May 16, 2004


Issue #117

Greg Fry
   Greg Fry

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WEEK ON WALL STREET: Week In Review  /   by Bob Coppo

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Our new Week on Wall Street columnist is Bob Coppo. Bob is Managing Director and Chief Technical Analyst for JNL Financial Consultants, Inc. The company has operated on the internet since 1997 and provides investment advice to both individual and institutional clients. Make sure to visit his site,

Bob Coppo
Week on Wall Street
The Week on Wall Street

Friday's Action:   Stocks finished mixed Friday as investors mulled a mixed batch of economic data. Nasdaq tumbled following disappointing reports from Dell and BEA Systems. Blue Chips finished little changed, helped by gains in Altria and ExxonMobil. Major world markets reported mostly lower results on Friday. London's FTSE closed down 0.27%; Frankfurt's DAX closed down 0.57%, and Paris' CAC 40 finished lower by 0.30%. Japan's Nikkei closed up 0.23%, Hong Kong's Hang Seng closed down 1.05%, and Sydney's All Ordinaries closed down 0.28%. In economic news, CPI for April rose 0.2%, with the Core Rate up 0.3%; Business Inventories in March rose 0.7%; Industrial Production in April rose 0.8%; Capacity Utilization rose to 76.9% from 76.5%; Consumer Sentiment (preliminary) for May is 94.2, unchanged from April's number. Volume came in at 1.34 billion shares traded on the NYSE and 1.53 billion shares traded on the Nasdaq. Market breadth was mixed, with NYSE advancing issues over declining issues by 1.30, and down volume over up volume by 1.11; Nasdaq declining issues over advancing issues by 1.87, and down volume over up volume by 4.28. Leading sectors were Gold Bugs, +2.21%, Natural Gas, +1.69% and Integrated Oils, +1.53%. Laggards were Disk Drives, -4.10%, Networkers,-2.94%, Airlines, -1.93% and Semiconductors,-1.86%. Nasdaq 100 futures closed 9.50 pts lower to settle at 1400, while the S&P's settled up .90 pts at 1094.70.

Weekly Recap:   Stocks fell for the third week in a row, again on concerns about rising interest rates, escalating energy prices, and the situation in Iraq. Crude oil for June delivery topped $41/bbl. Rising energy prices rattled international markets as well, particularly Japan, which is also bucking concerns about a slowdown in China. The Nikkei sank 5.2% for the week, with the yen falling 1.8% against the dollar.

On the economic front, inflation worries increased with the release of the PPI and CPI reports, but overall, the data continued suggest an improving economy. Consumer prices rose 0.2% in April and have increased 2.3% over the past year. Core inflation rose 0.3% for the month and now stands at 1.8% over the last year. The modest increases for this month should help quell anxiety about rising inflation in the near term. Industrial Production for April increased 0.8% versus consensus +0.5%, while Capacity Utilization was 76.9% versus consensus 76.7%. An 80.0% rate is considered inflationary for the industrial sector.

A slightly higher than expected core-CPI rate of +0.3% sent the yield on the 10-yr note to its highest level in nearly two years soon after its release. It quickly reversed however, when a short-covering rally drove the yield back down to 4.79%. That reversal could support the idea that the Treasury market is accepting the notion that the Fed's expected tightening has already been priced in. If the bond market can find a footing, the stock market's fortunes should improve.

For the week, the Dow lost -1.0%, the S&P 500 finished -0.3% lower and the Nasdaq slipped -0.7%. The small cap Russell 2000 lost -0.9%. Next week, economic reports take a back seat, as there are only a handful of releases scheduled. Earnings releases are also falling off since their peak a few weeks ago. Nonetheless, there are some important reports in the retail and technology sectors, including Applied Materials, Hewlett-Packard, Home Depot, JC Penney, and Gap.

Is the Real Estate Bubble Bursting?:   Last week's headline real estate news read...."A sharp increase in mortgage interest rates pushed the MBA index for mortgage applications down by 5% last week to 742.2. The decline, however, occurred solely in the refi index. The purchase index increased to near record highs. With mortgage interest rates expected to continue rising, the housing market is set to slow in the coming quarters, although last minute home-buying will keep the path downward from being a straight one." Behind the headlines are these startling facts:

  • The average interest rate on 30-year mortgages has reached an eight-month high.
  • Mortgage lending rates have climbed for eight consecutive weeks.
  • Adjustable rate mortgages (ARMS) as a share of applications reached its highest level in 10 years.
  • The number of newly licensed realtors has swelled to an all-time high.
  • The Wilshire REIT Index (RWR) has lost nearly 20% of its value since April 1.

Real estate analysts have been claiming all along that there is no housing bubble and prices will remain high despite rising interest rates. But the fact that a large percentage of homeowners are opting for ARMÕs is a bit frightening. In a rising interest rate environment, those rates can only go higher, and will most likely result in forced liquidations. In an economy fueled by debt rather than savings, the consequences could be devastating.

Day Trading the E-mini's:   SMT's Day Trade Service consists of two primary elements; a time & price forecast graph and our proprietary support and resistance levels. When used in conjunction, they can be a powerful system to day trade the S&P and Nasdaq E-mini futures contracts. We prefer to trade the first move of the day, simply because it consistently makes money. But the second move can also be profitable, as the graph for Friday's S&P forecast shows. For those unfamiliar with the E-mini's, one S&P contract controls about $55,000 of stock in the S&P 500 Index. Each point is worth $50 and the day trade margin requirement is approximately $1,750 per contract, depending on the broker. Brokers have some discretion in setting day trade margins, whereas overnight margins are set by the exchange.

The forecast graphs are posted by 8:25 AM CT, before the RTH open. The red lines are the forecast, the green lines are the actual price movements and the horizontal blue lines are the support and resistance levels. The expected turning points are numbered on the graph, 1,2,3, etc. On Friday, we were looking for the S&:P to rally off the open during the first 5-15 min of trading and head towards the R1-R2 resistance zone. This is a typical trading pattern known as the morning rotation. The index will bounce around until the market makers get all of the stocks in the index open for trading. The e-mini hit our resistance level at R2 (1096.50) right in the expected time zone at point #1. That was our signal to go short and we sold the e-mini at that point. Price then declined to Point #2 at our S3 support level (1087.50). The first move took less than 45 min and was good for 9 S&P points ($450 less commissions). Price then reversed at Point #2 on the graph and headed for Point #3, topping out right at our R2 resistance level. The second move was also good for 9 S&P points, or $450 less commissions. In less than two hours, our system forecast two trades good for $900 per contract in profits (less commissions) on a $1750 investment.

