Market View – October 22, 2007

Big Picture

The political climate combined with decisions by policy makers continues to heavily impact global markets. For example, recent geopolitical events sparked further upside move in Crude prices. Other policy related issues include: weaker dollar and upcoming actions by the Federal Reserve.

These factors can serve as downside catalyst especially at this junction of a bull market. Similar to July, markets made new highs and now are beginning to decline. Once again, 'credit risk' remains a downside catalyst while negatively impacting the financial services. Last week, companies in Financials continued to unravel fundamental weakness.

As we near key inflection points, fear sharply sets in, especially with cycle winners trading at escalated levels. Many global indexes continue to trade near overbought levels. Chinese markets are reaching "bubble –like" levels, which begs the question of a potential top. Even for aggressive risk takers, finding entry points with rational justification is becoming difficult. At the same time, there are opportunities to enter in "neglected" and undervalued areas.

Sentiment

Plenty of stock specific events especially with earning season. Meanwhile, the broad markets continue to witness rise in volatility. Noticeably, VIX (volatility index) rose by 29% this week as participants took profits in search of safety. Evidently, percentage of bulls dropped by 23% (AAII). Likewise, the put/call ratio reached 1.13 signifying overly pessimistic outlook.

Credit Risks

As seen in the summer months, credit risk is resurfacing and driving financials lower. Lenders and smaller Banks remain vulnerable based on weaker fundamentals and unfavorable business cycle.

Investment Strategy:

Technology: Select groups are favorable from a rotational perspective. Most stocks appear stretched in the near-term. Nevertheless, near-term declines can offer bargains. Given the sectors make up, stock-specific attributes are vital when seeking ideas.

Long Ideas: MOT (Motorola), BRCM (Broadcom), AMD (Advance Micro), and CSC (Computer Sciences).

Healthcare: Pharma is a theme that has underperformed in the past cycle. For value seekers several names present a timely purchase point. For example, PPH (Pharmaceutical Etf) is attempting to bottom at current levels ($78-80).

Long Ideas: CVTX (CV Therapeutics), IMGN (Immunogen Inc.) and WAT (Waters).

Financials:

Although selling appears overdone, use recoveries as shorting opportunity.

Short Ideas: DSL (Downey Financials), FED (First Federal), WFSL (Washington Federal) and AF (Astoria Financial).

Macro Levels:

Crude: Once again, making new highs. $90 remains a key resistance level. For those keeping score, the commodity has soared over 739% since lows in December 1998 ($10 a barrel). At this point, beyond supply/demand, the index is reacting more on speculation and geopolitical factors.

Gold: Reaccelerating with next key resistance at $850. Extended and poised for pullbacks. Next key support levels include: $755 and $730.

US 10 Year Yield: Attempting to bottom at current levels. Slightly below 4.40% a key support level in the past few years.

S&P 500: After peaking at 1555 in July, recently index paused at 1576. Intermediate-term data suggests further downside between 1500-1450 ranges given the overbought conditions.

FXI (China 25 Index): Due for pullbacks especially following a 90%+ gains since August 2007 lows. Index remains far removed from 50 day ($163.15). Overall, watch for sharper declines in the near-term.

EEM (MSCI Emerging Markets Fund): Extended momentum after a 3+ month surge. Watch for pullbacks near $140-144.

Weekly Market Update – October 15, 2007

Similar to days in June, markets are jumping out to new highs on a global scale. It is difficult to find major sellers in this atmosphere. A period in which, Central Banks appear to 'restore' confidence, and a growing risk appetite especially among participants in emerging markets. Perhaps, July briefly reminded us about existing credit risks. While it seems like February was a long time ago, when speculative markets sharply declined. Nevertheless, the uptrend remains intact. At the same time, the risk/reward for new entry points remains rather questionable.

Sentiment:

Volatility is relatively tame since mid August. But last week, VIX rose 4% signifying hints of trend reversal. Upcoming option expiration at weeks-end can create further turbulence in market behavior. Finally, earnings season should provide a gauge on investors expectation and overall sentiment at this junction of the business cycle.

Investment Approach:

Continue to favor technology based themes especially related to communication, media, networking and telecommunication. Increase in Wall St financing should boost sector higher and expect more deals given attractive valuations. That said, stock specific selection is critical since some parts of Technology are not as "cheap".

On a selective basis, Healthcare groups offer attractive entry points. Big Pharmaceutical companies are attempting to increase their pipeline which benefits smaller/specialty based companies. Similar to Technology, expect deals in upcoming quarters.

Meanwhile, the fundamental in Financials are vulnerable. On pending market pullbacks, lenders and REITS are poised to lead downside moves. Also, surprises in Federal Reserve actions and lower than expected numbers can spark more selling across the sector.

Macro Levels:

Crude: Hovering around all-time highs. Two key near-term resistance levels: $84.05 – intraday highs from October 12 and $83.76 reached on September 28. Otherwise, uptrend remains intact.

