Retracement 2

Text Box: Wiser Trader Stocks and Options Newsletter
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Issue No. 63 – January 23, 2006 Prescott, Arizona Systems@WiserTrader.com

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(Delayed issue containing some additional watchlist entries)

1.0 Trading

The first month of earnings season has been down for six out of the last eight quarters.

1.1 Retracement

The breakout of the S&P 500 from the rising wedge formation was premature, as seen in Figure 1. If the rising wedge pattern continues, we will face another critical point in April when the S&P 500 reaches support at around 1,225. The S&P has declined the first month of the new quarter for six out of the last eight quarters, as illustrated by the rectangles.

FIGURE 1

© 2005 WiserTrader.com, LLC. Members of wisertrader.com are neither licensed brokers nor licensed advisors. Trades discussed represent recommendations made by the editor for the wisertrader.com portfolio. The newsletter and web site are for information only and should not be considered as personal advice. While it is believed that the posted information is factual, mistakes can be made in transcription. Investors should trade stocks only after verifying all information and consulting with a licensed broker or adviser. WiserTrader.commarkets third party trading systems but has no other affiliation with trading system companies.

1.2 Options

Options are highly volatile, making it possible to gain or lose money very quickly. While they are not for everyone, they have distinct advantages when continuously monitored. As most of you know, an options contract grants the right to buy (call option) or sell (put option) 100 shares of an underlying stock at a specified strike price by a specified expiration date. Option contracts are traded just like stocks for a price known as the premium. An option’s fair value is based on the underlying stock price, the stock’s volatility, the time to expiration, the risk free interest rate and the difference between the stock price and the strike price. The value of an options contract falls to zero after expiration. This brief discussion is not meant as a tutorial. Key words are italicized for later lookup.

Many comparisons between trading stocks versus options can be made. A trader needs to consider how much profit will make a trade worth the investment. If the target profit is, say 25%, he has to ask how long it will likely take. On average, it took about 9 months for the S&P 500 to increase 25% during the bull market run up from 1996 to 2000. A trade involving 100 shares of a $60 growth stock would tie up $6,000 in capital.

Compared to trading stocks, options have a lower entry cost with a shorter holding time. For an underlying stock priced around $60, the average at the money option premium is $6.00. This makes the average 100-share contract cost $600, a factor of 10 lower than the cost of buying 100 shares of the actual stock.

For a given percentage price move in the underlying stock, the percentage change in an option’s price is 5 to 10 times greater. This means the stock needs to move only 2½ to 5% to provide a 25% profit on the contract.

The 9-month trading period for the S&P 500 would have been shortened proportionately. One can be in and out of several profitable options trades in the time it takes an underlying stock to move 25%.

Moreover, it is much easier to predict a 2½ to 5% price move over a short period than it is to predict a 25% price move over a longer period. It is true that some penny stocks offer similar returns as options. Like penny stocks, options need to be carefully watched. However, given the choice between trading a penny stock versus an option on a proven $60 stock, with prospects for the same percentage return, it is not too difficult a decision to make. A small price move in a high quality stock is easier to predict than a large price move in a penny stock.

It is strongly recommended that when doing any kind of trading, options or otherwise, that an established trading system be used with a working knowledge of chart analysis. As long as this is followed, the trading of simple put and call options requires little more effort than trading stocks. After one has established a 70% or so success rate in predicting the direction of price movement, it would pay to consider trading options.

2.0 Market Analysis

Choppiness for the first three weeks of earnings season is an understatement. Expectations are for earnings to be up about 14% over the previous year but with lowered projected earnings for 2006. With 20% of companies reporting so far, only half met or exceeded expectations, compared to the normal 75%. It is still early. Precious metals and energy are still expected to be near term leaders due to geopolitical concerns and colder weather. Conditions imply a continued flat to downward bias for the broader market, as seen for the past week.

Key industry ETF’s in Table 2A are Biotech and Semiconductors, which confirm the NASDAQ. Transportation confirms the Dow Jones Industrial Average according to Dow Theory. Banking and Financials are confirming indicators for the S&P 500. Gold and Real Estate are respective indicators for the inverse health of the currency (inflation) and the capacity for consumer spending.

