LOGM

LogMeIn, Inc (LOGM) is setting up to breakout as early as Friday into new all time highs.

The daily chart looks cup and handle-ish but technically the base is an IPO base with the pivot coming on new highs $23.60

An aggressive trader (i.e. me) could have bought today through the $22 area as volume poured in. In fact, LOGM traded nearly 600% more than it average 50 day volume. It was it's largest single day up volume since its IPO in July 2009.

You might ask, what is LOGM and what do they do?

LOGM has a technology that allows you to log onto your desktop via iPad and perform any tasks that your desktop runs.

LOGM recently reported earnings growth of 23% and sales growth of 24%. They sport an impressive ROE of 38%. The largest shareholder is Fidelity (FMR). And if you are a William O'Neil follower you know FMR always has the goods.

Good luck and do your due diligence!

EARNINGS

Earnings season is certainly one to remember. Of S&P stocks reporting so far, a record 83% have beat expectations. The past average as been 61% beating expectations. Companies are beating on both the top and bottom line. Estimates are being raised and forward guidance is generally strong. All of this bodes well for the current rally.


After starting to sell stocks over a week ago, Wednesday it appeared the market was going to split open with the opening gap down. By the lunch the market had recovered and it dawned on me that the right side was the long side.

I repurchased positions in CREE, PCLN, and GMCR. All three bounced well. However, GMCR reports on Monday. If GMCR can get back above the 50 day moving average by close Monday then I will hold for earnings. If not, I will close out the position on Monday.

The market continues to shake off news stories and issues like Greece and Goldman Sachs only to make new highs. It is quite simple that the market is not done going higher. Many new stocks are making new highs and really starting to stretch their legs out. I will not be surprised to see some climax moves in the likes of BIDU, CREE, AAPL, NFLX, CMG, DECK, etc.

This week there are several opportunities setting up:

WCRX $28.49
ASIA $30.00
AIXG $39.00
APKT $21.00
FIRE $27.65
OSTK $21.87
PXP $34.80
SWI $25.00

RAISING CASH

I started to raise cash on Friday. Not that I think the absolute top is in on this latest move but I want to lock in profits. I have been 200% long since late February and Friday we racked up another Distribution Day. Now, one might say it was Options Expiration and a ton of volume came on GOOG earnings and GS fruad news. However, heavy selling even with logical reasons needs to be paid attention to regardless. We have 5 days of distribution on the S&P and NYSE and 3 for the leading index, the Nasdaq.

Therefore, I will be off margin at this point. I have been watching the 2470 to 2550 area on the Nasdaq for potential retracement level. Well, we got to 2517. A pullback would appear to be in order. Everybody and their brother is looking for the pullback which might just be the reason for the market to grind higher. There is still tons of cash on the sidelines by funds and the mom and pop retail investor appears to still be on the sidelines. Maybe we need to get everyone back in before the market really can rest.

None the less, I am taking some profits in stocks like CREE, CMG, GMCR, PCLN, and SNDK. These stocks are up big in 2010 after gigantic moves in 2009. I will still have some exposure but would rather be disappointed that I left a little on the table than wished I would have sold. I want to have cash on hand to buy these same names back on potential pullbacks to their 50 Day Moving Averages.

The other thing I noticed last week is that some of the breakouts are not working as well. Let's face it, this market has been way too easy. Every breakout has come worry free and with quick profits. I am having a hard time thinking of any breakouts that even came back to their pivot points. Ok, CTRP did. But, that is about it. VMW and ULTA broke out nice but really didn't give the follow through you'd like to see. I took just so-so profits and moved on. I also jumped on SWI and APKT only to see the breakouts reverse. This leads me to believe that while the end is not necessarily here, it is closer. I think once we get through earnings season the market will be due for a rest. This may be one of those years when it truly is "Sell in May & Go Away".

I certainly have no idea what the market will do and it's crazy to try and predict. I am simply observing what I see happening and try to make the best decisions for my P&L. So far the charts of leading growth stocks are holding up well. But, it is time to be on high alert.