Gold: Making cycle highs and $100 removed from record highs reached in March 1980 at $850.

US 10 Year Yield: Attempting to bottom. Early indication of a bottom at 4.40%. And yet, far removed from yearly highs of 5.32%.

S&P 500: Once again, registered all-time highs this week. Investors watch for 1555 level as a key support level. (July highs)

FXI (China 25 Index): Fund is up a remarkable 82% since August 16 lows. Plenty of acceleration as momentum players continues to deploy capital, despite overbought conditions. Perhaps, this can explain comments from Alan Greenspan that the Chinese "economy might be overheating".

EEM (MSCI Emerging Markets Fund): Similarly, index is making all-time highs. Not surprising given the funds top holdings are in Chinese equity market. (15% of overall fund).

TECHNOLOGY:

MOT (Motorola): Despite recent run-up, stock offers buying opportunity on pullbacks. First support level near $18 which is near its 200 day moving average.

BRCM (Broadcom): Presents investment opportunity especially with growth potential in digital TV and multi-media. Bottoming long-term technical profile as a breakout above $35, displayed strength among buyers.

TELCOMMUNICATION:

VZ (Verizon): Solid growth potential as positive trend continues. After bottoming in August 2006, stock is setting up for sustainable upside move.

MEDIA:

DTV (Direct TV): Breaking out from multi-month trading range. ($22-26) Attractive entry point for long-term investors. Growth in HD TV, strength in revenue, and upside potential in Latin America sets up a promising outlook.

HEALTHCARE:

CBST (Cubist): Appealing for buyers above $21. Product development in anti-infectious drugs should continue to improve.

MATK (Martek): Improving fundamentals, with positive near-term momentum. Accumulate on pullbacks and a buy idea in the Small Cap space.

Dear Readers:

The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

Market Review – October 8, 2007

Market Review – October 8, 2007

The S&P 500 has erased losses from this summer and currently trading near all-time highs. Volatility continues to decline as the bullish uptrend remains in tact. Despite negative news from Financial companies, the US markets closed positive on the week. Perhaps, investors have "priced in" concerns over credit risks. Nevertheless, broad markets are overbought in the near-term.

For the upcoming weeks, look for consolidations, especially as we enter a heavy part of the earnings season. There is plenty of noise ahead as participants speculate on Fed cuts, "recession" and broad market peak.

In terms of managing portfolio, balanced exposure seems appropriate for positioning towards year-end. As commodity related themes retrace from escalated levels, other areas in the market place are worth a look. In looking ahead, most Technology and Healthcare themes are poised to outperform.

Sector allocation chart below.

Technology:

As the sector makes multi-year highs, positive trend remains in tact and pullbacks offer buying opportunities. Investment bankers continue to finance M&A activities in the sector. At the same time, valuations are relatively attractive, favoring upside moves.

BRCM (Broadcom): Demonstrating further strength in the last 3+ months. Holding above key levels and a sustainable idea. Additional bullish include, improving long-term fundamentals along with investments in growth related areas.

FFIV (F5 Networks): Add on pullbacks closer to $40. Also, strength in core business and increasing demand growth favor additional upside move.

NICE (Nice-Systems): Holding above $36. Appealing entry point at these levels.

FDRY (Foundry Networks) Stretched in the near-term but strong relative strength since summer 2006. Use weakness to accumulate.

PAY (VeriFone Inc): Long term uptrend in tact for the electronic payment company. Accumulate closer to $40, given the solid fundamentals and growth potential.

MOT (Motorola): From an intermediate-term view, early indications of a bottom. At this point, consolidation ahead between $18-20 range. Company is poised for a turnaround following a weak 2007. Improving product mix along with pleasing valuations create buying opportunities.

Media:

DTV (Direct TV): Breaking out from multi-month consolidation. Key support at $22. Further expansion in consumer related space presents a bullish outlook.

Healthcare:

CBST (Cubist Pharma): Bouncing from key support level at $21. Early stages of a recovery as stock attempts to breakout of 2+ year trading range between $24-26.

MATK (Martek Bio): Bottoming at current levels and deeply oversold from a long-term standpoint. Opportunistic entry point especially with growth in sales and expanding margins.

Industrials:

LYV (Live Nation): Holding above key support $20. Add on any pullbacks as company continues to expand in the concert promotion business.

CAL (Continental Airline): Recovering from oversold levels. Also, a decline in Crude prices can lift shares of airline stocks.

Financials:

Despite recent recoveries group is relatively vulnerable. Favor insurance related themes over REITS and Lenders. At this point, sector presents more of a trading rather than investing opportunities. Plus, any near-term Fed cuts should not alleviate weakness at this stage of the business cycle.

MACRO INDICATORS:

Crude: Holding above $80, while pullbacks ahead from elevated levels. Major resistance at $83.76.