Friday's trading is not an isolated example, as these patterns occur over and over again. If you can afford to spend an hour or two a day, our system is a simple, yet effective day trading method that consistently makes money. To learn more about SMT's Day Trade Service, click HERE.

The COT Report:   The latest Commitments of Traders report from the CFTC shows that Commercial Hedgers sold some 1,100 S&P 500 futures contracts last week to bring their net short position to -20,307 contracts. Large Traders remained net short -38,240 contracts, with the entire offsetting net long position of +58,547 contracts held by Small Traders, the so-called "weak hands". For the Nasdaq 100 futures, Commercials sold some 1,500 contracts to bring their net long position to +20,270 contracts. Small Traders were net short -11,356 contracts in the Nasdaq. Commercial action in Dow futures saw the smart money sold some 1,000 contracts to bring their net long position to +1,1107 contracts.

Commercial Hedgers were better sellers in the S&P's last week, and increased their net short position. For the intermediate term, their position should be considered bearish.

Sentiment Surveys:   The latest Investors Intelligence survey showed that the percentage of bullish newsletter writers came in at 44.6%, while the percentage of bears was 25.7%. The bullish ratio (bulls/bulls +bears) was 63.4%.

The latest AAII survey showed a decrease to just 33% bulls, and an increase to 43% bears. The bullish ratio came in at 43%, while the 4-week moving average remains high at 60%. One thing to note about the AAII survey is that, while membership in this organization is quite large as investor groups go, the number of members that actually participate in the survey is very small. Thus, large fluctuations in survey results from week to week are not uncommon.

The latest Market Vane survey came in at 59%, indicating that the majority of commodity trading advisors (CTA's) remain bullish on the future direction of the S&P's.

The Short Term Outlook; 1-5 Days:   Friday's price action was mixed, so we don't have a directional bias for Monday. We said Thursday night that Dell would be a drag on the Nasdaq for Friday's trading and that certainly was the case. Dell dropped about 3% on heavy volume, but managed to bounce off its 50-day moving average. Dell weighed heavy on the Nasdag, but again, the Comp managed to remain above critical support. As we mentioned earlier in the week, it's essential for the Nasdaq to trade above critical support if the market as a whole is to have any chance of moving higher.

We mentioned above that the 10-yr T-Note yield spiked higher Friday, hitting 4.90%, on higher-than-expected CPI data. Once that data was digested, the bond market lost its jitters and rallied the treasuries, dropping the yield back to 4.79%. While the yield is still high, action in the bond pits seemed to stabilize the broader stock market. Any bond market rally follow-through next week should be positive for stocks.

SMT's Pivot Point Forecast; 1-2 Weeks:   Our Pivot Point RS indicator is currently on a BUY signal. Our next Pivot Point is forecast to occur on or near May 21st.

The 60-mn NDX chart below shows that the StochRSI indicator is in the SELL zone. For Monday, resistance for the S&P's comes in at 1103 and then 1110. Support lies at 1086 and then 1078. For the Naz, resistance comes in at 1412 and then 1430. Support lies at 1385 and then 1376.

The Intermediate Term Outlook; 2-6 Weeks:   The Risk Aversion Indicator, represented by the NDX:Dow Ratio, has been a good forecaster of the general market trend over the last couple of years. As the chart below shows, the ratio crossed below its 70-day exponential moving average at the end of January, coinciding with the year-to-date high for the Nasdaq Composite on Jan 26th. The slope of the EMA has now turned flat however, confirming the trading range the market has been locked in over the last three months.

Our Market Trend Indicator (MTI) is currently positive and trended slightly higher on Friday.

Good Trading!

Charts and data appearing in today's column are courtesy of:


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It was quite an ugly week for the Fresh Picks as the markets continued to fall on inflation fears and continuing chaos in Iraq. For the week, the Fresh Picks lost an average of 6.5%.

Both picks would have been stopped out for losses if you had entered prematurely. We have extrememely high confidence in these two top-line stocks, but the key is waiting on entry for signs of reversal. As we said in the commentary last week for KKD:

"Friday's close came at the bottom end of the intraday range, so be extremely cautious on entry as you may not want to be on the receiving end of a falling knife. However, watch for an increase in buying and once the reversal appears, look to enter."

Of course, the reversal never appeared, and so the prudent move was to remain on the sidelines. The same goes for our second pick last week, cellular giant NOK:

"For the short-term trader, we'd recommend waiting for the dust to settle and for a reversal to appear before jumping in with both feet. Friday's close came at the very bottom of the stock's intraday range, so there could still be more to the downside before NOK turns northward once again. Remember, at these levels, there's no support built in below. "

Make sure to also have a look at the Track Record page on the site for our 2003 monthly breakdown showing each and every Fresh Pick from the year, along with its price when recommended and where it ended the year. For specific targets and stops, please see the archives.

Have you traded any of our recommended plays along the way? We'd love to hear from you and how you did. Please send your stories to

TECH WATCH: Using Technology to Fascilitate Beef Quality / by Jeff Neal, Technical Market Columnist

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Jeff Neal is a veteran options strategist and trader with over a decade of experience in the trading business. Jeff has had a diversified business career operating a very successful management consulting business with his clients representing some of the largest companies in the world.

He has a B.S. in Computer Science from Indiana University and an MBA in Finance from the University of Indianapolis. Jeff is a writer, mentor, and options strategist for Optionetics ( and as head of his own hedge fund is an active options trader in both the equity and futures markets.

Jeff Neal - Staff Writer & Options Strategist - ~ Your Options Education Site

Jeff Neal
Tech Watch

TECH WORLD: Using Technology to Facilitate Beef Quality

By Jeff Neal

The contaminated beef scare a few months back has accelerated the application of high-level technology to help prevent a similar type of scare and also to combat the distribution of diseased meat. The technology is really comprised of a variety of different technical devices rolled into one integrated system. This system is being used and available to meat processing plants to account for their cattle inventory and in turn verify the quality of their beef.

