Wiser Trader Stocks and Options Newsletter

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Issue No. 67   February 20, 2006 Prescott, Arizona Systems@WiserTrader.com

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1.0 Trading

      The market has three reasons to form a short term top.

1.1 Formations

        One reason the market could be forming a short term top is that the S&P 500, the NASDAQ, the NYSE Composite and the DOW are all trading at the top of a two year rising wedge trading ranges, as illustrated by the S&P 500 Index in Figure 1.  Each has briefly broken above resistance.

FIGURE 1

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However, a failure to breakout convincingly would imply a downward movement lasting for about three to four months. 

      So far, each index has danced along the resistance line, having arrived at the top of a new short-term formation, as shown in Figure 2.  The NYSE Composite is the most promising, having converted resistance into near term support.  Sustained breakouts for the other three are less convincing.  Having arrived at the top of these new short-term formations, a downward leg could be expected in the absence of positive market moving news.

FIGURE 2

      The third observation that leads to an expected near-term decline is that the 10-period Williams %R is overbought for all four indices, as well as, for the Russell 2000. 

2.0 Market Analysis

      The market is still obsessed with inflation and interest rate increases.  It is a little schizophrenic in that it gave Federal Reserve Chairman Bernanke a resounding vote of approval this past week because he is strongly against inflation.  At the same time, it is now almost a given that at least two more rate hikes are due, and possibly more, with the latest positive news on retail sales, new housing starts and industrial production plus the negative news that core inflation was up by 0.4%.  The prospect of additional rate hikes beyond March 28^th and May 10^th is supported by the news that with 86% of S&P 500 companies reporting, profits are up by 15%. 

      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	4.2%	1.8%	1.2%	-1.0%	2.2%
NASDAQ Composite Index	1.5%	0.9%	0.0%	-1.8%	2.5%
NYSE Composite Index	2.0%	1.6%	0.2%	-1.5%	1.8%
S & P 500 Index	2.4%	1.4%	-0.3%	-1.2%	2.5%
Russell 2000 Index	3.7%	1.9%	-1.0%	-1.1%	3.9%
GLD, GOLD	-0.4%	0.3%	-3.0%	1.6%	0.8%
RKH, Banking	5.2%	2.3%	1.6%	-2.1%	3.5%
IYT, Transportation	6.4%	2.1%	1.4%	-1.0%	3.8%
SMH, Semiconductors	1.3%	-0.6%	2.7%	-3.0%	2.2%
BBH, Biotechnology	0.0%	2.7%	-3.1%	1.1%	-0.5%
IYR, Real Estate	4.5%	3.3%	-0.4%	-1.3%	3.0%
OIH, Oil	-10.0%	-4.4%	-4.6%	-2.2%	0.8%
XLE, Energy	-6.0%	0.9%	-4.9%	-2.5%	0.4%
XLU, Utilities	-1.3%	1.6%	0.4%	-2.3%	-1.0%
XLB, Materials	5.1%	2.4%	-0.6%	-1.6%	4.9%
XLI, Industrial	5.1%	2.1%	1.3%	-0.6%	2.1%
XLK, Technology	3.1%	1.3%	1.7%	-2.0%	2.1%
XLV, Healthcare	2.3%	2.0%	0.1%	-0.9%	1.0%
XLF, Financials	3.5%	1.6%	1.1%	-1.8%	2.7%
XLP, Consumer Staples	2.0%	1.8%	-0.1%	-1.3%	1.6%
XLY, Consumer Discretionary	2.0%	1.1%	0.4%	-0.9%	1.5%

VTO Report on Market Sentiment Indicators

Sentiment Indicator	Current	Last Week	2 Weeks Ago	Complacent	Cautious
VIX **	12.0	12.9	13.0	< 20	> 50
VXN ***	15.0	16.9	17.5	< 30	> 70
Put/Call Ratio	0.595	0.583	0.698	< 0.6	> 0.7
%Bulls - %Bears	26.3%	26.3%	26.8%	> 29%	< 20%
**   Below 20 day SMA = Short-term buy signal. *** Below 20 day SMA = Short-term buy signal.