Gold: Uptrend in tact. $720 near-term support with pending pullbacks ahead.

Natural Gas: Consolidating between $6-8 range. Upward bias at current levels for months ahead.

US 10 Year Yield: Stabilizing near 4.60% range with major support at 4.40%.

Dollar (DXY): Early signs of trend reversal. Attempting to hold above all time lows $77.66 reached on September 28, 2007.

Emerging Markets (EEM): Due for near-term pullbacks. Key resistance at $157.77.

S&P 500: Overbought in the near-term. Further consolidation between 1540-1500.

Market Thoughts: October 1, 2007

Quarter End:

As the third quarter comes to an end, for the most part macro themes remain intact. A historical quarter where Crude reached all time highs, dollar broke down to all-time lows and further strength in emerging markets. Not to mention, a volatile July/August, aggressive Federal Reserve tactics and deteriorating credit conditions. In short, plenty of action.

Q3 Results: S&P 500 +1.9%, Nasdaq +4% and Dow + 3.8%.

Looking ahead:

In looking ahead, the role of the Federal Reserve is a topic of heavy interest among participants. Despite declining volatility (VIX declined 54% since August 16) in recent weeks, there are uncertainties yet to be resolved. At the same time, commodity prices are overdue for pullbacks and Chinese stock market is extremely overbought. Nevertheless, there are opportunities for near-term traders and value for investors.

As the trading rule goes: Don't call tops or bottoms. Now, that's challenging for those trading Crude, Chinese markets and US dollar. In terms of Crude and China, both themes have worked despite several overbought signals in 2007. Since 2002, the Dollar is in a clear downtrend. Currently, the Dollar Index (DXY) is at new lows and no signs of promising recoveries.

At this point, betting on trend reversal has been a risky approach for quarterly ideas. However, the odds for reversals are increasing as global themes await external catalysts.

MACRO REVIEW:

Crude: Trading 2.6% below all-time highs set on September 28, 2007. Major support at $80 followed by $75. Overbought in the near-term.

Gold: Strength continues with positive momentum. 14% removed from historical highs (850 March 1980).

US 10 Year Yield : Attempting to stabilize between 4.40%-4.60%. Short-term downtrend in place since peaking at 5.32% on June 13, 2007.

DXY (US Dollar Index): Breaking below all-time lows. Since Q1 2006, index has dropped 16% and no major signs of recovery.

S&P 500: Extended in the near-term. Expect further consolidation between 1480-1520.

EEM (MSCI Emerging Markets): Trading near all-time highs. ETF is up 357% since inception in April 2003.

Financials:

Financials continue to underperform as the Fed attempts to slow the downtrend. Yet again, can't fight the Fed, especially following aggressive rate cuts. That said, the current business cycle is less favorable, as fundamentals remain vulnerable. From a group standpoint, favor Insurance over Lenders and REITS.

Earnings Season:

In addition to macro factors, we are approaching earnings season. A period, that should set investors tone for the rest of the year. In the next 4-6 weeks, look for broad market consolidations as focus shifts to stock specific events.

Group/ Stock Review:

Telecom:

DOX (Amdocs ) Attempting to bottom between $34-37 range. Accumulate on weakness.

VZ (Verizon): Attractive entry point as stock continues its strength. Add on pullbacks with major support at $42.

Technology

For those seeking alternative ideas to energy related themes, there are areas in Technology offering attractive entry points.

NSM (National Semi): Holding above key support at $24. Poised for an upside surprise given recent weakness.

SNDK (Sandisk Corp): Continues to consolidate in the past 3 months. Appealing entry point given growing demand for flash cards and company focus on high margin products. Buying opportunity between $50-55.

Healthcare:

ABI (Applied Biosystems): Uptrend intact. Extended in the near-term. Buying opportunity between $31-33 range. Positive fundamentals with new product launch and projected revenue growth.

MATK (Martek Bio): Bottoming at current levels. Improving sales and expanding margins setting up for an upside move.

Staples:

WFMI (Whole Foods Markets): Bottoming since July 27 lows ($36). Following a 2 year downtrend, company is showing early signs of recovery.

Macro, Group and Stock Review – September 24, 2007

Eventful week indeed!

Broad Markets:

A positive week mainly sparked by rate cuts. A cheerful reaction by bulls, puzzling for shorts and yet a confusing outlook ahead. Capital inflow into SPY (S&P 500 ETF) rose significantly. Data suggests that buyers are slowly rotating into equity markets. For example, Investors added $13.26 billion from 9/12 to 9/19. (trimtabs.com).

At the same time, Volatility declined from elevated levels as VIX (Volatility Index) is below 20. A key note, last Friday was known as "quadruple witching". That's when equity index futures, equity index options, equity options and single stock futures all expire. A quarterly event, which contributes to abnormal trading patterns.

