Date:  May 18, 2008

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Fundamental Data provided by Investors Business Daily  

F.I.T. STOCKS

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Market Update

MARKET HEALTH:  Market in Confirmed Rally

The rally light remains GREEN! The major indexes finished up for the week with the NASDAQ posting a 3.4% gain, the S&P generated a 2.7% rise, and the DOW followed with a 1.9% increase.  Leading stocks in leading industries have also remained strong.  Many of our leading F.I.T. Stocks have shown their strength and the importance of picking high quality growth stocks with superior fundamentals, in excellent industries, with strong technical chart bases.

This new rally has also shown us the importance of spending a few minutes each night of studying the price and volume movements of the three major indexes and of stocks you have invested in.  Once again if you are to listen to the news and information being fed to us, the picture still looks a little gloomy.  The FED stated that industry output fell by .7% for the second straight month and the S&P posted a report that first quarter earnings were down 25.9%.  On the other hand, Ben Bernake, the FED Chief, said he was encouraged by the banks efforts to raise cash.  But how do we as regular investors decipher all of this information that gets passed on to us from the various media outlets?

To use a saying often used in tennis, "The strings never lie, the ball will always go the way the strings are facing once you make contact with the ball".  It does not matter if your knees are bent or if you missed your follow through or whether you did not keep your eye on the ball, the ball will always go the way the strings are facing no matter what else you do.  The same is true of the major indexes.  People have their opinions on what the markets may do, but the markets do not lie.  If we monitor it at the end of each day for its price and volume movements it will always tells us where it wants to go. Since the end of March it has told us that it wants to rally and this is what it has done.  The Market leads and we follow. 

A Healthy Investor captures the pulse and health of what the market is actually doing.  We look for signs in the daily price and volume of the markets movements.  We want strong volume up days and weak volume down days.  We want the markets to be able to shrug off bad news and fight back, we want leading stocks to show market leading strength. Since the end of March this is what the markets have told us, and if you followed the markets lead you have been rewarded nicely. 

Could the rally end tomorrow and we start heading south again? You bet! Could we be on the next great bull run? You bet!  Only one thing is truly for sure and that is the market is always right and this is why we always follow its lead.  As healthy Investors we must always be prepared. Being prepared means spending a few minutes at the end of each trading day to monitor the price and volume action of the Markets health and of the stocks you have invested in.  This healthy investment habit, on a daily routine will always keep you in tune to the pulse of the markets.

We have left up last weeks newsletter charts so you can compare them to this week.  Notice the breaks of the downwards trend lines.

NASDAQ

LAST WEEK  

THIS WEEK

Last week the support line of 2400 held up for the NASDAQ and our uptrend continued from the March 20 rally confirmation.  In addition to this, we had prices close above the 200 day moving average for the first time this year.  Institutional investors usually use the 200 day moving average as a technical tool for dividing between the bulls and the bears.  They are bullish when prices are above the 200 day moving average and bearish when prices are below the moving average.

Next week we will look to see if the NASDAQ can hold above its 200 day moving average.  Eventually we would like to see the shorter term 50 day moving average pierce up through the longer term 200 day moving average.  This moving average cross over is considered very bullish by technical analysts standards.

S&P 500

Last Weeks    

THIS WEEKS

The S&P appears to be lagging the price action of the NASDAQ.  This is understandable when you consider the S&P is inundated with financial stocks.  The S&P currently sits just under its 200 day moving average.  It would be a very healthy sign if the S&P were to be able to break through this resistance level of the 200 day moving average and than hold this line as a level of support.  For next week this will be the action we want to watch for in the S&P.  Prices may very well head back down to the upwards trend line before resuming its attempt to pierce through the 200 day moving average.  Just watch closely next week.

Stock: Titan Machinery Inc. 

Symbol: TITN

 Fundamentals:  9.6 out of 10

Industry:  Retail Wholesale Bldg. Prds.                                            Industry Strength: 32 

Technical Pattern: U Turn                                                              Avg. Volume: 510,600

Pivot or Buy Point: $24.63

Stop Loss: $22.91 or 7%

Profit 1: $27.09 or 10%

Profit 2: $29.55 or 20%

Titan operates 34 agricultural equipment stores and 2 outlets that offer new and used tractors and other machinery.  Sales increased 61% last quarter and Titan has an annual earnings per share growth rate of 58%.  Currently TITN is forming a U Turn pattern and looks ready to jump past its old high of $24.50.  Notice last week how the volume to the upside was very heavy.  Definitely a sign of accumulation.  If this volume continues look for a buy point of $24.63.