Critical Inflection Point . . .

Sell with Buy Stop. Following our January 3 sell call, markets proceeded to sell off dramatically, with the NASDAQ dropping nearly 20% and individual technology sectors plunging from 15-25% or more. The past two weeks have seen prices break out of their downtrends, rebounding on recent data indicating a possible end to the recession, and recovering about half of their 2002 losses. Most sectors are now reaching resistance areas which may prove difficult to overcome. Additionally, in the past three days, we have gotten bearish signals on the majority of the stocks that we cover. Our proprietary strength factor has reached above 200 on the bearish side (a strength factor of over 150, bearish or bullish, indicates a sell or buy call, if other criteria are met), and we have a sell on technology as a whole.

The next several days deserve close attention, however, as the NASDAQ has already broken through the lower levels of its resistance areas, though most other areas have not. If these other areas are also able to break out to the topside by 3-5% and the NASDAQ holds, it could be a sign that the current stock market recovery will continue, and a buy signal could ensue. We will keep you informed.

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