Macro Review:

Trends that remain in tact: Surging oil prices, declining dollar and re-accelerating gold. These indicators are approaching record levels and breaking key technical levels. Importantly, the relationship of higher commodity prices and weaker Dollar became significantly apparent when the S&P bottomed in March 2003. The multi-year strength in Crude, Gold, China and Canadian Dollar is nearing a trend shift. At least, these themes are becoming overbought in the near-term.

Crude: All-time highs reached on September 19 at $82.50. First support level, near $80 followed by $75. Currently, 26% removed from its 200 day moving average.

Gold: Poised for near term pullbacks after breaking previous highs from May 2006. Next major resistance level $850 (All-time highs from March 1980). An upside move above 15% needed to record new highs.

US 10 Yr Yield: Oversold recovery from yearly lows (4.29%). Major resistance at 4.80%, although further consolidations at current levels.

Dollar (DXY): Few points away from all-time lows $78.19. At this point, seeking external catalyst for a recovery.

S&P 500: Positive trend in tact. Becoming overbought in the near-term. Next resistance level 1555.

EEM: (MSCI Emerging Markets): Breaking out to all-time highs. Long-term uptrend intact, while nearing escalated levels in the short-term.

Financials:

Financials underperformed the market in the first half of the year but some analysts and corporate insiders are rather optimistic. Fundamentals for homebuilders and lenders suddenly improved following rate cuts. Perhaps, a knee-jerk reaction or an oversold bounce. Nevertheless, it is difficult to fight the Fed, as seen by huge jumps following interventions by the Federal Reserve. At the same time, investors should not forget the bleak earnings outlook for the sector, slowing economic data and unfavorable period in the business cycle.

Communication, Networkers, Telecom and Media

Stocks in Technology, Telecom and Media groups offer appealing entry points. As we approach year-end, strength in technology continues. Stability in macro related themes can benefit the sector. Stock/Group exposure in communication, networkers, telco and media offers favorable odds.

From private equity perspective, select Technology companies are attractive as buyouts candidates given lower debt/equity ratio. Once again, from a cycle view, larger cap names are poised for relative outperformance.

STOCK IDEAS:

Telco:

VZ (Verizon Communications): Positive long-term trend above $40. Strong fundamentals and increasing customer base should contribute for further upside move. Accumulate at current levels.

Media:

GMST (Gemstar-TV): Breaking out and making yearly highs. Given the balance sheet strength and revenue growth, GMST is a takeout candidate. Regardless, investors should add on any pullbacks.

Technology:

MOT (Motorola): Early signs of recovery after August lows. Look for additional upside moves, especially with increasing global handset demand. Relatively oversold and holding above $16. (key long-term support).

WDC (Western Digital): Attractive relative strength. Improved demand and promising product mix. Add on pullbacks, as trend remains positive above $22.

ERTS (Electronic Arts): Holding above $50, key support level. Following 2+ year consolidation, stock is poised for recovery.

OVTI (OmniVision Tech): Recovering from oversold levels. Solid fundamentals with increasing demand and positive guidance. For the quarter ahead, attractive risk/reward ($19-25).

Healthcare:

ABI (Applera Corp. Applied Biosystems): Relative strength emerging and breaking above $34. Accumulate on pullbacks.

MATK (Martek Biosciences): Recovering from long-term oversold levels. Positive near-term momentum as trend remains positive above $26.

Market Overview: September 17, 2007

Market Overview: September 17, 2007

An eventful week ahead, as financial markets await results from the Federal
Reserve. Aggressive participants are looking to speculate and take advantage of volatility. Likewise, many investors are looking to dissect the language from Fed's announcement. However, all these factors should not dramatically change the long-term outlook.

Once again, investor sentiment remains overly negative as most participants expect a downside move in equity markets. Investors continue to rotate into risk-averse instruments and defensive themes. (Last week, Restaurants rose by 6.50% and were the top performing group in the market.)

Meanwhile, corporate insiders continue to accumulate stocks while companies continue to announce share buybacks. In addition, other areas of the stock market offer timely entry points. Therefore, plenty of mixed signals.

Besides the obvious, there is always room for surprises meaning its vital to examine
core ideas.

At this point of the credit cycle, Financials remain vulnerable. Despite, any recovery, fundamentals are not favorable for a sustainable upside move.

Attractive areas include, 'Growth' oriented themes especially in Technology and Healthcare. At the same time, Gold remains in an uptrend especially with growing uncertainties in the currency, credit and equity markets.

MACRO REVIEW:

S&P 500: Trading in a narrow range between 1440 -1500. Look for further consolidation before any upside move.

US 10 Year Yield: Attempting to bottom near 4.40% range.

Dollar (DXY): Less than 2% removed from all-time lows, reached 15 years ago. Deeply oversold in the near-term, as the dollar remains 3.7% removed from its 200 day moving average.