By applying this technology, a meat processing plant can more efficiently track their cattle inventory and help public as well as company officials respond better if diseased meat is discovered. This quick response capability that comes with the technology can circumvent any public panic that might ensue as in the past and more importantly can stop the meat from being distributed to avoid illness or in some cases even death.

One of these hi-tech system components being deployed is a retinal scanner. The retinal scanner takes an image of the cow’s retina via a wand operated by an employee at the meat processing plant. This data is then inputted to a software package that generates a unique identification number linked to that particular cow. The scanner can covert into a digital camera allowing snapshots to be taken giving meat plant processors an actual picture of their cattle inventories. The camera can accommodate a bar-code reader that can be attached to the wand used by the employee that interprets the bar codes that ranchers often put on plastic tags that are inserted in the cows’ ear.

The system has another option available that requires a second wand and can interpret Radio Frequency Identification tags. These tags are actual computer processing chips that have pertinent information for that particular cow imbedded which can then be picked up by nearby sensors. The system’s hub is built with a Global positioning system. The GPS is equipped with a satellite connection and has the capability to locate virtually anywhere around the globe. This is extremely important in the overall tracking process.

All the aggregate information once collected by the base hub can be sent to nearby computers within the processing plant using wireless data technology. The wireless technology utilizes radio waves to transfer data over short distances. Employing wireless technology is absolutely essential given the rough environment found in most meat packing plants. The tough conditions found in the plant are not very wire friendly and with the wireless technology it more than addresses the enduring the tough environment requirement.

The overall goal for the meat processing plants after implementing this type of technology is to track a particular piece of beef to the particular cow it originated. This should go a long way in processing recalls faster and limiting the actual size of the recalls as well. However, even as promising as this technology sounds, most meat processing plants are taking a wait-and-see approach to see if the system actually delivers the desired results of those meat processing plants that are deploying the system.

If the desired efficiencies and all the system requirements are indeed met by the implementation of these hi-tech system configurations, then look for similar deployments within the industry to flourish. There are variety of players interested and closely monitoring the systems performance. They range from government officials, ranchers, meat processing plant executives and of course hi-tech companies that specialize in the manufacture and installation of these types of devices. The attention given by all parties in the coming months should be intense indeed.

Happy Trading.

MARKET TA: Riding the Waves / by Dale Woodson, Technical Market Columnist

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Dale Woodson is the editor of Woodson Wave Report, a market-timing newsletter. Woodson Wave Report identifies turning point targets in the Dow, NASDAQ, and S&P 500 index as well as the bond and gold markets using Elliott Wave analysis and fibonacci ratios. Since publishing the newsletter began online in 1998, Woodson Wave Report has been downloaded in twenty-five different countries.

We encourage our subscribers to visit his site at and please see Dale's complete bio following his column.

Dale Woodson

Dale Woodson
Market TA columnist

TIMER DIGEST’S (P.O. BOX 1688, Greenwich, CT. 06836/ 203-629-3503)

















Year 2012



1932 or 1942


Year 2012*



12/6/74 or 8/12/82


Year 2012





.618 = 5803





Complete @ 8062 on 9/21/01





Complete @ 10,673 on 3/19/02





Complete @ 7197 on 10/10/02





Topping, high 10,753 on 2/19/04





 .500 = 6865/ .618 = 5803





Year 2012

* "…it should terminate about the year 2012"

* "...not expected to terminate until about 2012"

R. N. Elliott, Educational Bulletin O

R.N. Elliott, Interpretive Letter No. 17

October 26, 1942.



August 25, 1941.

Primary degree wave 2 down (1987 - 1990) running flat correction.

Primary degree wave 3 up (1990 - 1999)



Primary degree wave 4 down (8/24/99 -?)





The chart above illustrates how perfectly the Dow has declined from our turning point high back in February. At that time, we declared wave (D) up in the Dow as complete. Since that high, the first wave down of minor degree broke down in absolute textbook fashion. Five wave patterns to the downside followed by three waves up. Note the extension in minute wave three. At every degree, from minor to minuette, we can easily count five waves down. Each fourth wave holds below the low of the previous first wave low, fulfilling the guidelines of Elliott Wave. It doesn’t get any prettier than this, folks.

The market has been a bit choppy since that first wave low of minor degree on 3/24/04. As you can see, we label this second wave counter trend bounce as complete at the 4/27 high. From that high, the market appears to once again decline in five wave patterns. This of course, is the initial stage of wave three down

Recall from the March issue that we expected the Dow to retreat, if for no other reason than to at least fill in the gaps that remained from its most recent gains.

“…As the market has moved up over the last week, it has left some gaps to be filled. At a minimum, the market will need to come back and fill these gaps. I can’t imagine three breakaway gaps in a new upward run.”

Of course, the market once again has accommodated our forecast. At this point in time, the Dow has filled two of those three gaps. The one remaining gap lies just above the 10,000 level. Again, at the very least, we expect the market to come back and fill this last gap.

Keep in mind however, that this is a third wave. In the near term, we can expect this third wave to accelerate to the downside. Now, note the gaps to the downside in the hourly chart above. Notice how the tide has changed. The market went from gaps to the upside to gaps to the downside. This can only mean that wave two is complete, and as wave three accelerates to the downside, the previous gaps will be filled as new gaps are formed. These gaps to the downside are acceleration gaps and should not be filled in the near term. They could quite possibly remain unfilled in the intermediate term as well as this third wave gains momentum. Soon we shall see the Dow once again below 10,000.


I’d like to revisit our Fibonacci time spiral briefly. Once again, the spiral that has called the turning point highs since 1999 has served us well. Of course, I felt extreme confidence that it would come through once more with the wave (D) high in February. Now comes the critical point of the entire bear market. To be quite honest, with all our success at calling the highs, we have not enjoyed that same jubilation at the lows. After studying the Fibonacci ratios and trying every possible combination from the August 1999 high, we had to think outside of the box. What we came up with was displayed in the January 2, 2004 report. We compared the number of days from the actual all time high (1/14/00) to the lows of waves (A) and (C). In this case, there were 618 (minus 2) days between the all time high and the wave (A) low, and 1,000 to the wave (C) low. Of course, these numbers are exact Fibonacci ratios themselves! From that point, we projected the wave (E) low to naturally occur 1,618 days from the high. That date is June 19, 2004.

