Burlington Northern (BNI)

Burlington Northern (BNI) reported Tuesday that its first-quarter earnings climbed to $455 million, or $1.30 a share, from $349 million, or 96 cents a share in the year-ago period. The Fort Worth, Texas-based railway company said revenue rose to $4.26 billion from $3.65 billion. Analysts polled by FactSet expected, on average, earnings of $1.22 a share on sales of $4.12 billion. Helping BNSF was a sharp rise in its agriculture products revenue, the company said. Agricultural products revenue were up 38% to $866 million due to strong volumes growth in the shipment of wheat, soybeans, corn and ethanol, coupled with improved yields. Looking forward, BNSF said it is optimistic about long-term prospects despite current economic softness in its consumer products business.

Excellent quarter for BNI, beat expectations by $0.08 cents a share. You have to wonder how much of their business will be affected if we see an end to the bull run in commodities.

Dow and S&P 500 log distribution

S&P 500

Dow

Nasdaq

2 of 3 Indices logged a distribution day yesterday

Visa (V) & Mastercard (MA)

Visa did extremely well today, setting an all-time high @ $80.88. The stock reported earnings last night, and initially, the street did not take this well. The stock was trading as low as $71 in the after-market. The stock dropped at the open this morning, filling the gap it created two sessions ago. After that, it was full steam ahead, closing up over 6%. Visa is the #1 credit card processor in the world, in front of Mastercard (MA), who also reported stellar earnings and was up 12.98% today to close at an all-time high of $273.98.

Sold UGA

Sold 20 shares of UGA @ $54.18. Profit = 4.8%. Purchased @ $51.19. The ETF gapped down 3.12% on volume of 71,467 which is the highest amount of shares sold ever for the life of this ETF. Looks like were seeing an end to the commodity bull run. Check out DUG, an ETF that is short the oil & gas sector.

Railroads Hold Support

Union Pacific (UNP)

Kansas City Southern (KSU)

CSX

Burlington Northern (BNI)

Indices Log Follow Through

S&P 500 Dow

Nasdaq

One word to describe this market: Whipsaw! Just yesterday I posted that the indices logged a distribution day. Now they have logged a follow through day. Absolutely amazing!

MTL Trade

Well, I sold my shares of MTL today @ $148.92. This is very frustrating given that I had over a 5% profit 2 days ago. I originally bought shares @ $150.5 and watched them rise up to $165. The past 2 days have been nothing but selling in this stock. Commodities as a whole are getting slammed today.

This market is not for the weak of heart.

Indexes Log Distribution Day

Dow Jones Industrial Average

S & P 500

Nasdaq Composite

All 3 major indices logged a distribution day yesterday. This is only the 2nd distribution day since the follow through on March 20. According to IBD this is not that big of a concern:

'Occasional distribution days are also a necessary evil for a market rally. Pick just about any major bull run in Wall Street history and you'll find a day or two here or there where the market suddenly pulled back in brisk trade.

It's instructive to see how the market responds to a negative day. Additional bouts of distribution would be a sign of weakness. If the market quickly resumes its uptrend, though, you can chalk up the distribution day to a blip on the screen.' - Investor's Business Daily

Charts

Netflix (NFLX) - nice break-out on excellent volume.

Hess, Inc. (HES) - broke-out on great volume. Currently testing its support line which could be a possible buy point.

Expeditor's International (EXPD) - very nice cup w/handle. Would like to see the volume increase if the stock breaks - out.

Tech Heavyweight Google Reports Positively

Google (GOOG) released a positive 1st Quarter earnings report today after the bell:

SAN FRANCISCO (Reuters) - Google Inc (NasdaqGS:GOOG - News) on Thursday posted a 31 percent rise in net profit on 42 percent revenue growth, defying predictions the company is having trouble converting Web searchers into advertising viewers.

Google shares shot up 11.5 percent to $501 in extended trade.
The Internet leader, one of the hottest technology stocks of 2007, had erased last year's 50 percent gain this year on investor fears that the online advertising industry is maturing and vulnerable to a weakening economy.
First-quarter net income rose to $1.31 billion, or $4.12 per diluted share, from $1.0 billion, or $3.18 cents a share, in the year-earlier quarter. Excluding one-time items and stock option expenses, profit was $4.84 a share.
Gross revenue rose 42 percent to $5.19 billion. By contrast, its revenue grew at a 63 percent rate in the same quarter a year ago.
Wall Street was looking for an average profit, excluding one-items, of $4.53 per share, according to Reuters Estimates. The average forecast for net profit was $3.93 per share.
Revenue was expected, on average, to grow 40 percent to $5.13 billion, according to Reuters Estimates. - Yahoo Finance

This should give the Nasdaq a huge boost tomorrow.

Industry Group Snapshot - Railroads

Union Pacific (UNP) - nice break-out on excellent volume.

Kansas City Southern (KSU) - notice the trend? Nice break-out on good volume.

Burlington Northern (BNI)

CSX Corp. (CSX)

All of these stocks broke out today which bodes well for the entire industry group. The red box indicates the base.

Charts

The Mosaic Co. (MOS) - broke out of cup shaped base and is extended past $119.88 buy point. Has the volume to support its break out.

Potash Corp. of Saskatchewan (POT) - pretty far extended past $166.50 buy point. Broke out of base on average volume. No real above average volume buying as it has made this move which is a concern. Looks like this may be the top.