Table 2A

Indices, Key Industry ETF’s and Sector SPDR’s

	1 month	1 wk ago	2 wks ago	3 wks ago	4 wks ago
Dow Jones Industrial Index	-2.0%	-2.7%	0.0%	2.3%	-1.5%
NASDAQ Composite Index	-0.1%	-3.0%	0.5%	4.5%	-2.0%
NYSE Composite Index	-0.6%	-2.0%	0.2%	3.0%	-1.6%
S & P 500 Index	0.8%	-1.5%	-0.1%	3.6%	-1.1%
Russell 2000 Index	2.6%	-0.5%	1.3%	3.9%	-1.9%
GLD, GOLD	10.1%	-0.4%	3.2%	4.1%	2.9%
RKH, Banking	-4.3%	-3.5%	-0.7%	2.2%	-2.3%
IYT, Transportation	-3.2%	0.0%	-1.7%	0.2%	-1.7%
SMH, Semiconductors	-1.1%	-5.2%	-0.5%	8.2%	-3.1%
BBH, Biotechnology	-4.4%	-1.6%	-1.4%	0.5%	-2.0%
IYR, Real Estate	2.5%	-0.3%	-0.1%	4.8%	-1.8%
OIH, Oil	14.8%	6.6%	1.7%	8.7%	-2.5%
XLE, Energy	10.1%	3.6%	1.9%	6.3%	-1.8%
XLU, Utilities	2.7%	1.6%	0.1%	2.5%	-1.4%
XLB, Materials	-1.3%	-1.5%	-2.6%	3.7%	-0.8%
XLI, Industrial	-2.8%	-2.1%	-0.5%	1.1%	-1.3%
XLK, Technology	-0.6%	-3.9%	0.6%	5.3%	-2.3%
XLV, Healthcare	-1.0%	-1.5%	-0.3%	2.6%	-1.8%
XLF, Financials	-2.7%	-3.7%	0.2%	2.5%	-1.6%
XLP, Consumer Staples	-2.1%	-1.3%	-0.1%	0.9%	-1.6%
XLY, Consumer Discretionary	-0.4%	-1.8%	0.7%	2.1%	-1.3%

3.0 Procedure

The following watch lists contain stock candidates for consideration. They are not necessarily trades. Categories include checklists for insider buying and cash rich companies, as well as, filters that employ stock picking methods used by master traders.

Current stock rankings are based on the degree to which stocks are overbought or over sold based on the 10-period Williams %R for the past two trading days. Two columns are labeled “%R1” and “%R2” with “%R2” indicating the Williams %R for the most recent trading day. Of course, values more negative than -80 are oversold and those less negative than -20 are overbought.

A column labeled “Weekly % Gain” was added to show the inverse relationship between price action over the past week and the Williams %R.

One should keep in mind that oversold stocks are not necessarily ready to move upward. They could very well be in a condition of continuous decline. The lists are meant to serve as a starting point for further due diligence.

The “Reference” is the date that a stock passed the indicated filter and was first added to or returned to the list. The “% Change” is how the price has changed since the reference date. Stocks that are down 10% or more after being listed are removed for a period of about two months. The “% from Max” is the percentage the price has declined from the maximum price reached since the reference date. Stocks that are down 8% from their highs after being listed are flagged in yellow. Stocks that are down 15% from their highs after being listed are removed for two months. More information on filters is available on the web site.

A performance summary of filtering techniques for checklists and master trader selection methods is given in Table 3A.