Crude: Nearing elevated levels, following a 16%+ move since August 22. Key resistance near $80.

Gold: Intermediate-term uptrend remains intact. Next resistance level $725. (May 2006 highs).

Natural Gas: Deeply oversold with major support at$6. Early indication of a recovery.

MSCI Emerging Market (EEM): Overbought and poised for consolidation between 135-125 range.

Stock Ideas:

Telecommunication:

VZ: (Verizon): Relative strength continues to improve. Accumulate closer to $40.

SKM (SK Telecom): Strength developing and poised for an upside move. South Korean wireless operator presents a timely entry point and improving fundamentals.

Healthcare:

JNJ (Johnson & Johnson): Remains attractive as value buyers continue to accumulate. Add on pullbacks.

WAT (Waters): Although extended in the near-term, any weakness offers better entry points.

SSRX (3SBIO): A Chinese biotech company that is deeply oversold. Buy point near $10-12 levels.

Technology:

NICE (Nice Systems): Look for near-term declines as buying opportunity. Above $36 trend remains positive.

KNM (Konami Digital): Recovering from oversold levels. Since mid 2006, uptrend remains in intact.

Market Observations: September 10, 2007

Market Observations: September 10, 2007

Investors continue to closely monitor economic data and speculate on pending rate cuts.

Sentiment indicators showcase fear and uncertainty in the marketplace. Once again, VIX (volatility index) climbed nearly 5% closing at 26.13. Similarly, participants witnessed a rise in the Put/Call ratio. Finally, NYSE and NASDAQ short interest ratio reached high levels.

In terms of macro outlook, further weakness in the US dollar and US 10 year yield. Last week, both (yields and dollar) reached annual lows and remain deeply oversold. Meanwhile, commodities continue to re-accelerate. Gold is setting up for a strong recovery. Crude is nearing overbought levels but uptrend remains in tact. At the same time, slowing US economy has not fully played out in the global markets. Emerging market indexes are overbought and reaching elevated levels.

Despite overall bearish sentiment, select groups offer upside surprises. In upcoming weeks, investors should increase exposure in Technology, Biotech and Media stocks. At the same time, continue to reduce financial services exposure.

Financials:

Investors should not assume that Federal Reserve intervention creates a risk-free environment especially in the financial sector. Lenders, REITS and Small Cap Banks face further downside pressure. In a period of "risk adjustment", one should expect volatility. At this point, any recovery in the XLF (Amex Financial Index), should offer shorting opportunity.

Short Ideas:

FED (First Federal), DSL (Downey Financial) and CFFN (Capitol Federal).

Biotech:

Biotech stands out as an attractive theme. For example, the BBH (Biotech Holders Trust) is showing relative strength versus the market. The sector is setting up for a strong recovery. From a seasonal point of view, September –October is a favorable period. Also, with declining financial services, demand for healthcare shares should increase.

Long Ideas:

GILD (Gilead Sciences) , HGSI (Human Genome), GENZ (Genzyme) and VRTX (Vertex).

Technology:

Technology upgrades continued last week, as we enter a favorable period. On an absolute basis, many managers should look to deploy capital into the sector. From a relative standpoint, timely long ideas are forming with bottoming patterns and improving fundamentals.

Long Ideas:

MOT (Motorola), SOHU (Shou.com), INFA (Informatica Corp.), AMD (Advance Micro), and SRX (SRA International).

MACRO LEVELS:

Crude: Overbought from an intermediate perspective. Next resistance $78.70 reached on Aug. 1, 2007. (all time highs).

Gold: Breaking out of multi-month range. After trading between $660-680 levels, the commodity is above $700 with positive momentum. Approaching all-time highs of $725, reached on May 12, 2006.

US 10 Yr Yield: Becoming oversold in the near-term after making annual lows.

US Dollar: Broke below key support 80. Following a weak non-farm payroll, global investors appear to lose confidence. Next support level 78.19, all-time lows reached back in September 1992.

S&P 500: Consolidating between 1440-1480 range. Look for pullbacks in the near-term.

FXI (China 25 Index): Remains deeply overbought, after peaking on August 27 ($154.54).

Market Review – September 4, 2007

Market Review – September 4, 2007

An interesting finish to the summer, as Bush and Bernanke provided some words of confidence regarding the financial markets. Clearly, participants and policy makers have recognized the risk facing lenders and banks.

In terms of broad markets, there are plenty of themes to examine which dominate investor behaviors. Themes include: Growing investor pessimism, flight to quality, increase in insider buying, and speculation on rate cuts. At the same time, one should consider purchasing quality ideas on pending weakness.

Financials:

It can be dangerous to underestimate the power of the Federal Reserve For example, since the Fed lowered the discount rate, S&P 500 climbed almost 8% in two weeks. Nevertheless, interventions are designed to create temporally relief. From a fundamental and business cycle perspective, Financials remains vulnerable. Despite, lenders hope for bailouts and value players accumulating REITS, -- downtrend remains in tact.