      Figure 1 compares index tracking stocks for the major averages with key ETF’s and Sector SPDR’s.

FIGURE 1

Table 2C

Market Summary

 Major Indices 
 For the Past Week:
 Dow Jones     +1.8%
 NASDAQ        +0.9%
 S&P500 Index  +1.6%
 Russell 2000  +1.9%
 NYSE          +1.4%
 
 30 Year Bond 4.509%
 10 Year Note 4.541%
 
 Leading Industries
 For the Past Week:
 Platinum & Precious Metals 
 Home Improvement Retailers 
 Mobile Telecommunications 
 Telecommunications 
 Commercial Vehicles & Trucks 
 Recreational Products 
 Fixed Line Telecommunications 
 Drug Retailers 
 Industrial Engineering 
 Real Estate Holding & Devel               
 
 Lagging Industries
 For the Past Week:
 Travel & Tourism 
 Oil Equipment & Services 
 Oil Equipment, Services & Dis 
 Distillers & Vintners 
 Insurance Brokers 
 Aluminum 
 Toys 
 Semiconductors 
 Broadcasting & Entertainment 
 Media Agencies          
 Leading Industries
 For the Past Month:
 Steel 
 Platinum & Precious Metals 
 Fixed Line Telecommunications 
 Railroads 
 Commercial Vehicles & Trucks 
 Telecommunications 
 Industrial Metals 
 Industrial Engineering 
 Building Materials & Fixtures 
 Investment Services   
 
 Lagging Industries
 For the Past Month:
 Tires 
 Internet 
 Travel & Tourism 
 Home Construction 
 General Mining 
 Exploration & Production 
 Pipelines 
 Toys 
 Auto Parts 
 Oil Equipment, Services & Dis                   
 
 Crude Oil $59.75
 
 Gold for the past 30 days:
 USD    +1.51%
 CAD    -0.30%
 CHF    +3.76%
 GBP    +2.85%
 EUR    +2.93%
 JPY    +4.08%

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 28-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.

      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. 

      A column labeled “Monthly % Gain” was added to show the inverse relationship between price action over the past month and the Williams %R.  The change from a 10-period Williams %R with a weekly percent change to a 28-period Williams %R with a monthly percent change was done to reflect a longer term view.

      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	10.7%	0.2%	0.7%	0.7%	-2.1%	0.8%	1.0%
Cash Rich Companies	3.7%	0.0%	-1.8%	0.2%	-0.8%	1.1%	-2.1%
Price to Free Cash Flow	1.4%	-1.0%	1.3%	-2.7%	1.2%	-4.3%	7.5%
Growth Momentum Stocks	14.1%	0.3%	7.2%	1.6%	1.2%	-0.5%	4.9%
Lynch Stocks	20.4%	-0.2%	3.9%	0.7%	-0.8%	-0.3%	4.4%
Buffett Stocks	15.9%	-0.4%	4.1%	0.6%	-1.4%	-0.4%	5.3%
Graham Stocks	13.2%	0.8%	0.3%	2.4%	-0.1%	-2.7%	0.9%
Templeton Stocks	3.7%	-0.2%	2.9%	1.4%	-0.3%	0.4%	1.4%
Zweig Stocks	17.9%	-0.1%	6.7%	2.3%	-0.2%	0.5%	4.0%
Average Long Stocks	11.2%	0.0%	2.8%	0.8%	-0.4%	-0.6%	3.0%