Table 3A

Stock Filter Summary

Filter	Avg. % Change Since Listed	Avg. % Change Friday	1 Month	1 Week Ago	2 weeks Ago	3 Weeks Ago	4 Weeks Ago
Net Insider Buying	8.8%	-0.4%	14.4%	3.7%	5.4%	3.6%	0.8%
Cash Rich Companies	4.4%	1.3%	0.1%	-0.3%	-0.3%	0.2%	0.6%
Price to Free Cash Flow	6.1%	1.6%	6.0%	-1.1%	1.5%	4.4%	0.9%
Growth Momentum Stocks	12.4%	0.7%	3.6%	-0.4%	0.4%	5.0%	-1.4%
Lynch Stocks	25.0%	-0.5%	0.2%	-2.6%	-1.1%	4.7%	-0.7%
Buffett Stocks	18.1%	0.4%	1.6%	-0.9%	-0.5%	4.2%	-1.1%
Graham Stocks	12.7%	0.0%	2.3%	0.4%	0.3%	3.1%	-1.5%
Templeton Stocks	1.7%	-0.4%	-2.6%	-2.2%	-0.7%	1.1%	-0.9%
Zweig Stocks	19.8%	0.0%	5.0%	0.3%	0.4%	6.1%	-1.8%
Average Long Stocks	12.1%	0.3%	3.4%	-0.3%	0.6%	3.6%	-0.6%

Key

Passed Recent Filter

Price declined by half of stop loss setting

Oversold based on Williams %R (%R2 is most recent)

Overbought based on Williams %R (%R2 is most recent)

Companies that have experienced net insider buying within the past 6 months of 5% or more of issued stock are listed in Table 3B. These stocks should also appear in one of the master trader screens or meet additional screening criteria before being given serious consideration. This list is a mixture of stocks that are optionable and those that are not.

Table 3B

Net Insider Buying Check List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
VSTA	10/21/05	2.7%	VistaCare, Inc.	Health Care	Healthcare Facilities	-6.4%	-2.2%	-70	-83
SNSS	12/16/05	-0.6%	Sunesis Pharmaceuticals, Inc.	Health Care	Major Drugs	-10.5%	-5.2%	-80	-75
NXTM	01/06/06	-6.8%	NxStage Medical, Inc.	Health Care	Biotechnology & Drugs	-10.8%	-3.0%	-62	-72
XGEN	11/25/05	0.0%	Xenogen Corporation	Technology	Scientific & Technical Instruments	-12.2%	-3.1%	-63	-72
NTOP	01/20/06	0.5%	Net2Phone, Inc.	Services	Communications Services	0.5%	0.5%	-100	-67
MEMY	12/30/05	6.6%	Memory Pharmaceuticals Corp.	Health Care	Biotechnology & Drugs	-13.8%	10.5%	-44	-62
CLRT	11/18/05	-1.6%	Clarient, Inc.	Technology	Scientific & Technical Instruments	-14.2%	-4.0%	-50	-57
EQS	01/13/06	0.0%	Equus II Incorporated	Financial	Investment Services	-0.9%	-0.2%	-67	-48
ISO	01/20/06	0.0%	ISCO International, Inc.	Technology	Semiconductors	2.9%	-7.7%	-50	-40
BDOG	12/16/05	10.7%	Big Dog Holdings, Inc.	Services	Retail (Apparel)	-1.8%	-1.8%	-64	-37
MEAD	12/23/05	24.0%	Meade Instruments Corp.	Technology	Scientific & Technical Instruments	-3.8%	13.2%	-12	-29
AMIC	01/13/06	-0.9%	American Independence Corp.	Financial	Insurance (Miscellaneous)	-1.8%	-0.9%	-1	-28
TRMA	01/06/06	13.6%	Trico Marine Services Inc	Energy	Oil Well Services & Equipment	-4.1%	-3.3%	-25	-27
MBRX	10/14/05	51.8%	Metabasis Therapeutics, Inc.	Health Care	Biotechnology & Drugs	-1.6%	-1.6%	-23	-24
OTL	01/13/06	7.4%	Octel Corp.	Basic Materials	Chemical Manufacturing	0.3%	7.4%	-40	-19
MNKD	12/30/05	58.1%	MannKind Corporation	Health Care	Biotechnology & Drugs	-3.3%	22.7%	-5	-15
LXU	12/23/05	-1.6%	LSB Industries, Inc.	Basic Materials	Chemical Manufacturing	-6.4%	2.5%	0	-14
IDMI	01/20/06	-2.6%	IDM Pharma Inc.	Health Care	Biotechnology & Drugs	-2.6%	19.7%	-6	-12
MMLP	11/25/05	0.0%	Martin Midstream Partners L.P.	Transportation	Water Transportation	-6.5%	1.2%	-6	-12
SOMX	01/13/06	24.1%	Somaxon Pharmaceuticals, Inc.	Health Care	Biotechnology & Drugs	1.5%	24.1%	-11	-5
CWEI	12/09/05	0.0%	Clayton Williams Energy, Inc.	Energy	Oil & Gas Operations	1.5%	10.1%	-11	-4

Companies with net cash positions that comprise at least 40% of their share price are listed in Table 3C. These stocks should also appear in one of the master trader screens or meet additional screening criteria before being given serious consideration. Again this list is a mixture of stocks that are optionable and those that are not.