Wave Relationships from 1/14/00 high

Fibonacci Target Actual Turn Date
Plus 618 days = 09/23/01 wave (A) low 09/21/01 (margin of error 2 days)
Plus 1,000 days = 10/10/02 wave (C) low 10/10/02 (direct hit)
Plus 1,618 days = 06/19/04 wave (E) low?

As you know, we expect wave (E) down to decline in a five-wave pattern to end the bear market. Waves one and two appear complete. At this point, from the wave (D) high in February, it is quite possible for this decline to bottom in five waves at or near our target date.

Before we all become giddy like third grade school girls over this possibility, I want to make one point. Once I identified the orthodox high on 8/24/99, I had confidence that the market would turn on our Fibonacci turning point highs. As April 14, 2000 approached, I eagerly anticipated a turn to the downside. As the NASDAQ topped and tumbled to the downside on that exact date, I felt a growing confidence in this sequence because I had been here before. It was much like the spiral back in 1996. That Fibonacci sequence enabled us to call the turning point highs up to the spring of 1998. Now, it was happening all over again. And, once again, just like before, the market paid its respect to these spirals. With each turning point – the Labor Day weekend of 9/4/00 and subsequently the March 2002 high, I came to expect the market to reverse itself. I had supreme confidence now. That is why there was no doubt in my mind that the market would top in wave (D) near our February turn date. Now, in the spring of 2004, I have witnessed the fibonacci spiral sequence call seven different turning point high dates covering two different major moves to the upside (one in a bull market, one in a bear market) spanning a total of more than six years. And all these dates were hit with a margin of error of just a few days – some within the exact day! It still ceases to amaze me.

So you can imagine my resolve that the market would indeed top. Now that you have a feel for my level of confidence in the fibonacci sequence in calling the tops, you can imagine I move forward with at a little trepidation as we await the oncoming bottom. Because the spiral I am using for this low is not like the one used for the high. Unlike the other spiral, it has not stood the test of time. To date, it is unproven, except for the wave (A) low. And it is outside of the box, to say the least. So I must openly admit that I do not have the same level of confidence that the market will bottom in wave (E) on June 19, 2004, as I did that the top of wave (D) would occur in February of 2002. But with that being said, each day as this wave pattern from the February high unfolds, the case for a June 19, 2004 low gains more and more credibility. At least the framework has been set. And up to this point, the market has set itself up beautifully in terms of wave pattern and price for what we anticipate to actually occur. From this point forward, a strong decline in wave three down is exactly what is needed to move this potential bottom date from possibility to probability. Of course, we will watch and wait with great anticipation.

How will we know if we are correct? At what point is the wave count negated? Thankfully, we have our Elliott wave patterns to guide us. In the near term, we remain bearish against the most recent high of 10,537 registered on 4/27. This price represents the second wave high. While a move above this price will not negate the wave count, it will cause serious damage to the prospect of a June 19, 2004 bottom. To the downside, a move below the first wave low of 10,007 will be the first indication that our wave count is correct. We know that the possibility of a panic/spike low existed fifty-five fibonacci days after the most recent (2/19/04) high. Of course, that did not materialize. The next potential day for a panic/spike low is a fibonacci eight-nine days from that high. That date is May 18, 2004. This date could possibly mark the end of wave three down. From there, the market could rebound in wave four up, only to fall to new all time lows at the end of the bear market in wave five down on June 19, 2004.


As the April 26 email alert stated, it is safe to say that the highs of early March represent the entire second wave retracement (see chart above). We remain bearish against those highs (116-11 in the June contract). It would take a move above 116-11 to negate our wave count. The bond market is in a third wave down. We had mentioned this before, but now is the time when the bond market does not move in the opposite direction of the stock market. Both are in a third wave decline. They shall fall in unison. This third wave should prove quite devastating. Recall that the first wave began from the highs of last summer (high in prices, low in rates). That first wave roughly removed some eighteen points off the bond market. That, my friends, is more than just a trim. The third wave will gain a common 1.618 relationship to the first wave at 86-14. That move will push interest rates up to prices they haven’t seen since January of 2000 (more than 6.75%).

Remember, in the first wave, it took only two months (from June to August) for the bond market to lose some eighteen plus points! And that was a first wave! Third waves are quick and powerful. Proof of such can be found with the rather large spike down on April 2nd (see chart above). We will remain short the bond market as this third wave decline continues to gain momentum. This is a bear market, so any surprises should be to the downside.


We moved to a short position in the gold market with the April 26 email alert. And not a moment too soon, I might add. This is it - one of the few times in history when everything falls in value at the same time. Of course, stocks have been in a bear market now for almost five full years. Gold, on the other hand, just ended a decades long bear market in a prolonged fourth wave that began in 1980. In the big picture, gold is in a bull market. Wave five up will surpass the third wave high of $850 registered in 1980. This fifth wave up is going to take years to play out. Within this bull market, there will be pullbacks. As reported in the April 26 email alert, the most recent move up satisfied the minimum requirement for wave five. Now, the market must correct the advances of the previous five waves up. The move below the February 2003 highs of $385 indicates that this correction is of a large degree. Remember, it took gold some three plus years to move up from the $280 level to the most recent highs near $433. The correction of that rise is underway. A fibonacci .618 retracement of this rise gives us a target price of $339.70 for gold. Remain short.

Positions for rating services:

The “positions for rating services” below are assumed positions taken for rating services such as Timer Digest to rate our newsletter and rank us against other market timing newsletters. While the Elliott wave patterns and fibonacci ratios have implications regarding the overall direction and turning points in the markets, a reader is not justified

in inferring that any trading advice is given. Woodson Wave Report, LLC does not offer specific trading recommendations.

Long-term counts are found on weekly and/or monthly charts and generally cover a time period of years to decades.

Intermediate-term counts are found on daily and/or weekly charts and generally cover a time period of weeks to years.

Short-term counts are found on daily and/or hourly charts and generally cover a time period of days to hours.