Growing Fears:

The need for confidence seems appropriate as investors are less optimistic and placing greater focus on "worrisome" topics. Further evidence is visible in various sentiment data. For example, the put/call ratio is relatively elevated (.71) which signals a negative tone. Also, over $500 million put options were purchased on the S&P 500 index. The bears, in this case are expecting a 5-11% decline in September.

Similarly, investors are increasing exposure to risk-averse instruments. Recently, investors took out $1.42 billion out of equity markets. At the same time, money markets funds witnessed a 105% increase in July.

Bottoming Process:

Despite negative sentiments, public companies continue to buy their own stocks, especially in the past two months. That should decreases supply of shares available in the marketplace thus causing stock prices to rise.

Select groups offer buying opportunities, especially in Technology related themes. Nasdaq (QQQQ) continues to outperform the S&P 500, especially since June 2007. Given further risks in Financials and elevated Energy groups, expect further rotation into Technology. Investment banks are seeing growth in revenue from the technology sector specifically in financing and M&A advising. In the past 12 months, wall street firms accumulated close to $2.86 billion in revenues. (Institutional Investor). Again, seven years removed from the "Tech bubble", the risk/reward is attractive at current levels.

MACRO LEVELS:

Crude: Holding above $70. Next resistance is near $75, followed by all-time highs at $78.70. (reached on Aug. 1, 2007).

Gold: Choppy trading between $670-690. Again, poised for further upside move as near-term momentum remains positive.

US 10 Yr Yield: Near-term oversold around 4.50%. Approaching March lows, watch recovery near 4.44%.

US Dollar: Attempting to stabilize between 80.50 and 81.90. Again, oversold and above its all-time lows of September 1992. (78.19).

S&P 500: Key resistance at 1480. Momentum reaching overbought levels while index holds above 200 day moving average.

FXI (China 25 Index): Overbought, after making all-time highs at 154.54 on August 27. Interestingly, in the last two weeks index appreciated with declining volume. Therefore, sustainability of near-term uptrend is questionable.

STOCK IDEAS:

Technology:

ALTR (Altera): Holding above key support level $23 and oversold in the near-term. The stock is among the top "cash rich" companies in S&P 500. It provides exposure to Semi's and relative strength remains positive.

BRCM (Broadcom): Trading in a narrow range. Accumulate closer to $32 levels.

AMAT (Applied Materials): Strong bounce from key support level $20. Add on pullbacks.

MOT (Motorola): Deeply oversold and far removed from 200 day mva. Look for improving fundamentals to drive share prices higher.

FDRY(Foundry Networks): Although extended in the near-term, look for pullbacks as buying opportunity. Uptrend remains intact.

SOHU (Sohu.com): Attractive entry point above $30. Look for upside move following near-term consolidation.

PAYX (Paychex): Positive trend in tact. Buy point between $42-44 range. Company continues to show optimism by announcing dividends payments and share buybacks.

Telecommunications:

DOX: (Amdocs Ltd): Bottoming near $35 level as stock remains oversold. Offers timely entry point with solid growth potential.

Consumer Staples:

WAG (Wallgreen): Stock continues to trade between$44-46 in the past 4+ months. Currently, presents an attractive entry point given its improving fundamentals, driven by acceleration in sales of generic drugs.

Biotech:

GENZ (Genzyme): Holding above $60, and bottoming. Timely entry point as Biotech attempts to re-accelerate. Also, opportunity to invest ahead of upcoming fall conferences.

Market Review – August 27, 2007

A relatively calm week, as markets finished higher with lower volatility. VIX (Volatility Index) declined to 20 from its August 16th highs of 37.

Despite long-term uncertainties, macro indicators are beginning to stabilize. US 10 year yield is back down to 4.60% levels following a surge above 5.20% in June. Crude is holding above $70, while S&P attempts to bottom around 1460-1480 range.

Overall sentiment remains net bearish among consensus. For example, in the last four months, mutual funds witnessed net outflows of $35 billion (trimtabs.com). This further illustrates flight to cash and other risk-averse instruments.

It is customary to expect lower trading volume and quieter market behavior in the last two weeks of August. Needless to say, there are several opportunities in the marketplace as investors and commentators speculate on pending rate cuts.

Last year, Technology bottomed in July, following a sharp broad market correction. Since that point, the sector has demonstrated leadership. Since last summer lows, ML Tech 100 Index has gained 35% while S&P 500 rose 21% in the same period. Given further risks in Financials and elevated Energy groups, expect further rotation into Technology.

Macro Indicators:

US 10 Year Yield: Oversold near-term. Attempting to bottom with key support at 4.60%.

Crude: Holding above $70. Index is 10% removed from all-time highs $78.70. Expect further consolidations ahead.