Table 3C

Capital Rich Companies Check List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
HIH	01/20/06	2.0%	Highland Hospitality Corporation	Services	Hotels & Motels	2.0%	-1.3%	-82	-46
WSC	07/01/05	6.9%	Wesco Financial Corporation	Conglomerates	Conglomerates	-1.0%	0.8%	-58	-29

Table 3D was added to contain companies having a low price to free cash flow (P-FCF) less than 5. Companies having P-FCF less than 10 are typically capable of financing the purchase of all their outstanding shares of stock.

Table 3D

Price to Free Cash Flow Companies Check List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
TEO	01/20/06	0.2%	Telecom Argentina S.A. (ADR)	Services	Communications Services	0.2%	-6.8%	-100	-98
MOVI	01/20/06	-1.1%	Movie Gallery, Inc.	Services	Recreational Activities	-1.1%	-3.4%	-75	-84
UL	01/20/06	0.9%	Unilever plc (ADR)	Consumer Non-Cyclical	Food Processing	0.9%	-1.2%	-92	-61
F	11/11/05	4.4%	FORD MOTOR	Consumer Cyclical	Auto & Truck Manufacturers	-6.8%	-2.7%	-95	-58
BBI	01/20/06	1.3%	Blockbuster Inc.	Services	Recreational Activities	1.3%	1.6%	-49	-51
PBR	11/25/05	31.0%	Petroleo Brasileiro S.A. (ADR)	Energy	Oil & Gas - Integrated	3.1%	5.9%	-7	26

For the Peter Lynch screen in Table 3E, the number of selections is reduced by selecting only optionable stocks having P/E’s less than 30.

Table 3E

Peter Lynch Value Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
TMX	06/03/05	27.1%	Telefonos de Mexico, S.A. (ADR)	Services	Communications Services	-9.8%	-6.0%	-99	-112
KOF	04/29/05	23.9%	Coca-Cola FEMSA, S.A. (ADR)	Consumer Non-Cyclical	Beverages (Non-Alcoholic)	-4.2%	-3.0%	-52	-109
CHL	03/18/05	42.3%	China Mobile (Hong Kong) Limited (ADR)	Services	Communications Services	-6.2%	-4.7%	-81	-84
SKM	02/07/05	6.6%	SK Telecom Co., Ltd. (ADR)	Services	Communications Services	-7.1%	-2.0%	-40	-61
TM	12/13/04	37.9%	Toyota Motor Corporation (ADR)	Consumer Cyclical	Auto & Truck Manufacturers	-4.4%	-0.8%	-68	-58
BTI	08/12/05	12.1%	British American Tobacco (ADR)	Consumer Non-Cyclical	Tobacco	-2.6%	0.9%	-31	-16

For the screen in Table 3F, the number of selections is reduced by selecting only optionable stocks having P/E’s less than 30.