Long term: Remain short expecting wave (E) down to new lows.
Intermediate term: Remain short expecting wave (E) down to new lows
Short term: Remain short against the wave 2 high of 10,537. Prepare for wave 3 down.


Long term: Remain short expecting wave (E) down to new lows
Intermediate term: Remain short expecting wave (E) down to new lows
Short term: Remain short.

S&P 500:

Long term: Remain short expecting wave (E) down to new lows.
Intermediate term: Remain short expecting wave (E) down to new lows
Short term: Remain short.

Bonds: Remain short.

Gold: Remain short.

Dale Woodson is editor of Woodson Wave Report, a market-timing newsletter. Woodson Wave Report identifies turning point targets in the Dow, NASDAQ, and S&P 500 index as well as the bond and gold markets using Elliott Wave analysis and fibonacci ratios. Since publishing the newsletter began online in 1998, Woodson Wave Report has been downloaded in twenty-five different countries.

Timer Digest rates Woodson Wave Report as the #5 stock market timer and #5 bond market timer for the three-year period from 12/31/98 through 12/31/2001. Woodson broke into the top ten rated stock market timers by placing #7 in the year 2000. He followed that up with a #4 rating for the year in 2001. These ratings were achieved during a period when market timing was extremely difficult as the bull market was turning over to bear and most were caught off guard.

While there is no feeling like catching a turn on the dime, Dale especially enjoys writing the newsletter. He is most proud of the numerous correspondences complimenting him on his writing abilities. He has a real passion for his work. He knows that the market will move in certain Elliott wave patterns and fibonacci sequences. His challenge is to identify those patterns and sequences in advance, while there is still time to profit from them.

Woodson Wave Report offers monthly, quarterly and yearly subscriptions. Newsletters are delivered via email and URL links and are published on the first Friday of every month. Special interim reports are released as market conditions warrant and targets are achieved. All new annual subscribers receive two months free.

You can subscribe to Woodson Wave Report via the secure online order form link below:

Disclaimer: The Woodson Wave Report combines Elliott Wave analysis and Fibonacci ratios to identify turning point targets in the Dow, NASDAQ, S&P 500 cash, bond and gold markets with respect to both price and time. The monthly newsletter is generally released on the first Friday of the month and special interim reports are issued as market conditions warrant and as targets are achieved. The information contained in the report is prepared solely for informational purposes and should not be taken as an offer to buy or sell any investment vehicle. Past performance is no guarantee of future results. Woodson Wave Report is waived of any liabilities.

GOLD RUSH: Golden Consolidation/ by John Dowdee, Ph.D., Gold Editor

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Golden Consolidation

Last week gold and gold stocks consolidated within a relatively narrow range. Bullion opened the week at $379.10 and then fell almost immediately to $371.30. The bull caught a slight tailwind and bounded to $384.50 but was pushed back to close the week at $377.10, just a couple of bucks below the open. Gold stocks, as measured by the XAU index, reacted in a similar manner. The XAU opened at 77.15, retreated to 76.79 in sympathy with the metal and then sprinted to 83.88. The gold index closed the week at 81.21 actually gaining over 4 points (a good sign since stocks normally lead the gold price). There is no doubt that the bear is alive and healthy. Both stocks and bullion are well below their 200 day moving averages and are in a short term down trend. The key question is: “Have we bottomed?”

Looking at the weekly gold chart, we see that the pattern does not look nearly as bad. In February, 2003, gold fell over $70 per ounce (from $390 to $319) in about two months. The current correction has lasted about 6 weeks and gold has fallen $62 in 6 weeks. So it is quite possible that the current decline is just a normal correction in a bull market and is not the start of another bear. The Fibonacci 38% retracement of the rise from 2001 is at about $363 which also happens to be the Fibonacci 62% retracement from the 2003 low (which also happens to be exactly $70 from the top made in early April). Thus, there is a confluence of support at the $363 level. So my prognosis is that we have likely bottomed but if not, $363 should contain the bear. A close significantly below this critical level would send the bull reeling again. Gold stocks have a pattern similar to the precious metal. The XAU fell more precipitously than gold but now seems to also be bottoming. Key support remains near 77.

In summary, I believe the worst is over (but it may take several weeks to months for the bull to recover). We “should” see a substantial bounce soon. However, “should” is no guarantee. A lot depends on the dollar. Unfortunately, the dollar stayed above the 200 day moving average all week. If the dollar continues to rally, it will not bode well for the precious metals. However, if the dollar sinks back below its 200 day moving average (as I believe is likely over the next few weeks), then the long awaited gold bounce could occur.

As I have cautioned over the last several weeks, it is dangerous to try to catch a falling knife. The conservative approach is to wait until a new up-trend is established. If you are a risk taker and can withstand losses, then you can bottom fish at what are (hopefully) bargain prices. Both of the blue chip gold stocks, Newmont (NEM) and Barrick (ABX) look to have good value at current levels. However, it should be noted that gold stocks are much more volatile than most equities. The opportunity for exceptional gains is balanced by the agony of potential losses. Only time will tell. As always, we caution that you should never depend on anyone else’s opinion. You should do your own due diligence and evaluate your risk tolerance before making decisions to buy (or sell) any stocks or funds. Best of luck!

MR. SWING'S PLACE: Weekly Swing Trading Ideas / by Larry Swing

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Each week, Mr. Swing analyzes his database of more than 9,200 securities to scan for swing trading opportunities. But be warned: Do not expect a fast way to make money. Mr. Swing is going to show you how you can accumulate small gains weekly, ultimately making money through a disciplined, low-risk trading approach. While he realizes that this short-term swingtrading approach is not for everyone, he hopes that the information given at will be useful to you in the near future...

These are your Swing Trading Opportunities for this week:

Talking Points member - Over the nearly two years that we have carried the Mr. Swing's Place column, Larry's picks have consistently put in great performances. Don't miss out on the full swing-trading content available at Mr. Take advantage of some of the great programs available by clicking here.

