Latest quarterly earnings

Most highly rated stocks stumbled during the past week, as the overall market fell back into correction mode after a brief uptrend.
InvenSense (INVN) was among the week's big losers, sliding 20% in fast trade. It has fallen out of the IBD 50 lineup.
The maker of motion-sensing devices briefly climbed back above its 10-week moving average, but then ended below that level for the fifth straight week.

Investors seemed to be disappointed by the company's latest quarterly earnings result, which came out late Thursday and only matched expectations.
Ubiquiti Networks (UBNT) also lost 20% for the week and sliced through its 10-week line as it reported earnings. The networking gear maker had been holding above its 10-week average since January.
Other IBD 50 stocks retreated in a less dramatic fashion, but still showed signs of stress.
Among those finishing the week under their 10-week lines were Apple (AAPL), MercadoLibre (MELI) and Michael Kors (KORS). MercadoLibre has lost its spot in the IBD 50 screen.
Some stocks still managed to hit new highs, helped by better-than-expected quarterly earnings.
Online auctioneer Liquidity Services (LQDT), whose clients are

Healthy demand for the shares

Texas Roadhouse (TXRH) broke out of its base Tuesday after a better-than-expected earnings report, and Cheesecake Factory (CAKE) also cleared a base, leading a host of restaurant stocks higher.
Texas Roadhouse gapped up, clearing a 17.93 buy point in huge volume as it broke out of a flat base.
The nine-week pattern also can be viewed as the handle to a larger cup with handle.
The stock has a 96 Composite Rating, putting it fifth among 53 companies in IBD's restaurants industry group.
The company said late Monday Q1 profit rose 15%, beating expectations. Sales rose 14%, accelerating for the second straight quarter.
The stock has an A- Accumulation-Distribution Rating, indicating healthy demand for the shares. Yet the company's quarterly profit growth hasn't topped the 25% that's common of leading stocks in six quarters, and Q2 earnings are seen rising just 5%.
Meanwhile, Cheesecake Factory hit a new high as it cleared a flat base. The buy point was 31.68, which it topped Thursday, although 32.57 can be treated as an alternative buy point.
The company announced Thursday that Q1 profit rose a better-than-expected 9% on a 4% increase in sales. The company has averaged 28% profit growth over the past three years, but earnings growth over the past three quarters averaged just 18%. Quarterly sales growth over the past three years has been mainly under 10%.
Although the two stocks are not in the top tier of industry leaders, the new breakouts suggest there's still strength in restaurant stocks. The industry group ranked No. 38 out of 197 as of Tuesday's IBD.
Meanwhile, Red Robin Gourmet Burgers (RRGB) reclaimed its 50-day line. The company is expected to report May 17 that Q1 profit rose 12%, down sharply from triple-digit gains in the two prior quarters. The stock is shaping a flat base with a 38.08 buy point.
Also Tuesday, Brinker International (EAT), the operator of Chili's restaurants, jumped to a new high, and Dunkin' Brands (DNKN), which owns Dunkin' Donuts and Baskin-Robbins ice cream parlors, is near an all-time high.

The percentage price

The stock action of Questcor Pharmaceuticals (QCOR) in the past two sessions offers a clinic to IBD readers wondering how they should invest during a notoriously volatile time.
On Wednesday, Questcor moved like a bungee cord. It opened sharply up in the opening minutes, then dove as much as 9% below the prior session's close of 41.66.
The percentage price swing from the intraday high of 42.80 to its intraday low of 38 was 12.6%. The stock finished the day down nearly 3%.

Add Thursday's 7% rebound in heavy volume, and you've got a two-day trading range of as much as 16%.

Percentage of closed bank assets

It is not complicated to understand how laws are being violated by the FDIC. Karl Denninger in his post details that and why there should be no losses from bank closings (unless there is bank fraud involved). Simply stated, it is the FDIC that is causing the losses by not closing banks when their mandate says they must. Leaving them open beyond this point enables losses to continue to mount to the point that, when they are finally closed, taxpayer funds are needed to bail out depositors. Timely closings would ensure taxpayer funds would not be needed.
There are two possible reasons why the FDIC is in violation of the law. First, they are inept. Second, they are “playing politics.” While all government agencies suffer from the first (and most from the second), the FDIC has a rather simple task and Sheila Bair, at least based on TV appearances, does not appear incompetent.
It is my belief that the FDIC is playing a form of politics. Whether this is willingly or out of necessity might be debated. Thus far they have closed just over 100 banks. Losses (which should not occur) have been increasing as a percentage of closed bank assets, indicating their “oversight” is becoming worse. Speculations by some analysts of eventual total bank closings exceed 1,000.

Strong earnings growth

Since we last looked at Questcor in early March, the general market direction has shifted, the company has reported earnings, and we've enhanced the data included in the IBD 50, so today we'll see how those all tie together.

• The company reported Q1 results on Tuesday, soundly beating estimates and scoring triple digit gains for both sales and earnings.
• Sales growth accelerated for the 5th straight quarter, and marked a second straight quarter of triple digit increases.
• While earnings growth did not accelerate, it was still very strong at 205%.
• In addition to now being updated in both the Monday and Wednesday editions, the IBD 50 also now includes the average EPS growth rate over the last 3 quarters for each stock. That's because the best stocks tend to have several quarters of strong earnings growth before they launch a big run, and this new feature will help you quickly spot stocks showing that kind of performance.
• After reporting its latest numbers, Questcor's average EPS growth rate over the last 3 quarters now stands at 197%.
• Going forward, analysts see earnings rising 91% this year, followed by a 38% increase in 2013.
• The company's return on equity is a very strong 49%.
• In terms of overall fundamental and technical strength, Questcor scores the highest possible 99 Composite Rating.
• Its Accumulation/Distribution Rating is a B, but that's down from the B+ it had before it reported earnings. Keep a close eye on that to see if institutional investors start to do more selling than buying.

Chart Analysis

Recover our money

“Taking the State wherever found, striking into its history at any point, one sees no way to differentiate the activities of its founders, administrators and beneficiaries from those of a professional-criminal class.”

Albert J. Nock, 1935

Our press, the glorious fourth estate, the “guardian of our freedoms,” has the visual acuity of Mr. Magoo regarding the Obama Administration. Regarding corruption, they saw no better during the Bush Administration.  Finally, some in this see-no-evil, hear-no-evil press may be undergoing lasik surgery. James Lieber of the Dallas Observer seems to have had successful surgery.

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Fast growing market

Casino game maker Shuffle Master (SHFL) and women's fashions chain Francesca's Holdings (FRAN) wouldn't seem to have much in common.
But a look at their charts shows that both have found support at their 10-week moving averages and may be forming new bases.
Francesca's broke out past a 24.73 buy point in early March and climbed 37% before retreating to its key support level in low volume, a bullish sign.

The company eventually plans to operate 900 boutiques, more than triple the current figure. Earnings