Table 3F

Growth Momentum Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
UNH	04/15/05	24.3%	UnitedHealth Group Inc.	Financial	Insurance (Accident & Health)	-9.1%	-4.8%	-95	-136
MOT	12/09/05	-5.3%	Motorola, Inc.	Technology	Communications Equipment	-9.6%	-7.7%	-99	-113
ENDP	11/18/05	-5.8%	Endo Pharmaceuticals	Health Care	Biotechnology & Drugs	-13.9%	-6.9%	-95	-98
CHE	05/06/05	27.5%	Chemed Corporation	Services	Business Services	-10.1%	-4.0%	-92	-95
CTX	11/18/05	-0.5%	Centex Corporation	Capital Goods	Construction Services	-7.0%	-4.8%	-86	-93
OSK	03/12/05	19.3%	Oshkosh Truck Corporation	Consumer Cyclical	Auto & Truck Manufacturers	-2.2%	-1.7%	-35	-72
BEN	11/04/05	6.7%	Franklin Resources, Inc.	Financial	Investment Services	-2.3%	-0.8%	-71	-69
VIP	12/09/05	8.2%	Vimpel-Communications (ADR)	Services	Communications Services	-1.5%	-1.5%	-56	-51
ET	10/21/05	23.7%	E*TRADE FINANCIAL Corporation	Financial	Investment Services	-1.2%	-1.0%	-93	-43
HCC	10/21/05	16.2%	HCC Insurance Holdings, Inc.	Financial	Insurance (Property & Casualty)	-3.9%	-0.5%	-47	-37
ADTN	11/25/05	0.0%	ADTRAN, Inc.	Technology	Communications Equipment	-1.8%	1.0%	-55	-37
GOL	12/16/05	-0.3%	GOL Linhas Aereas Inteligentes SA (ADR)	Transportation	Airline	-7.6%	1.7%	-44	-29
PCU	12/02/05	6.1%	Southern Copper Corporation (USA)	Basic Materials	Metal Mining	-4.5%	0.3%	-43	-25
ZIGO	12/09/05	6.1%	Zygo Corporation	Technology	Semiconductors	-0.7%	3.3%	-18	-23
AMTD	10/28/05	26.7%	Ameritrade Holding Corp.	Financial	Investment Services	-0.3%	0.2%	-57	-23
LM	08/12/05	19.7%	Legg Mason, Inc.	Financial	Investment Services	-0.4%	1.8%	-18	-22
WSO	11/25/05	9.4%	Watsco, Incorporated	Capital Goods	Misc. Capital Goods	-0.6%	1.6%	-9	-21
BHP	09/09/05	17.9%	BHP Billiton Limited (ADR)	Basic Materials	Metal Mining	-0.1%	3.8%	-36	-12
SYT	04/08/05	22.4%	Syngenta AG (ADR)	Basic Materials	Chemical Manufacturing	0.6%	2.0%	-38	-3
BJS	11/04/05	25.2%	BJ Services Company	Energy	Oil Well Services & Equipment	3.6%	10.3%	-22	14

The filter for Warren Buffet style stock picking in Table 3G is for the intermediate to long term. Two requirements were added. One was to include only optionable stocks in order to find LEAPS opportunities. The other requirement was to include only those stocks having a PE of 17 or less.