Long Swings:

^ click here


Short Swings:


^ click here
^ click here
MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 > MDI10 AND HIGH < SMAC5
^ click here
MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 < MDI10 AND LOW > SMAC5
^ click here
MAV20 >=500000 AND CLOSE>12 AND ( ADX10+ ADX20)/2 > 30 AND ( PDI10+ PDI20)>( MDI10+ MDI20) AND LOW< LOW1 and LOW1< LOW2 AND HIGH< HIGH1 and HIGH1< HIGH2

^ click here

MAV20 >=500000 AND CLOSE>12 AND ( ADX10+ ADX20)/2 > 30 AND ( PDI10+ PDI20)<( MDI10+ MDI20) AND LOW> LOW1 and LOW1> LOW2 AND HIGH> HIGH1 and HIGH1> HIGH2

^ click here

^ click here

^ click here
MAV20 >=500000 AND CLOSE>12 AND (CLOSE1 - LOW1) <= 0.1 * ( HIGH1- LOW1) AND ( CLOSE - LOW) >= 0.95* ( HIGH- LOW) AND CLOSE > SMAC15 AND CLOSE > SMAC50
^ click here
MAV20 >=500000 AND CLOSE>12 AND( CLOSE1 - LOW1) >= 0.9 * ( HIGH1- LOW1) AND ( CLOSE - LOW) <= 0.1 * ( HIGH- LOW) AND CLOSE< SMAC15 AND CLOSE < SMAC50
^ click here
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MAV20 >=200000 AND CLOSE>7 AND HIGH>=MAX40 and HIGH1 <> MAX40_1 AND VOLUME>1.5 * MAV20 AND CLOSE > OPEN AND VOLUME1 < MAV20 and ( ( CLOSE - LOW ) ) >=0.75*( HIGH - LOW )
^ click here
MAV20 >=200000 AND CLOSE>7 AND LOW<=MIN40 AND LOW1<> MIN40_1 and VOLUME>2*MAV20 AND CLOSE < OPEN AND VOLUME1 < MAV20 and ( ( CLOSE - LOW ) ) <=0.25*( HIGH - LOW)
^ click here
^ click here

REVIVAL (Track1) + REVERSE (Track2) + TRIANGLE (Track3) are different scans developed by MrSwing.
Try for yourself to find the LIST that fits you the BEST...
Tracks, Breakouts & Reversals are explained in our new section called: SWINGLAB...


REVIVAL (Track1) + REVERSE (Track2) + TRIANGLE (Track3) are different scans developed by MrSwing.
Try for yourself to find the LIST that fits you the BEST...
Tracks, Breakouts & Reversals are e explained in our new section called: SWINGLAB...

MSFT (Long) - Chart of the Week
Larry Swing

Fundamental Analysis


Microsoft Corporation (MSFT)

Microsoft Corporation is primarily a developer and manufacturer of software products for computing.  The company sends these products for distribution, as well as selling or licenses them directly.   These products are bought by both retail and enterprise customers.  Secondarily, Microsoft provides consulting and support services, Xbox consoles and games, and runs several online businesses including  Microsoft sells products worldwide. The stock appears attractive in light of a combined analysis of the following four measures:  Relative competitiveness, prospects for growth, analyst estimate shifts, valuations, and stability. 


Relative Competitiveness


Operating System

Microsoft has advantages over competitors through economies of size; software designed for Microsoft’s operating system is incompatible with the other operating systems.  Because Microsoft has a dominant share of the operating system market, more software is designed for their systems.  As a result, their systems are more valuable to potential customers, who desire options amongst add-on software applications.  Furthermore, research and development costs for new features are reduced on a per-item-sold basis, since Microsoft sells to a larger customer base.  This is important since research and development costs are a very large portion of total costs for software companies.


Other Products/Services

Microsoft has effectively leveraged this gorilla position in the Windows OS to gain competitive advantages in related fields.  A key expansion of their monopoly power has been in applications.  Microsoft has benefited from bundling of important software, an unmatched brand name.  Advantages in applications and other systems has also benefited from an extensive distribution network and an unparalleled capital base.


Prospects for Growth

Microsoft has historically had a relatively stable business, however, analysts predict that growth may accelerate greatly with the introduction of:

1.                   64-bit computers

2.                   The Longhorn operating system


Analyst Estimate Shifts

Prospects for growth in MSFT appear positive:  During the past sixty days, analyst consensus for FY 2004 has risen from 1.19 to 1.27, a significant positive, as changes in analyst earnings estimates often occur before stock-price appreciation.  Similarly, FY 2005 estimates have risen from 1.27 to 1.34.



Valuations appear attractive.  The stock trades at only 20x forward earnings, despite a history of extremely strong performance, a dominant position in key markets, and the potential earnings growth acceleration.  Furthermore, the company has essentially no debt, and has over 50 billion in cash (over $5 per share).  Aside from altering one’s interpretation of the P/E ratio of 20, the large cash position increases the likelihood that the company will increase dividends (market reactions to dividend increases are generally very favorable).




EPS Stability

MSFT has demonstrated great business stability; the company very rarely experiences EPS downturns, and, when it does, they are shallow.  Generally, this is considered a plus, and the company deserves higher valuations on average returns. 


Financial Stability

Microsoft has essentially no debt, and a substantial cash position.  There is an essentially zero probability of the company suffering from bankruptcy related difficulties.


Technical Analysis:


MSFT has filled its recent gap, and nearly has a stochastic buy.  The technical situation would turn bullish if the stochastic buy signal occurred.



Key Levels:


Stop buy:  A buy could be placed just above the highs of the recent consolidation, at 26.26.  A move to this level would be a minor breakout, and would trigger a stochastic buy signal.


Stop loss:  A stop loss could be placed slightly below the recent low, at 25.24.


Target:  Our target for the stock is 29.97, slightly below an old high.



Mr.Swing DISCLAIMER: Information for the stock observations was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the stock observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the strategies described above. © Copyright 2002, All rights reserved. COPYING AND OR ELECTRONIC TRANSMISSION OF THIS DOCUMENT WITHOUT THE WRITTEN CONSENT OF MRSWING.COM IS A VIOLATION OF THE COPYRIGHT LAW.

THE TRADER'S MINDSET: Trading Denial / by Bennett McDowell, Columnist

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Founder and President of, Bennett started his financial career on Wall Street with the firm J.J. Kenny Co. in 1984 after serving as an officer in the U.S. Navy. Bennett also served as a Retirement Plan Specialist with the Equitable in New York and has investment real estate experience as well. In addition, his 1979 Economics BA degree from Syracuse University in upstate New York gave him a foundation on which he was able to build a solid background in Finance.