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	Monthly % Gain	%R1	%R2
MWY	02/10/06	0.0%	Midway Games Inc.	Technology	Software & Programming	-2.8%	-32.3%	-96	-94
TRMA	01/06/06	8.3%	Trico Marine Services Inc	Energy	Oil Well Services & Equipment	-13.3%	-4.6%	-66	-85
NTOP	01/20/06	-0.5%	Net2Phone, Inc.	Services	Communications Services	-1.5%	-0.5%	-50	-67
CWEI	12/09/05	0.0%	Clayton Williams Energy, Inc.	Energy	Oil & Gas Operations	-14.3%	-8.8%	-73	-66
VSTA	10/21/05	5.9%	VistaCare, Inc.	Health Care	Healthcare Facilities	-6.1%	1.9%	-49	-64
MMLP	11/25/05	0.0%	Martin Midstream Partners L.P.	Transportation	Water Transportation	-8.0%	-1.9%	-72	-59
AMIC	01/13/06	-0.9%	American Independence Corp.	Financial	Insurance (Miscellaneous)	-1.8%	-1.8%	-51	-39
MBRX	10/14/05	53.0%	Metabasis Therapeutics, Inc.	Health Care	Biotechnology & Drugs	-1.3%	0.8%	-26	-32
NXTM	01/06/06	1.3%	NxStage Medical, Inc.	Health Care	Biotechnology & Drugs	-3.0%	6.6%	-29	-26
ULBI	02/17/06	0.0%	Ultralife Batteries, Inc.	Technology	Electronic Instruments & Controls	0.0%	-0.5%	-21	-24
SNSS	12/16/05	8.2%	Sunesis Pharmaceuticals, Inc.	Health Care	Major Drugs	-2.5%	9.9%	-37	-22
BDOG	12/16/05	23.5%	Big Dog Holdings, Inc.	Services	Retail (Apparel)	-2.8%	15.8%	-36	-18
MEAD	12/23/05	27.5%	Meade Instruments Corp.	Technology	Scientific & Technical Instruments	-1.2%	-1.2%	-26	-17
SOMX	01/13/06	43.7%	Somaxon Pharmaceuticals, Inc.	Health Care	Biotechnology & Drugs	-7.7%	18.9%	-1	-17
IDMI	01/20/06	-3.5%	IDM Pharma Inc.	Health Care	Biotechnology & Drugs	-3.5%	-3.5%	-12	-16
LXU	12/23/05	4.7%	LSB Industries, Inc.	Basic Materials	Chemical Manufacturing	-1.2%	5.7%	-29	-11

      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	Monthly % Gain	%R1	%R2
HRAY	01/27/06	0.5%	Hurray! Holding Co., Ltd. (ADR)	Services	Communications Services	-5.4%	-8.8%	-76	-73
CLCT	01/27/06	5.0%	Collectors Universe, Inc.	Services	Business Services	-7.0%	5.2%	-66	-68
KEYN	02/17/06	0.0%	Keynote Systems, Inc.	Technology	Computer Services	0.0%	-6.2%	-58	-66
WSC	07/01/05	9.2%	Wesco Financial Corporation	Conglomerates	Conglomerates	0.0%	2.7%	-28	0

      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	Monthly % Gain	%R1	%R2
TEO	02/17/06	0.0%	Telecom Argentina S.A. (ADR)	Services	Communications Services	0.0%	-1.2%	-77	-91
BBI	01/20/06	-1.8%	Blockbuster Inc.	Services	Recreational Activities	-10.0%	-1.8%	-68	-79
F	11/11/05	6.0%	FORD MOTOR	Consumer Cyclical	Auto & Truck Manufacturers	-5.4%	7.0%	-51	-46

      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	Monthly % Gain	%R1	%R2
AZN	02/03/06	-3.7%	AstraZeneca PLC (ADR)	Health Care	Major Drugs	-3.7%	-4.0%	-90	-96
CHL	03/18/05	40.2%	China Mobile (Hong Kong) Limited (ADR)	Services	Communications Services	-7.6%	-1.8%	-75	-61
PKX	02/17/06	0.0%	POSCO (ADR)	Basic Materials	Iron & Steel	0.0%	2.0%	-31	-35
KOF	04/29/05	30.3%	Coca-Cola FEMSA, S.A. (ADR)	Consumer Non-Cyclical	Beverages (Non-Alcoholic)	-1.0%	2.6%	-34	-31
BTI	08/12/05	13.8%	British American Tobacco (ADR)	Consumer Non-Cyclical	Tobacco	-1.1%	2.0%	-19	-24
SKM	02/07/05	17.6%	SK Telecom Co., Ltd. (ADR)	Services	Communications Services	-1.3%	10.0%	-10	-13
TM	12/13/04	44.7%	Toyota Motor Corporation (ADR)	Consumer Cyclical	Auto & Truck Manufacturers	0.0%	5.8%	-14	-3

