of institutional selling by counting distribution days and observing the price volume action in the leading stocks.

Fundamental view: As mentioned previously corporate profits are at record highs, monetary policy is very loose, and the market is undervalued. Thus, barring some major catastrophe, this market should continue to move higher. In fact corporate profits are outpacing the gain in the S&P 500, indicating this upside move in the markets is not due to any kind of irrational exuberance. This still indicates that markets are still very fearful despite surveys which are pointing to extreme bullishness.

According to Investment Company Institute, ICI, which measures the flow of funds, cash has steadily been leaving stock funds, although in January it shrank to an outflow of $218 million, well below the December outflow of $28.84 billion (see attached table), and there were signs that the situation improved somewhat in February. Bond funds saw an inflow of $27.86 billion in January, vs. $9.5 billion inflow in December. Despite some possible improvements, still this tells us that retail investors are fearful. Investors are still willing to buy low yielding bonds instead of taking on equity risk. This market is still very pessimistic, if you believe in the future of America and capitalism, equities are cheap.

Sometimes we can get a sense of the market by looking at prevailing social moods. We can look at the market from a Socionomic view of the market from Robert R. Prechters Jr. (2003) Pioneering Studies in Socionomics, which tells us that popular art, fashion and other factors are a reflection of the dominant public mood. The stock market changes direction in step with these expressions of mood. Mood changes can be considered as possible if not probably a basic cause of ensuing events. The recent change in fashion we are witnessing may be telling us that the market is moving form a “negative peak mood” to a “rising transition”. We are just being introduced by ads from the Gap with colored jeans, Neiman Marcus is coming out with floral prints for girls skirts, the hemlines are rising, and Saks is introducing bright colored shoes!  Men’s ties are getting skinnier, and the Michael Kors add on my web page is flashing colorful shoes as well.  These fashion trend changes point to a “rising transition” and are coinciding with a rising market! Interesting!!

And most interesting of all this week Bloomberg ran a story that the Bank of Israel will begin a program to invest a portion of its foreign currency reserves in U.S. equities. The initial investment phase will amount to about 2 percent of the $77 billion in reserves, increasing to about 10% in the future. Perhaps the bankers of one the last true capitalistic countries in the world also sees value in U.S. equities? Now of course one can make arguments as to what the true role of a central bank should be. However, what I like about this is that the Bank of Israel is betting on Capitalism. They are buying assets that are attached to thriving businesses that serve customers, and make profits the old fashion way. Take this in contrast as to what MF Global did. MF Global bet on Socialism, they bet on sovereign debt, figuring that government policies (using tax payer’s money) would bail these countries out, and they would profit the easy way. MF Global bet big on Socialism and lost, and created the first ever default on counterparty risk in the futures market.  In fact being run by a politician and in true form, they even placed this bet with others people’s (unknowingly) money.

Of course we go through the negative view. The risk in the market is still from the political side, the current administration wants to continue to redistribute wealth rather than allow free citizens to create wealth. I see this as a problem because this kind of mindset is what creates lower standards of living. Governments do not care about efficiency or profits in their mantra of “fairness” thus this leads to major financial mistakes.

Borrowing a few lines form George Gilder’s The Israel Test ( 2009) “Poverty springs chiefly from envy and hatred of excellence- from class-war Marxism, anti-Semitism and kleptocratic madness. It stems from the belief that wealth inheres in things and material resources that can be seized and redistributed, rather than in human minds and creations that thrive only in peace and freedom. In particular the immiseration of the Middle East stems chiefly from the covetous and crippling idea among Arabs that Israel’s wealth is not only the source of their humiliation but also the cause of their poverty.”

This is the parallel I see happening in America today.  I see is an administration and public media which is preaching a mindset that anyone in America who is less fortunate, is somehow damaged at the expense of people who did well for themselves (despite the meteoric rise in standards of living for all in the U.S over the last 50 years). We are being told the less fortunate have a right to seize this property of others for themselves, or let the big brothers in government (and some of their crony capitalist friends) seize it and redistribute it.  This class warfare rhetoric has to stop!

“Socialism everywhere expresses envy of excellence by treating the works and wealth of the successful as the wages of sin.”

Summary: From the technical and fundamental side of things the stock market continues to act constructively. Continue to watch the action of leading stocks and look for signs of possible add on points. Also continue to monitor the market for any signs of weakness.  Please feel free to contact us if you have any questions pertaining to anything we mentioned here or in past reports, or if you need a midweek update as to what is going on in the market.

In this issue we highlight 2 new names which we think are interesting FIO and CDNS, plus we do a quick review of many stocks mentioned in the past. Also I encourage the reader to go back past issues to review recently highlighted stocks.

At the time of this writing I and or managed accounts do hold KORS, TSCO, MNST, CXO, CLR, SWI, RAX, BIIB, CELG, JAZZ, however this may change at anytime based on market conditions and other stocks that we do not own may be bought. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change

FIO Fusion-Io Inc. Developed a storage memory platform for data decentralization enabling customers to improve processing capabilities.

