Exactly

Traders,

Let's begin

With the past in front

And all the things

You really don't care about now

It'd be exactly where I'm at

And to think

You got a grip

Look at yourself

Your lips are like two flaps of fat

They go front and back and flappity flap

-- Ween, Exactly Where I’m At

Our current position:

BUYER BEWARE

In this week's edition you will find:

• Where We Are
• What Was Important About Last Week
• What We Are Watching For This Week
• A Word On Discipline

The following sections are on our home site:

• The Growth Stock Landscape
• What We Like - What We Have
• This Week's Scans

Where We Are:

Taking a look at the broader market:

Price action on the major indexes and sectors continues to send the same message.

Preference for defensive sectors such as Consumer Products over the more speculative Technology sectors remains intact.

The Dow Industrial Average gained ground while the Nasdaq posted a small loss.

The Internal indications of Volume and Hi Lo Ratios continue to portray weakness.

We never attempt to call tops or bottoms, but what we are seeing is a considerable lack of evidence to feel comfortable in the market’s ability to gather steam and head higher.

But as bull markets go (and we’re still calling this general uptrend a bull market), gradual pressure to the upside can easily negate the bearish signals and send us to a place where we look back at this weakness and see it as period of the weak hands being shaken out.

Experience has taught us that seeking deeper reasons other than what we see in the charts is almost futile.

When looking to the minds of economists and gurus we get the same old mixed picture.

Reasons to be bullish:

• P/E ratios
• Technical trends
• High earnings from companies

Reasons to be bearish:

• Four-year political cycle
• A flat yield curve
• Too much complacency evident in the VIX

Inevitably, some notions will be proven right while others wrong. In the end perhaps it’s all just chance.

Our approach to chart reading, or Technical Analysis (TA), is not as technical as opponents of the practice tend to believe.

Our take on TA is that it provides a language the markets move in, and not a system that gives specific buy and sell signals. The market is not a math problem to be figured out. It’s a battle ground.

What we do at The Growth Stock Report is trade Growth Stocks.

Some market environments offer great opportunity, while others don’t.

Given the lack of performance in the speculative sectors such as technology that signify ripe conditions for 20% Growth Stock gains, our best bet is to do nothing.

To feel comfortable as bulls we want to see Technology turn iaround and post stronger volume on the rallies.

Until then this market is suspect.

Homebuilders continue to represent weakness in the market. As mentioned before, should this market top out it will look for a sector to lead the way down.

Technically speaking:

The Dow Industrial Average ($INDU), +2.01%, is trying to make a stand at its 50-day moving average to remain trend up.

The S&P 500 ($SPX), +1.26%, is also attempting to rally from its 50-day moving average.

Nasdaq ($COMPQ), -0.22%, is trading under its 50-day moving average and above its200-day average as it represents the weakest of the major indexes.

Russell 2000 ($RUT), +0.27%, is trying to turn around on its 50-day moving average.

Volume indications gave use one day of accumulation a piece on the major indexes. For the past three weeks bears have tilted the scale to their favor with the Dow and S&P 500 making three days of distribution a piece, and the Russell 2000 making five distribution days.

Hi Lo Ratio has shown bearish divergence for the past month.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The 10-year Note Yield ($tnx) is popping north of a year-and-a-half long base.

The U.S. Dollar Index ($USD) made a strong rally off its 50-day moving average as it notched in a new high for the year.

The Gold Miners Index ($XAU) hit a new low for the year as it trades well below its 50-day average.

The Dow Jones AIG Commodity Index ($DJAIG) hit a new low for the year as it trades below its major moving averages.

Consumer Staples ($CMR) hit a new high for the year.

Consumer Cyclicals ($CYC) hit a two month low.

Technology ($DJUSTC) continued its slide as it trades below its 50-day average and above its 200-day average.

The Semiconductor Index ($SOX) cruised to beow its 50-day average as it erases the majority of the year’s gains.

Banks ($BKX) put in a modest rally for the week as they hold ground above the 50-day average.

Broker Dealers ($XBD) pulled back for the week continue to hold form in an uptrend.

Retail ($RLX) is attempting to reverse on its 50-day average.

Healthcare ($HCX) is flirting with its 50-day average as it suffers from a slide after hitting a new high last week.

Biotech ($BTK) drifted lower for the week to find support at its 50-day average while maintaining an uptrend.

REIT's ($DJR) hit a new high for the week.

Homebuilders ($DJUSHB) continued to slide as it trades well below its major averages.

Transportation ($TRAN) posted a modest loss as it remains in an uptrend.

Airlines ($XAL) lost slight ground as it continues to trade in a triangle.

Defense ($DFX) posted a slight loss as it maintains its uptrend.

Energy ($IXE) drifted lower for the week as it trades below its 50-day average and above its 200-day average.

Utilities ($UTY) hit a new low for the year as it trades below its major moving averages.