      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	Monthly % Gain	%R1	%R2
AHC	02/03/06	0.0%	Amerada Hess Corporation	Energy	Oil & Gas - Integrated	-6.0%	-3.5%	-89	-76
MOT	12/09/05	-8.2%	Motorola, Inc.	Technology	Communications Equipment	-12.4%	-4.4%	-58	-73
BHP	09/09/05	15.0%	BHP Billiton Limited (ADR)	Basic Materials	Metal Mining	-8.4%	-0.8%	-72	-69
VIP	12/09/05	1.3%	Vimpel-Communications (ADR)	Services	Communications Services	-7.8%	-6.0%	-64	-69
UNH	04/15/05	24.4%	UnitedHealth Group Inc.	Financial	Insurance (Accident & Health)	-9.1%	-2.5%	-58	-64
ADTN	11/25/05	0.0%	ADTRAN, Inc.	Technology	Communications Equipment	-11.0%	-6.3%	-52	-63
APC	02/10/06	0.0%	Anadarko Petroleum Corporation	Energy	Oil & Gas Operations	0.0%	-5.4%	-65	-59
PCU	12/02/05	19.9%	Southern Copper Corporation (USA)	Basic Materials	Metal Mining	-11.7%	14.9%	-52	-44
BEN	11/04/05	8.1%	Franklin Resources, Inc.	Financial	Investment Services	-2.3%	1.6%	-35	-44
WSO	11/25/05	12.5%	Watsco, Incorporated	Capital Goods	Misc. Capital Goods	-3.7%	2.3%	-35	-43
ZIGO	12/09/05	9.9%	Zygo Corporation	Technology	Semiconductors	-5.7%	3.0%	-47	-38
LM	08/12/05	22.5%	Legg Mason, Inc.	Financial	Investment Services	-1.5%	2.4%	-34	-36
HCC	10/21/05	20.4%	HCC Insurance Holdings, Inc.	Financial	Insurance (Property & Casualty)	-1.2%	4.5%	-28	-26
CHB	02/17/06	0.0%	Champion Enterprises, Inc.	Capital Goods	Construction Services	0.0%	10.4%	-38	-25
EXP	02/03/06	3.8%	Eagle Materials, Inc.	Capital Goods	Construction - Raw Materials	0.0%	38.2%	-18	-18
WCC	02/10/06	5.2%	WESCO International, Inc.	Technology	Electronic Instruments & Controls	-0.5%	25.7%	-9	-11
SYT	04/08/05	33.9%	Syngenta AG (ADR)	Basic Materials	Chemical Manufacturing	0.0%	11.1%	-19	-10
ENDP	02/17/06	0.0%	Endo Pharmaceuticals	Health Care	Biotechnology & Drugs	0.0%	5.0%	-24	-9
ET	10/21/05	35.5%	E*TRADE FINANCIAL Corporation	Financial	Investment Services	0.0%	12.7%	-12	-8
GOL	12/16/05	24.8%	GOL Linhas Aereas Inteligentes SA (ADR)	Transportation	Airline	0.0%	27.9%	-15	-7
OSK	03/12/05	41.1%	Oshkosh Truck Corporation	Consumer Cyclical	Auto & Truck Manufacturers	0.0%	17.2%	-8	-6
CHE	05/06/05	40.2%	Chemed Corporation	Services	Business Services	-1.2%	9.6%	-17	-5

