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.