The top 10 industry groups from the 6 month RS screen are:

1. GOLD
2. DRUG DELIVERY
3. INTERNET SERVICE PROVI
4. INDICES DOW TRANSPORTA
5. PRINTED CIRCUIT BOARDS
6. INVESTMNT BROKERAGE-NA
7. INVESTMNT BROKERAGE-RE
8. SEMICONDUCTOR-INTGRTD
9. NETWORKING COMMUN DVCS
10. DIAGNOSTIC SUBSTANCES

What Was Important About Last Week

STOCKS:

• Texas Instruments (TXN) issued in-line guidance for Q1, foreseeing EPS of $0.31-0.33.
• Xilinx (XLNX) reiterated its Q4 (Mar.) rev guidance of +1-5% sequentially.
• Altera (ALTR) reaffirmed that Q1 sales will be in-line with its prior guidance, which indicated 4-7% sequential growth.
• Nortel (NT) telecom equipment provider reported a big Q4 loss and said it will restate prior earnings.
• Hansen (HANS) energy drink maker topped Q4 EPS estimates by $0.13, with its operating income surging 150%.
• Albertson's (ABS) : The grocer said earnings from continuing operations fell 12% year-over-year.
• AnnTaylor (ANN) beat Q4 estimates and issued upside guidance.
• Aeropostale (ARO) posted Q4 EPS of $0.76 that topped the consensus estimate by two cents.
• Micahels Stores' (MIK) posted an in-line Q4 report, but its guidance is below expectations.
• Wind River (WIND) announced Q4 earnings of $0.11 per share, excluding non-recurring items, a penny below the Reuters Estimates consensus.
• Sykes (SYKE) reported Q4 earnings of $0.22 per share, $0.08 better than the Reuters Estimates consensus.
• McDonald's (MCD) : posted positive global comparable sales For the 34th consecutive month.
• Biogen (BIIB): An FDA advisory panel unanimously recommended the return of Biogen Idec's MS drug to the market.
• Pixar (PIXR) reported Q4 (Dec) earnings of $0.25 per share, seven cents better than the Reuters Estimates consensus.
• The Dress Barn (DBRN) reported Q2 earnings of $0.47, beating the Reuters Estimates consensus by seven cents.
• Qualcomm (QCOM) raised its second fiscal quarter estimates.
• Myogen (MYOG) reported an FY05 loss of $1.68 vs. the $1.71 Reuters Estimates consensus, on revs of $6.96 mln vs. the $9.92 mln consensus.

ECONOMY:

• Non-farm payrolls increased by 243,000 jobs in February. Payrolls were revised down by a total of 18,000 in December and January.
• The household survey reported 183,000 new jobs and a jump of 335,000 in the labor force, pushing the unemployment rate to 4.8% versus 4.7% in January.
• Average hourly earnings increased 0.3% in February after a 0.4% gain in January.
• The U.S. trade deficit widened to a record $68.5 billion in January, higher than consensus estimates of a $67.0 billion gap. The December deficit was revised lower to $65.1 billion from the original estimate $65.7 billion.
• Exports jumped 2.5% to $114.4 billion in January. Total exports of goods and services have risen 28.7% at an annual rate in the last three months and are now at the highest level ever recorded. The U.S. has never exported more.
• Imports rose 3.5% to $182.9 billion last month. Imports of crude oil declined to 302.8 million barrels in January from 311.5 billion in December. However, the average price of a barrel rose to $51.9 billion from $49.8 billion.

What We’re Looking For This Week

Key earnings releases:

• MONDAY: Sonus Networks (SONS)
• TUESDAY: Goldman Sachs (GS), Wireless Facilities (WFII)
• WEDNESDAY: Charming Shoppes (CHRS), Comverse Technology (CMVT), Goodrich Petroleum (GDP), Hot Topic (HOTT), Ross Stores, Inc. (ROST), True Religion Apparel Inc. (TRLG).
• THURSDAY: Barnes&Noble (BKS), Bear Stearns (BSC), Winnebago (WGO).
• FRIDAY: none

On the economic front we have potential market movers with:

• MONDAY: none
• TUESDAY: Retail Sales, Retail Sales ex-auto, Business Inventories
• WEDNESDAY: Export Prices ex-ag., Import Prices ex-oil, NY Empire State Index, Net Foreign Purchases, Crude Inventories, Fed's Beige Book
• THURSDAY: Building Permits, Core CPI, CPI, Housing Starts, Initial Claims, Philadelphia Fed
• FRIDAY: Capacity Utilization, Industrial Production, Mich Sentiment-Prel.

The Following Sections Are On Our Home Site:

• The Growth Stock Landscape
• What We Like - What We Have
• This Week's Scans: • SETUPS • BREAKOUTS • BASE BUILDING • SHORTS

This Week's Word On Discipline:

“"Warriors take chances. Like everyone else, they fear failing, but they refuse to let fear control them." – Ancient Samurai saying