Table 3G

Warren Buffett Value Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
LNCR	12/27/04	-1.4%	Lincare Holdings Inc.	Health Care	Healthcare Facilities	-9.7%	-3.3%	-94	-139
CCRT	12/30/05	3.0%	CompuCredit Corporation	Financial	Consumer Financial Services	-3.9%	-3.0%	-86	-119
ABFS	04/29/05	37.2%	Arkansas Best Corporation	Transportation	Trucking	-4.9%	-4.6%	-54	-109
NKE	09/23/05	2.7%	NIKE, Inc.	Consumer Cyclical	Footwear	-8.7%	-3.2%	-91	-109
TOL	12/16/05	-6.8%	Toll Brothers, Inc.	Capital Goods	Construction Services	-12.7%	-7.7%	-97	-104
PGR	12/27/04	28.9%	The Progressive Corp.	Financial	Insurance (Property & Casualty)	-12.4%	-7.0%	-96	-93
ACS	04/29/05	17.5%	Affiliated Computer Services, Inc.	Technology	Computer Services	-9.6%	-7.1%	-91	-90
DHI	10/21/05	22.4%	D.R. Horton Inc.	Capital Goods	Construction Services	-8.3%	-5.7%	-66	-84
PSUN	12/09/05	-7.4%	Pacific Sunwear of CA	Services	Retail (Apparel)	-8.8%	-2.2%	-93	-80
MDC	01/20/06	-0.8%	M.D.C. Holdings, Inc.	Capital Goods	Construction Services	-0.8%	-1.0%	-35	-79
THO	04/15/05	53.5%	Thor Industries, Inc.	Capital Goods	Mobile Homes & RVs	-4.5%	-2.3%	-77	-65
DSPG	02/07/05	5.9%	DSP Group, Inc.	Technology	Communications Equipment	-3.4%	-1.8%	-62	-59
FOSL	12/02/05	11.3%	Fossil, Inc.	Consumer Cyclical	Jewelry & Silverware	-2.7%	1.9%	-60	-58
MIK	10/14/05	6.0%	Michaels Stores, Inc.	Services	Retail (Specialty Non-Apparel)	-14.5%	-1.9%	-55	-53
ASH	10/28/05	20.1%	Ashland Inc.	Capital Goods	Construction Services	-1.2%	-0.6%	-33	-49
FNF	10/21/05	3.0%	Fidelity National Financial	Financial	Insurance (Property & Casualty)	-4.7%	-0.1%	-33	-30
HDI	10/14/05	9.5%	Harley-Davidson, Inc.	Consumer Cyclical	Recreational Products	-3.4%	1.9%	-47	-27
NUE	04/15/05	48.4%	Nucor Corporation	Basic Materials	Iron & Steel	-0.1%	4.2%	-66	-16
BTI	12/30/05	0.3%	British American Tobacco (ADR)	Consumer Non-Cyclical	Tobacco	-1.6%	0.9%	-31	-16
RI	09/02/05	24.6%	Ruby Tuesday, Inc.	Services	Restaurants	-0.3%	1.7%	-56	-7
RS	04/15/05	92.4%	Reliance Steel & Aluminum	Basic Materials	Misc. Fabricated Products	1.6%	13.9%	-17	-7
RCII	10/21/05	26.5%	Rent-A-Center, Inc	Services	Rental & Leasing	0.6%	0.8%	-12	-5
EASI	09/09/05	26.8%	Engineered Support System	Capital Goods	Misc. Capital Goods	0.2%	1.6%	-16	-2
STLD	12/16/05	10.0%	Steel Dynamics, Inc.	Basic Materials	Iron & Steel	2.2%	3.6%	-93	27

Stocks from Benjamin Graham’s style of utility investing are listed in Table 3H. A requirement was added to include only those stocks having a PE of 17 or less.

Table 3H

Benjamin Graham Utility Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
ATO	04/01/05	-2.7%	Atmos Energy Corporation	Utilities	Natural Gas Utilities	-12.0%	-1.5%	-91	-128
UGI	12/30/05	3.8%	UGI Corporation	Utilities	Natural Gas Utilities	-4.6%	-4.0%	-53	-97
ATG	10/21/05	7.6%	AGL Resources Inc.	Utilities	Natural Gas Utilities	-2.1%	-0.3%	-70	-73
WPS	02/07/05	10.1%	WPS Resources Corp	Utilities	Electric Utilities	-4.7%	0.1%	-63	-67
WGL	12/23/05	-0.3%	WGL Holdings, Inc.	Utilities	Natural Gas Utilities	-1.1%	-0.6%	-95	-58
CPK	05/06/05	21.3%	Chesapeake Utilities	Utilities	Natural Gas Utilities	-10.3%	-0.5%	-28	-50
OKE	11/11/05	7.4%	ONEOK, Inc.	Utilities	Natural Gas Utilities	-1.6%	1.4%	-47	-44
SRE	01/10/05	31.5%	Sempra Energy	Utilities	Natural Gas Utilities	-0.4%	0.7%	-26	-36
KEP	01/10/05	74.8%	Korea Electric Power Corporation (ADR)	Utilities	Electric Utilities	-0.7%	2.6%	-46	-30
PGN	01/10/05	-1.3%	Progress Energy, Inc.	Utilities	Electric Utilities	-4.9%	1.3%	-40	-29
PNW	01/10/05	0.8%	Pinnacle West Capital	Utilities	Electric Utilities	-6.4%	4.1%	-38	-21
UU	06/10/05	-0.2%	United Utilities PLC (ADR)	Utilities	Electric Utilities	-2.5%	1.7%	-19	-5

Optionable stocks from John Templeton’s style of investing are listed in Table 3I.