Bennett has extensive experience in trading the financial markets and is currently an active trader including day trading the financial futures markets. He also coaches many traders through his company

Considered an expert in technical analysis and complex computer trading platforms and applications, Bennett has educated and helped traders worldwide improve their trading. Bennett is well known for helping traders overcome sabotaging psychological issues that keep them from reaching their full potential. In addition to his educational and coaching abilities, Bennett, a registered securities broker, manages money and trades for clients throughout the United States.

Bennett released his home study course Applied Reality Trading, also known as "ART" in January 2002. His cutting-edge course teaches traders his state of the art Pyramid Trading Points, Money management, and developing the "Trader's Mindset." Bennett is also known for developing The Trader's Assistant - a premier trade-posting record-keeping system for traders, as well as writing and publishing The Survival Guide For Traders, a book on how to set up and organize your trading business.

Bennett provides private consultation/coaching services to many traders throughout the world by telephone, video conferencing, and in person. Working with Bennett, traders spend time focusing on trading system development, trading psychology, and disciplined money management.


The Trader's Mindset Columnist
Trading Denial

Denial is a insidious and serious human condition that can be extremely dangerous to traders. I think out of all the human conditions, denial is one of the most harmful.

Denial keeps us stuck in doing a negative event over and over again regardless of the outcome. Have you ever heard the saying that madness is doing exactly the same thing over and over again and expecting a different result? Denial is usually why people do this!

Are you a losing trader who is trading the same way over and over again expecting different results? If so, you could be in denial. Look at the list below and see which of these apply to you:

1.Poor or no record keeping
2.Consistently losing month after month
3.Not profitable
4.Feeling helpless
5.Frustrated and stuck
6.Lying about your trading results to others
7.Creating diversions to distract you from reality
8.Needing to appear successful to feel successful
9.Spending out of control
10.Drinking or wild behavior
11.Anxious when alone, can’t sit still

If you can identify with two on the above list then you may have a denial issue. If you identify with three or more you have a denial issue. There are different degrees of denial and the idea is that to be a successful trader you must objectively look at yourself and your trading. If you are in denial, or flirting with denial, you are not being objective and are stacking the odds against you that you will be a successful trader.

Denial is insidious meaning that it begins without you really being aware that is has begun. Be on guard for denial. To catch denial before it get out of control, look for the occasional twisting of the truth about your trading results or being lazy about keeping good trading records all indicate that you may not want to face the truth about your trading.

Denial is a disease in that is rarely gets better on its own. Denial rarely just goes away without being proactive and taking conscious action to intervene. Always seek the truth in yourself, your trading and in life and you will be less likely to have a denial problem. Seeking the truth usually takes energy and at times is the harder path to follow and accept, but this is the path you must always follow to avoid denial. As a trader you will not be successful living in denial. Do whatever it takes so that you do not live in denial. If you cannot fix it on your own, get help. You must learn to deal with reality and get a better result!


Bennett McDowell, President
Free Video – Trading The Perfect Business!
10755-F Scripps Poway Parkway, #477
San Diego, CA. 92131

Copyrighted © 2003, Inc. All rights reserved.

CONTRARIAN CORNER / by Jeff Weber, Columnist

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As a leading contrary investing expert, Jeff has written own investing book, I Guarantee You Will Buy Low Sell High and Make Money, which shows you when to buy and sell the stocks he recommends in his book. You can order the book by clicking on the title and it comes with a free one-year subscription to his newsletter, one month of coaching articles, and one year free email support.

Jeff Weber of JJJ Investing Services
Jeff Weber
Jeff Weber
Contrarian Columnist

What is the latest fear of the month for stock market, bond market or just market anything? Why it's inflation of course. Funny thing about inflation - it causes a contrary reaction in stocks called deflation. So while every thing is going up, suddenly stocks come down. Seems to me if they figured stock prices into the inflation rate, then we wouldn't have inflation because billions of dollars of stocks being cheaper would offset higher gas prices and other higher things but I guess stocks don't count and of course since the herd still leads the way, the herd is panicking and clammering to sell. Well, of course they are wrong because they ain't acting contrary. Well, non-herding contrarians; this below is the smart thing us contrarians will be doing.

The first reason stocks got cheaper is because the herd is a-dumpin 'em and hankering into gold, inflation-protected Treasury Bonds and the like. These folks is plum short-thinkin, don't wait for the sun to set 'fore they set their stocks on the barn floor and stampeded 'em. These folks fickle as the wind, sell their lawn mower for a snow blower, in July.

What's the plum really smart folk sayin - they's a sayin hold on there fur a darn minute afore you sell them stocks. You have ta remember that the sellers panicking today are the baby boomers of the 70's who remember just how bad inflation was back then with President's Ford (WIN - Whip Inflation Now) buttons. But the herd's a sniffin up the wrong tree, because them city-slicker economists is a tellin us that inflation is good for the stock market over the long haul - not bad. Reviewing stock markets from the past shows us that robust stock markets go hand in hand with rising prices. If them herders stampede too quick, and sell them stocks, well, it just creates a good time fur us contrarians to dip twice in the well for the same amount of stocks we usually could only dip once fur. So we's get twice the catch fur half the money.

Looking to the past, Mr. inflation has dun made 10 of the best stock return years since the 20th century begun. Even during WW I, when inflation paniced the folks in many industrial nations, the U.S. stock market jumped about 36%, when inflation jumped from 1% to 2% and the following year stocks were up almost 13%. Even during the height of the Great Depression in 1933, the S%P was up 54%. So history was rollin along until about the 1960s. Them economists even found many things cost less in 1900 than 1800 - like meals, clothing, and many household items - kinda like computers today - always cheaper and better!

Cause think about it - if inflation comes along it's good for businesses - they can raise their prices and have incentives to market more new items. But the ornery critter inflation scared the herd bad in the 1970s. Then was real bad double-digit price increases and interest rates really soared high for mortgages and loans. This inflation hurt stocks and investors real bad, so now the herd's a nervous thinking deja vu all over again. But these a-times is different - it's a world-wide economy - no one can just get big uppity with their prices without the rest of the boys world-wide a-sawin his legs off and bringing him down to earth. So it's only semi deja vu this time - not the whole nine yards.

