Weekly Update: November 19, 2007

Weekly Results: S&P 500 +.34% DJIA +1.03% NASDAQ +.35% and MSCI Emerging Markets -1.38%

Despite negative sentiment, major indexes finished slightly positive for the week.

Participants are waiting for further clarity on economic outlook and recent sell-offs.

Broad Markets:

It is important not to confuse talks of "recession" with stock market collapse. In fact, the majority of money managers stay focused on implementing their investment strategies rather than react to market sentiment (Investment Advisor 9-2007). On that note, broad markets are shaping up for a year-end recovery. Recent declines offer bargains for those seeking attractive valuations. Historically, we are approaching a favorable season for equity markets, especially in the third year of a presidential cycle. That said, the next few weeks should determine the conviction level of buyers.

At the same time, these are periods of uncertainty following a bullish run in the past 4+ years. S&P 500 index is almost 8% removed from all-time highs set on October 11, 2007. Currently, the index is at short-term buy point between 1440-1420 ranges. If further declines below theses levels, expect further discussions on a potential cycle peak.

Credit Concerns:

Credit risk continues to linger, especially from a fundamental point of view. Select Lenders and Small Cap Banks remain vulnerable. On technical basis, financials are becoming oversold as optimist step in. Nevertheless, a sharp turnaround in the sector can produce trading profits but not sustainable investment ideas. Not to mention, that some companies are facing severe financial crisis which have yet to be disclosed. Finally, policy-makers intervention can be a threat for those holding short positions.

Macro Review:

In the past few months, commodities rose significantly at a faster pace while the Dollar decelerated into all-time lows. Clearly, this is a reflection of a multi-year cycle, where investors continue to shift from paper assets to hard assets. At this point, Crude ($98), and Gold ($840) are key resistance levels. Also, watch for a recovery for the DXY (Dollar) at recent lows $74.98. Bottom-line: These relationships continue to dominate investor behavior and are reaching vital inflection points.

STOCK SPECIFIC:

Communications:

T (AT&T): Wireless revenues remain solid as company continues to generate earning growth. Stock presents attractive entry points near $39.

Technology:

SWKS (Skyworks Solutions): Uptrend intact in the past 12 months. Overall fundamentals are solid, as profit margins continue to improve. Expect consolidations and accumulate between $8-9 range.

ORCL (Oracle): Deeply oversold as stock is holding above support at $20. Despite investor anxiety on slowing IT spending, relative strength is intact.

PAYX (Paychex): Following a 4+ month of price decline, stock is nearing at a buy point at $38.

PLT (Plantronics): Appealing entry point near $26 range. Product demand expected to receive positive response in Europe and a play on office wireless growth.

HTCH (Hutchinson Tech): Long-term technical outlook is rather tempting for buyers. Last week, company confirmed its solid earnings and promising outlook create a buying opportunity as trend continues to emerge.

Healthcare:

JNJ (Johnson & Johnson): Illustrating further signs of sustainable upside move. Accumulate on pullbacks near $66.

CVTX (CV Therapeutics): Bottoming at current levels near $9. Companies top product showcasing positive sales outlook.

Consumer Staples:

ADM (Archer Daniels): Investor demand for agricultural commodities should bode well for the stock. Accumulate on pullbacks with $35 as a key support level.