Keep your stops in place and trade what you see and not what you think........

GRINDING HIGHER

All the averages added one more Distribution Day this past Wednesday. However, the leading index (Nasdaq) was only down .20% which barely qualifies. But, we must be respectful regardless. More importantly, the Nasdaq grinded higher for the week up 2%.

Last week, I had profiled CREE and CMG as two potential 3 Week Tight breakout opportunities. Both exploded out of their bases on Monday morning. CREE ended the week up 12% and CMG closed 7% for the week. My other pick SWI triggered but closed basically flat.

I still like SWI and think it will be a big mover. I am somewhat torn whether it blast out on the third try or if it now puts in a handle for potential Cup with Handle base breakout. The $23.77 area needs to be watched. SWI trades a somewhat light 500MM shares. However, there is only a little over 5MM shares in the float. SWI can really fly (in both directions) if it starts to move.

This week there are several potential set ups and I will discuss three.

Vmware (VMW) is in the computer software-enterprise business. It begins its 6th week in a flat base with potential pivot point at the $55 area. VMW doesn't have the type of quarterly earnings growth I love to see yet but quarterly sales were up 18% last quarter. The ROE is a solid 17%. I do like the fact it has solid liquidity and has institutional following and support. VMW also announced in March it would be repurchasing up to $400 MM of its stock back.

Ulta Salon (ULTA) is a retail salon supply store. Obviously, all the retail stocks have been on fire. I have been following ULTA and it has now set up a Square Box base with potential pivot point at $23.45. It is in it's 5th week of the base so it could now breakout. ULTA has quarterly earnings growth of 62% and quarterly sales growth of 16%. It's ROE is 15% which is so-so.

Acme Packet (APKT) is in the telecom equipment business. A trading friend has pointed out APKT to me and it has set up a very powerful High Tight Flag (HTF) base. The HTF can produce one of the most explosive and successful breakouts; potentially doubling again. The HTF is created when you have a stock up over 100% in less than 8 weeks and then you get digestion for a few week but less than 15% correction. APKT has a text book HTF set up and pivot over the $20.56 area.

SWI

I especially like IPO breakouts. Solarwinds Inc (SWI) has tried to breakout twice since it's IPO in 2009. The third time may be the charm.



It has a cup shaped base here. It is possible that it puts in a handle or just breaks out from cup without handle base.


SWI has quarterly earnings growth of 73% and sales growth of 32% (both accelerating). Also, a very impressive ROE of 208%. It appears that institutional sponsorship is growing. However, it only trades 450,000 shares a day so it is a tad on the thin side to be considered institutional quality.

The proper pivot point would be $23.77. Keep in mind it reports earnings on 4/28/10.

DIGESTION...............

Market continues to digest gains as index leader Nasdaq is up five weeks in a row. The past week closed tight in Holiday shorten (light volume) week. We experienced one distribution day on Wednesday but there has been zero damage to our leaders.

Next week there are two nice set ups for potential add on buys to existing holdings.

CREE.....3 Week Tight set up for what has been one of the leading stocks since early 2009. CREE had quarterly earnings growth of +90% and quarterly sales growth of +35%. CREE has a new buy point at $72.50 (10 cents higher than previous 3 week high). Keep in mind CREE reports earnings on approximately April 21st.

CMG......3 Week Tight set up as well. All of the restaurant stocks have had nice moves (CAKE, DIN & PNRA). My opinion, CMG is the leader in the group with quarterly earnings growth of 90% and quarterly sales growth of 12%. It also has a ROE of 19%. CMG has a new buy point of $117.21. CMG also has upcoming earnings around April 22nd.

Lastly, previous gigantic mover CAGC has fallen back into its base after earnings news on Wednesday. This one needs some time but did undercut previous low to set up a potential Double Bottom base down the road. Will need to monitor to see if it receives support at the 50 day moving average (which I suspect it will).