The Story: Fusion-io is viewed as a high growth company having a disruptive technology. Fusion-io uses flash memory storage instead of traditional disk drives. It is tapping into the cloud computing boom.  FIOs new form of data storage boosts speeds while lowering costs for business users. Similar to how graphic cards speed up computer display, FIO cards boost performance by moving the data closer to the computer processor. It does this with flash memory chips and integrated software. Customers include Facebook, Salesforce.com, Zappos, Answers.com and Apple.  Apple co-founder Steve Wozniak is the chief scientist for Fusion-io.

Recent news: On Thursday, Fusion-io announced the results of some testing of its technology as used with a secure computing platform from Verdasys. The results included as much as 720% performance improvements and data latency reductions vs. traditional approaches.

On Friday, press releases cite a Morgan Stanley analyst as restarting coverage and saying Fusion-io’s market for enterprise flash gear could rise from its present $2 billion to eventually $20 billion. A Credit Suisse analyst also reportedly reinstated coverage. On Wednesday, Dougherty & Co. analyst Mark Kelleher said in a research note initiating coverage that Fusion-io is “in a ‘hyper-growth’ mode as it struggles to keep up with the exploding market.”

“Fusion-io Technology is one of many SSD (solid state drive) competitors benefiting from the revolution in storage provided by solid state memory,” he wrote. Kelleher, however, started coverage with a neutral rating, citing customer concentration issues around key customers Apple (AAPL) and Facebook.

Fundamentals:

Earnings over the last 4 quarters have been in triple digits +213%, +167%, +350%, +600%

Sales over the last 4 quarters have been in the triple digits +403%, +556%, +175%, +169%

ROE of 9%

Fund ownership has increased over the last 3 quarters form 123 funds to 214

Strong forward estimates for 2012 of +108%, 2013 of +44%

Technical view: In the past FIO formed a base and broke out in October only to fail from the 40 dollar area, then was hit with a secondary offering at the time of the lock-up expiration which then killed the stock. However lately there appears to be a renewed interest in the stock as evidenced by the high volume buying over the last 4 weeks. On Feb. 17th it was able to recapture its 50 day moving average (red line) on huge volume then digested gains only to pop up again last Thursday and Friday on huge volume once again. The aggressive buyer can initiate a position here, or wait for a pullback to the ten day average (green line). of course using the usual 5-8% stop loss.

CDNS  Cadence Design Systems develops electronic design automation software and related hardware for electronics companies in circuit design.

The Story: As computer chips get smaller and more complex, chip designers and manufacturers need better tools to make them.  Cadence Design systems are benefiting from the trend toward tiny, yet powerful chips for smartphones, tablets, notebook computers and other devices. Cadence has notched six straight quarters of double-digit year-over-year sales gains. In that span, earnings per share have jumped by double or triple digits. Its customers include IBM , JDS Uniphase , LSI, Nvidia, Siemens,   Sigma Designs,  and Teledyne Technologies . Wall Street has looked more favorably on Cadence recently because of its bold plans to expand the company’s operating profit margins, says Jay Vleeschhouwer, an analyst with Griffin Securities. Cadence wants to achieve mid-20s percentage operating margin in 2013, up from about 19% this year, he says. Vleeschhouwer expects Cadence to have an operating profit margin of 22% in 2013.

Recent News: 2/1/2012 it posted Q4 results that beat Wall Street’s expectations. Cadence earned 17 cents a share, excluding items, up 143% from a year earlier, on sales of $308 million, up 24%. Analysts polled by Thomson Reuters were looking for Cadence to earn 15 cents a share on sales of $300 million. Cadence now has had six straight quarters of double-digit sales growth year over year. For the current quarter, analysts expect
Cadence to earn 15 cents a share, up 67%, on sales of $310 million, up 16%. For the year, Wall Street is projecting that Cadence will earn 68 cents a share, up 33%, on sales of $1.27 billion, up 10%

Fundamentals:

Last 4 quarters saw earnings rise, +350%, +71%, +250%, +143%,
Last 4 quarters saw sales rise, +20%, +25%, +23%, +24%,
ROE of 40%
8 solid quarters of increasing fund sponsorship from 353 to 518 funds owning the stock
Forward earnings estimates for 2012 of +33%, for 2013 +26%

Technicals: Prior to earnings the stock was being accumulated, the stock broke out on earnings taking out the 11.72 high, for the last four weeks the stock has been trading tightly and is still in the buy zone. The stock may be a slow riser, it can be tested here, or wait to see if any more buying interest comes along. It appears to be holding support in the 11.50 area, if it fails, it may fall to 11,  if it is going to work it should hold these areas.

Brief key points on a few stocks, some of these have charts in previous issues, some do not, however if you are interested I would be happy to e-mail you a marked up chart or the fundamental story on any of the below mentioned stocks.  Most of these stocks have very sound fundamentals, thus I am quickly going over their technical action. Please note these are not buy or sell recommendations just observations, and if you decide to act on any of these, if it is within your own personal risk tolerance limits, always keep a 5-8% stop loss from your point of entry.