      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	Monthly % Gain	%R1	%R2
SPF	02/03/06	-7.2%	Standard Pacific Corp.	Capital Goods	Construction Services	-7.2%	-13.3%	-87	-92
TOL	02/17/06	0.0%	Toll Brothers, Inc.	Capital Goods	Construction Services	0.0%	-0.2%	-83	-91
DSPG	02/07/05	5.9%	DSP Group, Inc.	Technology	Communications Equipment	-12.0%	0.2%	-79	-87
MTH	01/27/06	-4.7%	Meritage Homes Corporation	Capital Goods	Construction Services	-4.7%	0.2%	-71	-79
KSWS	10/14/05	1.3%	K-Swiss Inc.	Consumer Cyclical	Footwear	-14.6%	-5.3%	-82	-78
ABFS	04/29/05	34.8%	Arkansas Best Corporation	Transportation	Trucking	-6.6%	-4.7%	-69	-76
APA	02/03/06	-4.7%	Apache Corporation	Energy	Oil & Gas Operations	-5.6%	-5.6%	-64	-67
SCHN	02/10/06	1.5%	Schnitzer Steel Industries, Inc.	Basic Materials	Iron & Steel	0.0%	4.9%	-71	-64
FNF	10/21/05	3.5%	Fidelity National Financial	Financial	Insurance (Property & Casualty)	-4.3%	0.5%	-58	-62
HDI	10/14/05	5.8%	Harley-Davidson, Inc.	Consumer Cyclical	Recreational Products	-6.7%	-2.0%	-60	-60
MDC	01/20/06	-3.9%	M.D.C. Holdings, Inc.	Capital Goods	Construction Services	-3.9%	-3.9%	-45	-57
CCRT	12/30/05	4.0%	CompuCredit Corporation	Financial	Consumer Financial Services	-4.5%	-0.3%	-29	-56
TBL	02/17/06	0.0%	The Timberland Company	Consumer Cyclical	Footwear	0.0%	7.2%	-41	-44
PCU	02/10/06	-3.1%	Southern Copper Corporation (USA)	Basic Materials	Metal Mining	-3.1%	14.9%	-52	-44
NKE	09/23/05	4.5%	NIKE, Inc.	Consumer Cyclical	Footwear	-7.2%	0.8%	-45	-43
RI	09/02/05	29.8%	Ruby Tuesday, Inc.	Services	Restaurants	-3.4%	5.5%	-26	-38
LNCR	12/27/04	0.4%	Lincare Holdings Inc.	Health Care	Healthcare Facilities	-8.0%	0.3%	-36	-32
CECO	02/17/06	0.0%	Career Education Corp.	Services	Schools	0.0%	-3.5%	-33	-31
NUE	04/15/05	69.0%	Nucor Corporation	Basic Materials	Iron & Steel	-6.1%	17.7%	-23	-30
STLD	12/16/05	30.8%	Steel Dynamics, Inc.	Basic Materials	Iron & Steel	-6.0%	24.6%	-25	-28
PSUN	12/09/05	-1.4%	Pacific Sunwear of CA	Services	Retail (Apparel)	-2.9%	7.6%	-10	-25
BTI	12/30/05	1.8%	British American Tobacco (ADR)	Consumer Non-Cyclical	Tobacco	-1.0%	2.0%	-19	-24
ASH	10/28/05	23.2%	Ashland Inc.	Capital Goods	Construction Services	-0.8%	3.7%	-11	-24
RCII	10/21/05	43.2%	Rent-A-Center, Inc	Services	Rental & Leasing	-2.8%	13.9%	-18	-22
THO	04/15/05	61.1%	Thor Industries, Inc.	Capital Goods	Mobile Homes & RVs	-0.7%	5.9%	-17	-19
ACS	04/29/05	30.4%	Affiliated Computer Services, Inc.	Technology	Computer Services	-1.7%	11.1%	-16	-16
RS	04/15/05	116.0%	Reliance Steel & Aluminum	Basic Materials	Misc. Fabricated Products	-0.1%	14.1%	-15	-13
AH	02/03/06	4.7%	Armor Holdings, Inc.	Capital Goods	Aerospace and Defense	0.0%	20.0%	-18	-6