Plenty of actors in this inflation play - what will the Federal Reserve do? If they tightens the belt too hard, then stocks could go down sharp and swift. Well, us boys in the OK contrarian correl know what to do when them's stocks start running slow and cheap, we's lasso them right into our portfolios and wait till the herd stops stampeding and says, we'd a like to buy some of your now expensive critters, and we'll abilige 'em like we always does.

Here are three stocks I like this month:

QLogic - (Nasdaq: QLGC, $27.05)
52 week: High - $58.72 - Low $25.64

QLGC revenues be up about 12% in 05 after a estimated gain of 18% in 04. No long-term debt.

Emulex - (NYSE: ELX, $17.49)
52 week: High - $31.30 - Low $16.30

ELX expects revenues to grow by 19% in FY 05 after a 24% increase in 04.

Lexar - (Nasdaq: LEXR, $8.68)
52 week: High - $24.49 - Low $5.70

LEXR has no long-term debt and revenues growing and more than doubled from 2001 to 2002.

INSIDE TRACK: Weekly Insider Report / By Jeff Williams

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Jeff Williams is a partner with For the past seven years Jeff has done extensive investment research as a member of an institutional investment team. His background consists of a degree in Finance from the University of South Florida with a minor in Economics. Jeff's everyday activities as an insider stock analyst consist of analyzing data available through a multiple of sources as it applies to all publicly traded companies. With this information he can then make short-term and long-term evaluations on a company’s present and future performance based on insider buying patterns. Each month Jeff will share with you his thoughts on stocks he believes to display the most interesting insider buying patterns.

Jeff Williams
Inside Track Columnist

Interesting Buy Patterns

Open market insider trading activity for IGT April 2004

International Game Technology

International Game Technology is engaged in the design, development, manufacturing, distribution and sales of computerized gaming machines and systems products in all jurisdictions where gaming is legal. The Company operates in two lines of business, Product Sales and Proprietary Gaming. Product Sales encompasses the design, development, manufacturing, marketing, distribution and sales of computerized gaming products and systems. Revenues in this segment are generated from the sale of gaming machines, systems, parts, conversion kits, content fees, equipment and services. Proprietary Gaming includes the design, development, manufacturing, marketing and distribution of the Company's proprietary games under a variety of recurring revenue pricing arrangements, including wide area progressive systems, stand-alone participation and flat fee equipment leasing and rental and hybrid pricing or premium products that include a recurring fee attached to a for-sale game.

Neil Barsky, 46, has served on the board of directors since March 2002. Mr. Barsky is founder and managing partner of Alson Capital Partners, a New York City investment management firm. Through September 30, 2002, Mr. Barsky was managing partner and co-founder of Midtown Capital Partners, LLC. Between 1993 and 1997, Mr. Barsky was an equity research analyst at Morgan Stanley, specializing in real estate, gaming and lodging. Prior to joining Morgan Stanley, Mr. Barsky was an award-winning reporter at the Wall Street Journal. Mr. Barsky has an MS from Columbia University's Graduate School of Journalism and a BA from Oberlin College. Mr. Barsky is a member of the Audit and the Nominating and Corporate Governance Committees.

You will notice in Barsky's profile above that he was previously an equity research analyst at Morgan Stanley, specializing in real estate, gaming and lodging.  The fact that he is now buying a large amount of stock in a gaming stock that he is now on the board of is quite interesting.  You will notice on the chart that the stock has pulled back substantially during the past week.  Barsky bought into this dip.  Taking into consideration his knowledge as a gaming analyst and being on the board, we believe Barsky sees a much higher stock price down the road.

From our Readers:

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FRESH PICKS: On the Prowl

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Weekly Stock Picks From Bob Coppo - New Feature!  

Top Stock Picks for Monday, May 17th, 2004:

Good Trading!

Bob Coppo is Managing Director and Chief Technical Analyst for JNL Financial Consultants, Inc. The company has operated on the internet since 1997 and provides investment advice to both individual and institutional clients. Make sure to visit his site,

This week, we take a different slant on the Fresh Picks. Our focus is almost always on short-term trading candidates, and this week's picks can certainly be played that way. However, with the wealth of stocks scraping bottom and hitting 52-week lows on Friday alone, we wanted to point out some names we believe colud be in every subscriber's longer-term portfolio when the current market correction turns. With the S&P now the only index holding its 200-day MA, coming sessions will likely set the table for the near-term, with buyers waiting in the wings as bargains stack up on the floor. Keep an eye on these buy candidates and consider picking them up on any sustained buying swing this week.

Symbol Fri. Close / % Forward P/E 52-week high/low Short-term Target
GB $25.00 / -15.91% 16.89 $45.15 / $24.40 $28.00
EDS $16.07 / -1.23% 20.87 $15.85 / $25.44 $17.90
ADIC $8.13 / -19.27% 21.39 $7.50 / $19.79 $9.80
BEAS $8.35 / -22.54% 18.98 $8.26 / $15.50 $10.00
SFP $3.40 / +22.74% N/A $2.50 / $15.20 $4.40
KKD $20.76 / -2.63% 16.48 $20.08 / $49.74 $24.00
CMNT $5.36 / -6.78% 14.49 $5.35 / $11.84 $6.28
FHCC $15.00 / -1.51% 10.27 $14.99 / $28.88 $17.00
NOK $13.19 / -2.15% 13.06 $13.05 / $23.52 $15.00
IASG $4.90 / -37.58% 8.17 $4.50 / $12.50 $6.00

All of the above-listed stocks met our screening criteria for Fresh Picks this week. All appear to be oversold and undervalued at current prices, with most down between 20-40% in one month alone. A bounce is not a question of "if" but "when."

As always, do your own research before buying or selling any security. Our recommendations are for informational purposes only and are only our opinions. Make sure to read our Disclaimer

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Our Positions in the Stocks Mentioned and its representatives reserve the right to buy and sell any stock mentioned on this web site. reserves the right to buy or sell any of these profiled stocks before, during and immediately after they are posted to the site. is not responsible for any gains or losses incurred do to investing in these opinions.

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