Gold: Long- term trend remains positive. Holding above $660, as near-term momentum remains favorable for an upside move.

US Dollar: Retesting December 2004 lows (80.39). Index is 3% removed from all-time lows reached in September 1992. (78.19).

SPX: Recovery continues from oversold levels. Next key resistance levels, 1480 followed by 1500.

FXI (China 25 Index): Re-accelerating and trading near all time high.

Stock Ideas:

Technology:

TLAB (Tellbas): Bottoming and oversold. A timely entry point, and setting up for a sustainable run in the telecom networking group.

ONNN (ON Semiconductor): Improving fundamentals in the analog sector. Accumulate on pullbacks between $11.50-12.

EMC (EMC Corp): Add on any sell-offs. Buy range between $18-20.

SOHU (sohu.com Inc.): Relative strength remains positive. Offers exposure to Chinese internet market.

LNOP (Lanoptics): Despite a 7% increase on Friday, stock remains attractive. Solid fundamentals as company reported a 192% revenue increase. A small cap growth idea in technology, offering an entry point closer to $16 level.

Telecommunication:

VZ (Verizon Communications): 4+ month consolidation between $40-44 is setting up for an attractive near-term entry point.

Media:

CMCSA: (Comcast): Deeply oversold. The stock offers attractive risk/reward at current levels.

DTV (Direct TV): Positive long-term trend. Recovery continues from oversold levels. Add on any weakness.

Consumer Staples:

WFMI: (Whole Foods Market): Intermediate-term trend positive above $40 range. Add on any pullbacks.

Healthcare:

WAT (Waters): Uptrend intact. Timely entry point as fundamentals and momentum remain positive for the medical instrument manufacturer. Accumulate closer to $62-60 range.

Control the controllable – Market Review: August 20, 2007

Control the controllable – Market Review: August 20, 2007

An eventful week, as markets displayed large swings driven by growing uncertainty and looming fears. Also, plenty of data/news releases, highlighted by the action of the Federal Reserve. Nevertheless, the macro and cycle themes remain in tact. Despite oversold equity markets and boost from Bernanke & Co any upside sustainability remains unclear.

Even though, financials appear attractive in the near-term, select areas should experience further credit risks. Overall, artificial boost to the financial markets only prolongs the natural flow of cycles. The Federal Reserves’ decisions demonstrate that liquidity is a priority concern. Clearly, the Fed acknowledges that economic weakness lies ahead. That said, long positions in the financial sectors are susceptible to higher risks and potential downside surprises.

At the same time, equity markets are reaching overly bearish levels after recent sell-offs. This is exhibited by elevated VIX, high Put/Call ratio readings, oversold broad markets and buying among insiders. These factors suggest a near-term recovery. In looking ahead, instability generally breeds opportunity. Therefore, the next few weeks offer buying opportunities in Technology, Media, and Telecommunication and select Healthcare themes. Entry/exit points are going to be difficult on a relative basis given the higher market volatility.

The challenge ahead is beyond seeking trends and sector rotations. It is vital to focus on specific ideas. In "controlling the controllable" stock specific ideas below.

MACRO LEVELS:

Crude: Attempting to bottom above $70 in the near-term. Intermediate-term data suggests further downside/ consolidation ahead.

US 10 year yield: Becoming oversold in the near-term. Stabilizing near the 4.60% levels.

Gold: Sideway action continues. Trading in a narrow range between $670-650.

Japanese Yen: Further signs of bottoming. Currency is up more than 8% since June 22 lows.

S&P 500: Near-term oversold. Attempting to stabilize between 1440-1460 levels. Major resistance level at 1480.

FXI (FTSE/China 25 Index): Attempting to bottom near 120-130 level as it holds above its 200 day moving average.

Consumer Staples:

CQB (Chiquita Brands): Following a sharp sell-off after earnings season, stock is oversold and poised for a recovery. Timely entry points around $12/14 levels.

WFMI (Whole Food Markets): Holding above long-term support of $40. After 1 ½ years of underperformance, stock offers appealing entry points.

Technology:

INTU (Intuit): At a buy point with major support at $28.

BRCM (Broadcom): Further strength developing. Increase exposure.

MOT (Motorola): Bottoming between $14-16 range in anticipation of improving fundamentals.

SNDK (Sandisk): Further signs of strength. Above $50 trend remains positive.

TLAB (Tellabs): At long-term support of $10 with attractive risk/reward.

Healthcare:

JNJ (Johnson & Johnson): Offers a large cap exposure in healthcare. Accumulate between $60-62 levels.

ABI (Applera Biosystems): Following multi-year underperformance, ABI is showing early signs of bottoming. Add on near-term pullbacks.

GENZ (Genzyme): Strong support level at $60. Stock is positioned for a long-term recovery.

BMRN: (BioMarin Pharmaceutical): Uptrend intact since Q2 2005. Add on any weakness.