Table 3I

John Templeton Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
DGX	08/19/05	-2.0%	Quest Diagnostics Incorporated	Health Care	Healthcare Facilities	-6.7%	-3.5%	-89	-159
UNH	12/30/05	-6.7%	UnitedHealth Group Inc.	Financial	Insurance (Accident & Health)	-7.8%	-4.8%	-95	-136
EDMC	12/16/05	-9.7%	Education Management Corp	Services	Schools	-10.5%	-6.8%	-95	-112
CAKE	10/21/05	3.4%	The Cheesecake Factory Incorporated	Services	Restaurants	-7.4%	-2.6%	-89	-112
SPF	01/13/06	-7.0%	Standard Pacific Corp.	Capital Goods	Construction Services	-7.0%	-7.0%	-74	-108
WSM	09/02/05	6.7%	Williams-Sonoma, Inc.	Services	Retail (Specialty Non-Apparel)	-10.2%	-3.2%	-97	-108
EWBC	12/30/05	-1.9%	East West Bancorp, Inc.	Financial	Regional Banks	-4.3%	-3.8%	-99	-108
TOL	12/09/05	-1.1%	Toll Brothers, Inc.	Capital Goods	Construction Services	-12.7%	-7.7%	-97	-104
LOW	11/18/05	-4.1%	Lowe's Companies, Inc.	Services	Retail (Home Improvement)	-8.9%	-4.5%	-99	-96
SFG	05/27/05	28.2%	StanCorp Financial Group, Inc.	Financial	Insurance (Life)	-9.3%	-3.7%	-100	-88
MDC	12/30/05	4.1%	M.D.C. Holdings, Inc.	Capital Goods	Construction Services	-3.5%	-1.0%	-35	-79
HHS	10/28/05	2.6%	Harte-Hanks, Inc.	Services	Printing & Publishing	-2.9%	-1.1%	-99	-79
AMSG	10/14/05	-2.9%	AmSurg Corp.	Health Care	Healthcare Facilities	-8.3%	-0.4%	-72	-71
ORLY	01/20/06	0.9%	O'Reilly Automotive, Inc.	Services	Retail (Specialty Non-Apparel)	0.9%	-0.9%	-81	-62
KSWS	12/30/05	-5.8%	K-Swiss Inc.	Consumer Cyclical	Footwear	-5.8%	0.3%	-66	-55
MIK	12/30/05	-6.7%	Michaels Stores, Inc.	Services	Retail (Specialty Non-Apparel)	-6.7%	-1.9%	-55	-53
SNV	05/27/05	-7.2%	Synovus Financial Corp.	Financial	Regional Banks	-9.4%	1.3%	-49	-31
CPS	05/27/05	15.1%	ChoicePoint Inc.	Services	Business Services	-0.2%	1.6%	-45	-29
CHD	11/18/05	1.3%	Church & Dwight Co., Inc.	Consumer Non-Cyclical	Personal & Household Products	-0.7%	2.0%	-39	-19
GISX	12/30/05	6.2%	Global Imaging Systems, Inc.	Technology	Office Equipment	0.6%	0.9%	-14	-2
EASI	06/03/05	21.5%	Engineered Support System	Capital Goods	Misc. Capital Goods	0.2%	1.6%	-16	-2

Optionable stocks from Martin Zweig’s style of investing are listed in Table 3J.

Table 3J

Martin Zweig Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
MOT	01/20/06	-1.3%	Motorola, Inc.	Technology	Communications Equipment	-1.3%	-7.7%	-99	-113
STRA	01/13/06	-3.1%	Strayer Education, Inc.	Services	Schools

Sentiment Indicator	Current	Last Week	2 Weeks Ago	Complacent	Cautious
VIX **	14.6	11.2	11.0	< 20	> 50
VXN ***	19.5	15.3	15.0	< 30	> 70
Put/Call Ratio	0.692	0.586	0.583	< 0.6	> 0.7
%Bulls - %Bears	34.4%	34.7%	32.0%	> 29%	< 20%
Above 20 day SMA = Short-term sell signal. * Above 20 day SMA = Short-term sell signal.