In the Medical sector:

BIIB, Biogen Idec. Inc.   Continues to trade tightly found support at its 50 day moving average. Its relative strength has declined somewhat but still acting well is playable in this area.

CELG, Celgene, Continues to trade tightly, past the original breakout point of in the 68 area, however now has formed a 3 weeks tight pattern and additional buy point may be at 75.21, holding right below here.

ALXN, Alexion Pharmaceutical had multiple stage breakouts, extended from an entry point, top performing stock but never good idea to chase, need to wait for another consolidation to form. Just keeps moving higher. If you risk it here use the 10 day moving average for your stop.

JAZZ, Jazz Pharmaceutical above the 47.88 pivot  at 51.90 extended now,

QCOR, Questcor Pharmaceutical, corrected from last up move, held support at the 32.83 area, now recaptured the 50 day moving average on volume, may be playable with a tight stop.

ABMD, Abiomed appears to be failing for now.

VPHM,  Viropharma continues to move higher in a tight sort of flag on flag pattern it is extended so if anyone adds here, use a tight stop the 10 day moving average may be a good stop here.

GILD,   needs a lot of work at this time.

In the tech sector:

AAPL, keeps motoring higher, announcement March 7th coming!

FFIV, F 5 Networks, flashed a few “pocket-pivots” around this 120 area,  could use the 50 day moving average at 117 as your stop

RAX, Rackspace Hosting Inc, flashed a few pocket pivots, then had a complete breakout  can be added here using the low of last Friday as a stop.

SWI, Solarwinds, has flashed several “pocket-pivots” as it was moving up the right side of its base, broke out on huge volume, moved higher after earnings and is extended, but continues to act well.

NUAN, Nuance Communications, fell after an earnings miss, now volume coming in as it tries to recapture its 50 day moving average. Worth to keep an eye on.

INVN, Invensense, may be the hottest play, volatile,  looks like it is finding support at is 50 day moving average may be playable if it bounces form here.

TIBX, Tibco software, building the right side of its base on volume, can cheat in here, or wait for a clean break out.

VMW, Vmware, as the cloud becomes back in vogue,  the stock keeps melting up higher, tempting to take a stab using a tight stop.

CRM,  Salesforce.com Gapped up on earnings news, a buyable gap up using 139.75ish as your stop

In the energy sector:

CXO, Concho resources broke out past the 104.83 buy point, missed on earnings but recovered very nicely, sold off this week finding support at the 50 day moving average, if bounces from here could be added to.

CLR, Continental resources, broke out past the 73 area, a bit extended now,  and continued to move higher after earnings, came in this week with crude oil prices dropping, look to see what develops.

AREX, Approach Resources Inc.  Breaking down with crude oil to its 50 day moving average a bounce from here would be playable.

CJES perhaps the most undervalued energy play due to fear of fracking legislation, if this issue ever becomes clear this may be an interesting play at these levels.

In the retail sector:

KORS, Michael Kors, hot IPO broke out of a short consolidation 27.58 area, formed a possible high tight flag pattern this week taking out the 44.97 high. This could be a wild ride!

DG, Dollar General, continues to trade tightly without much further progress.

MNST, Monster Beverage continues to trade up after breaking out past the 50 area (split adjusted). Missed on earnings, but the market forgave them and is trading higher, too extended now.

LULU, Lululemon, moved higher this week on volume.

UA Under Armour, broke out to the upside extended now.

TSCO, Tractor Supply in the building construction retail group , recently broke out and trading tight, may be forming another consolidation,  continues to inch higher in a very tight fashion,

BWLD,  Exploded upwards after earnings. Need to watch for another entry point

LKQX corp. continues to move higher found good support at the 50 day line could be added to here.

HIBB, Hibbett Sports,  looks like forming a tight flat base look for a possible pivot. Earnings this week.

In the financial sector:

MA, Mastercard,  extended and crosses another century mark past the 400 area.

V, Visa extended running away need to wait for another entry.

TCBI,Texas Capital Bank, extended to the upside, starting to consolidate.

SBNY, Signature Bank, after breaking out, fell back into the buy zone, may offer a low risk entry right here, forming another base here.

In the gaming sector:

LVS, Las Vegas Sands, after having a climax top in November 2010, it has consolidated since, broke out and moved higher, extended for now.

SHFL, Shuffle Master after flashing several pocket pivots, in the 12 area, has broke out and is extended, but worth keeping an eye on for additional entry.

BYI, Bally Technologies,  a failed breakout. But may be finding support at the 10 week line.

In the Social Media sector:

LNKD Linkedin, flashed many pocket pivots along the bottom of its base in the 70-90 area, attempted to breakout pas the 95 area in a double bottom base, but reversed and failed,  looks like finding support at the 85 area.

ZNGA Zynga broke out past the 11.50 area, went higher than got hit after earnings, reversed higher playable at the 14 dollar area.

Cyber Security

FIRE Sourcefire huge gap up after earnings, for the aggressive player this is playable, or hope to see it settle a bit. Looks to see how it acts if it comes into its 10 day moving average.

FTNT  Fortinet, in the buy zone of a low volume breakout chart has been wide and loose so presents a bit more risk.