Agrium (AGU) - nice break out of cup shaped base. Very extended past buy point. Wait for it to fill those gaps.

'Fertilizer makers soared as China agreed to a big hike in potash prices. Canpotex, a Canadian export association that includes Potash Corp. of Saskatchewan (POT), Mosaic (MOS) and Agrium (AGU) reached a deal to sell 1 million metric tons of potash to China's Sinofert at $576 per metric ton. That's up $400 from last year's level.

Potash Corp. of Saskatchewan rose 7.22 to a new milestone of 191.63. Mosaic gained 4.50 to a new high of 132.10. It's now 10% past a 119.88 buy point from a rebound off its 10-week moving average. Agrium tacked on 3.59 to a record high of 82.55. It followed through after clearing a 76.88 buy point of a six-week cup base Tuesday. The cup formation is a part of a larger base-on-base pattern.' - Investor's Business Daily (IBD), www. investors.com

First Solar (FSLR) - choppy cup w/ handle, excellent volume. Reports earnings 5/1/08.

Meritage Homes (MTH) Trade

Yesterday, April 14th, I bought 200 shares of MTH right before the close @ $20.00. Today I sold those shares @ $20.80 for a 4% gain. The good thing about watching these homebuilder stocks is that I've gained a 'feel' for them.

Homebuilders - Downward Drift

I've been following most of the stocks in the homebuilding group for a couple weeks now. Initially, all 3 of my trades were profitable, with Meritage (MTH) shooting up 14%. Since then, they have quickly reversed and now I find myself in negative territory. I haven't been disciplined and haven't followed anything I've learned or read. Like Jesse Livermore says, "You hope when you should fear and you fear when you should hope." These past couple days have been extremely frustrating. CTX, MTH and TOL all were making very nice cup w/handles. As they say, hindsight is always 20/20. Looking back, I bought these stocks at their respective pivot points which turned out to be the top in terms of momentum. These stocks have since reverted back into their bases. It's very frustrating when I see the high volume buying and I, in turn, take this to be a positive sign. I bought these stocks only to see them drift lower on soft volume. I kept hoping that they were going to turn around and reverse their downtrend since the selling volume was so low. This hasn't been the case. This goes to show you that, in this market, you need to keep your profit no matter how small it is. I kept wanting more and I should have been happy with the profit I had. I guess its also a matter of greed. Greed can be a good thing but ultimately you can never go broke if you always take a profit.

Charts of Interest

Transocean (RIG) - broke out of saucer shaped base. The volume was lower as it pulled back to its support line after the initial break-out which is a positive.

Mechel Steel (MTL) - broke out on huge volume last week. Currently testing its support line. This could be a good place to add shares.

Continental Resources (CLR) - broke out of its base and hasn't looked back. This stock just keeps chugging along and now has the volume to support it.

United States Gasoline Fund (UGA)

Breaks out of base today, counts as a follow-through day because the volume is higher this trading session compared to last. Bought shares @ 51.59. Mimics the price of gasoline at the pump. Expect this to climb as we enter the summer driving season.

Industry Group Snapshot - Homebuilders

Toll Brothers (TOL) - yesterdays distribution is a concern, especially since today's trading volume is so light.

Pulte Homes (PHM) - excellent accumulation. Nice cup w/handle.

Meritage Homes (MTH) - continuing break-out, excellent volume for support.

MDC Holdings (MDC) - nice cup w/ handle as it approaches its break-out.

KB Homes (KB) - nice volume, cup w/handle pattern.

Centex Homes (CTX) - excellent volume to support break out.

Spider S & P Homebuilders (XHB) - the accumulation speaks for itself.

Notice the trend? Homebuilders are making a move. I initiated positions yesterday. The good thing is that this move is seen in stocks around the group and not isolated to only one or two stocks. As the Fed cuts interest rates people are able to re-finance their homes, lowering their mortgage payments or allowing them to move up to a better home. They are also able to take advantage of low interest rates on home equity loans, which bodes well for companies like Home Depot.

Buy Homebuilders!!!

I know you probably think I'm crazy, especially after everything that has gone on in the housing market, but now is the time to buy homebuilders. Stocks like Toll Brothers (TOL), Meritage Homes (MTH), Centex Homes (CTX) and even suppliers like Home Depot (HD) are all starting to break out. Unfortunately, I'm hooked up to a wireless network right now and unable to post any charts. Please look at these charts! Once you do, you'll see what I'm talking about. I analyzed MTH and HD back on March 28. Since then they have completed their handle and are very close to the pivot point.

Stocks to Watch

Mastercard (MA) - re-testing its old high. Volume is lacking.

Intuitive Surgical (ISRG) - fast approaching its old high, just broke into the top channel today.

Continental Resources (CLR) - nice breakout from base. Has the volume to support it. Hardly any selling coming into stock. Look to add shares once it cools off and touches its support line.

Nike (NKE) - has the volume to support a nice price advance. Currently making a cup shaped retracement to its highs. Look to add shares in this area.

Research in Motion (RIMM) - reports earnings Wednesday, April 2 after the close. Analysts are expecting $0.70 a share. Wait until after they report earnings to buy. The stock is still holding its support line. Volume has been weak over the past couple weeks but that should change come Thursday. Depending on the report, we could see a ripple effect into Apple.