Media:

CMCSA (Comcast): Near-term oversold. Attractive entry point near $25-26 range.

DTV (DIRECTV Group): After trading sideways in 2007, the stock is bottoming around $22 with improving fundamentals.

GMST (Gemstar): Near-term consolidation as it attempts to bottom. Buying opportunity around $5-50.

Telecommunication

VZ (Verizon Communications): Remains at a buy point between $40-42.

Market Themes – August 13, 2007

Market Themes – August 13, 2007

The last few weeks showcased that multi-year movements are nearing a trend shift. In the past 4+ years, investors have witnessed, a rise in Crude prices, low borrowing costs, low volatility and surge in global equity markets.

The last few weeks displayed the following:

Higher volatility

Credit risk unfolding

Crude retracing from overbought levels

Equity markets pausing

That said, the reshuffling process continues across various markets. Recent behaviors examined below:

Higher Volatility:

Another turbulent week, as the VIX (CBOE Volatility Index) continued to climb near 30. Index reached its highest level since 2003. Part of the volatility is caused by global headlines and actions triggered by Global Central Banks. Investors reacted to numerous data releases which in general, lead to mixed messages and confusion. Taking a step back, the 4+ year uptrends are being challenged. Therefore, it is natural to see higher volatility given an inflection point in the market cycle. Also, short-term trading faces higher risk tolerance as investors seek a comforting trend.

Credit risk unfolding:

In terms of credit risk, many themes reached oversold levels in the near-term. Although, financial themes such as Lenders, REITS, Homebuilders and Banks are attempting to recover in the near-term, sustainability is not clear. In other words, credit risk has not fully played out from a fundamental and cycle viewpoint. Of course, insider buying and corporate stock buy-backs can propel financials to slowly recover. From a long term view, current recoveries can be viewed as temporary relief.

Crude pulling back:

Since an August 1^st peak, Crude has declined over 10% and was down 5% for the week. At this junction, (outside of geopolitical events) long term charts are overbought and suggest further downside moves ahead. Downside pressures include: slowing demand and “priced-in” hurricane season. Finally, expect fund managers to unload long positions especially at current levels.

Equity markets pausing:

Clearly, few rough summer days ahead, especially for groups in the financial services. Further consolidation ahead as investors look for guidance from the Federal Reserve. As bulls and bears debate the broad market status, the next few weeks offer several opportunities. From a bottom-up approach, Healthcare, Media, Telecommunication and Technology present a buying opportunity: In the weeks ahead, markets are poised to favor risk-averse and low beta themes. Nevertheless, sector themes can be more rewarding given the current macro environment.

Macro Levels:

Crude: Further declines from August 1^st and all-time highs of ($78.70). First stabilization point in the near-term close to $70. Remains far removed from 200 day moving average with next support level closer to $65.

US 10 Year Yield: Settling near 4.80%. Deeply oversold between 4.60-4.80%. Expect near-term recovery.

Gold: Attempting to bottom around $660. Favorable odds for an upside move in the near-term.

S&P 500: Oversold in the short-term. Holding above 1440 - a key near-term level.

FXI (FTSE/China 20 Index): Following recent corrections, index is holding above $130 range.

OSX (Oil Service Index): Attempting to stabilize between 250-260.

BKX (Bank Index): Early signal of recovery between 104 -108. Key support level 101.48 (August 6^th lows).

ACTIONABLE IDEAS:

Healthcare:

JNJ (Johnson & Johnson): Offers a value and low beta idea in healthcare. Accumulate between $60-62 levels.

ABI (Applera Biosystems): Following multi-year underperformance, ABI is showing early signs of bottoming. Strength developing since May 31 lows. Accumulate on near-term pullbacks.

GENZ (Genzyme): Strong support level closer to $59-60 range. Despite negative headlines, stock is positioned for a long-term recovery.

ECLP (Eclipsys Corp): Positive momentum building. Stock presents an exposure to medical information group. Pullbacks near $20/22 level are worth a look.

Technology: Nasdaq has demonstrated relative strength versus the S&P 500 in the past 2+ months. Once again, use pullbacks as buying opportunity in select names.

BRCM (Broadcom) : Strength continues following a bottom on June 29^th. Add to any weakness as long-term picture looks appealing.

TLAB (Tellabs): Near-term oversold, buy point near $10.

PAYX (Paychex): Leadership in tact. Accumulate closer to $40 on any pullbacks.

EBAY (Ebay Inc): Pullbacks near $32-34 range offer buying opportunity.

SNDK (Sandisk): Further signs of strength. Trend remains

Airlines:

CAL (Continental Airlines): Deeply oversold and far removed from its 200 day moving average. Declines in oil prices and improving fundamentals suggest an attractive entry point at these levels.

Media:

GMST (Gemstar): Intermediate-term uptrend in tact. Approaching key support level around $5.50.