      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	Monthly % Gain	%R1	%R2
CPK	05/06/05	19.0%	Chesapeake Utilities	Utilities	Natural Gas Utilities	-12.0%	-2.7%	-74	-92
WPS	02/07/05	3.0%	WPS Resources Corp	Utilities	Electric Utilities	-10.9%	-6.5%	-84	-83
PNW	01/10/05	-3.2%	Pinnacle West Capital	Utilities	Electric Utilities	-10.1%	-3.0%	-91	-76
ATG	10/21/05	5.7%	AGL Resources Inc.	Utilities	Natural Gas Utilities	-3.8%	-1.8%	-86	-72
ATO	04/01/05	-2.0%	Atmos Energy Corporation	Utilities	Natural Gas Utilities	-11.3%	-0.2%	-74	-56
UU	06/10/05	-0.8%	United Utilities PLC (ADR)	Utilities	Electric Utilities	-3.0%	0.0%	-47	-51
WGL	12/23/05	0.3%	WGL Holdings, Inc.	Utilities	Natural Gas Utilities	-2.0%	1.7%	-75	-44
SRE	01/10/05	32.4%	Sempra Energy	Utilities	Natural Gas Utilities	-0.8%	0.3%	-79	-35
UGI	12/30/05	9.2%	UGI Corporation	Utilities	Natural Gas Utilities	0.0%	2.7%	-33	-17
OKE	11/11/05	12.9%	ONEOK, Inc.	Utilities	Natural Gas Utilities	0.0%	5.4%	-22	-14
PGN	01/10/05	1.0%	Progress Energy, Inc.	Utilities	Electric Utilities	-2.7%	2.7%	-25	-9
KEP	01/10/05	81.4%	Korea Electric Power Corporation (ADR)	Utilities	Electric Utilities	-0.7%	5.7%	-13	-7

      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	Monthly % Gain	%R1	%R2
MIK	12/30/05	-9.7%	Michaels Stores, Inc.	Services	Retail (Specialty Non-Apparel)	-9.7%	-3.1%	-84	-95
AMSG	10/14/05	-8.4%	AmSurg Corp.	Health Care	Healthcare Facilities	-13.5%	-5.8%	-71	-82
EWBC	12/30/05	-2.7%	East West Bancorp, Inc.	Financial	Regional Banks	-5.5%	-1.3%	-76	-81
CAKE	10/21/05	4.8%	The Cheesecake Factory Incorporated	Services	Restaurants	-6.6%	0.3%	-76	-80
WSM	09/02/05	4.9%	Williams-Sonoma, Inc.	Services	Retail (Specialty Non-Apparel)	-11.7%	-2.8%	-75	-76
DHI	02/03/06	-2.8%	D.R. Horton Inc.	Capital Goods	Construction Services	-2.8%	-9.5%	-68	-74
UNH	12/30/05	-6.7%	UnitedHealth Group Inc.	Financial	Insurance (Accident & Health)	-7.8%	-2.5%	-58	-64
JNJ	02/17/06	0.0%	Johnson & Johnson	Health Care	Major Drugs	0.0%	1.2%	-64	-63
MDC	12/30/05	0.9%	M.D.C. Holdings, Inc.	Capital Goods	Construction Services	-6.5%	-3.9%	-45	-57
CHD	11/18/05	4.0%	Church & Dwight Co., Inc.	Consumer Non-Cyclical	Personal & Household Products	-5.7%	3.4%	-64	-55
PCU	02/10/06	-3.1%	Southern Copper Corporation (USA)	Basic Materials	Metal Mining	-3.1%	14.9%	-52	-44
GISX	12/30/05	4.0%	Global Imaging Systems, Inc.	Technology	Office Equipment	-2.1%	-1.5%	-43	-44
HHS	10/28/05	13.0%	Harte-Hanks, Inc.	Services	Printing & Publishing	-4.0%	11.1%	-38	-41
CPS	05/27/05	12.7%	ChoicePoint Inc.	Services	Business Services	-2.4%	-1.3%	-24	-29
ORLY	01/20/06	8.1%	O'Reilly Automotive, Inc.	Services	Retail (Specialty Non-Apparel)	-1.2%	8.1%	-30	-25
JBHT	02/03/06	6.9%	J.B. Hunt Transport Services, Inc.	Transportation	Trucking	-3.4%	12.7%	-22	-23
LOW	11/18/05	0.5%	Lowe's Companies, Inc.	Services	Retail (Home Improvement)	-4.5%	5.0%	-9	-15
SNV	05/27/05	-4.5%	Synovus Financial Corp.	Financial	Regional Banks	-6.7%	3.8%	-10	-14
DGX	08/19/05	5.6%	Quest Diagnostics Incorporated	Health Care	Healthcare Facilities