______________________________________________________________________________

Issue No. 19 – March 28, 2005 Prescott, Arizona Systems@WiserTrader.com

______________________________________________________________________________

1.0 Trading

1.1 Transition

      Thank you for subscribing to the newsletter.  It has been a pleasure to provide profitable watch lists for seven stock filters once a week week.  Options information, on the other hand, is more time sensitive and should be addressed with more timely option alert email correspondence.  Since option alerts began on 1/31/05, 11 alerts were issued.  One expired and two are still pending so that 8 trades have been made in slightly less than two months.  The average alert profit per trade is 22%, as compared with 16% per trade overall.

      The last free options alert was sent today.  From this point onward the plan is that any future mention of specific options in the newsletter will be only historical or educational, unless there are any serious objections.  Meanwhile, continuously increasing profits are expected from the more timely options alert service.  I hope everyone who trades options can join.  To assist in the transition, enrollments by March 31^st will receive the previously mentioned 40% discount.  In addition, a month of free service is being added.  Details can be seen at the web site.

1.2 NASDAQ 100 Index Tracking Shares

      The NADAQ 100 Index Tracking Shares (Amex: QQQQ) mirror the behavior of the NASADQ Index.  The last alert recommended shorting the index by buying the Jun 36.00 PUT with the symbol QQQ RJ.  Looking at the chart in Figure 1A, the trade is not based on a TTC-A configuration. The trade was recommended due to a continued fall through support and overall market conditions.  Since the alert was issued, the NASDAQ attempted to climb back above the psychological 2000 level for two days in a row and failed each time.  Thursday’s close was within 1 point of Wednesday’s close, both days having lower than average volume.  To find the nearest support, we have to look all the way back to October whereas there is a lot of recent resistance at 2025, 2050 and 2100.  The QQQQ, like the NASDAQ, has crawled along its lower Bollinger band attempting to break beneath it.  Now we are waiting, before entering the trade, to see if it breaks lower or bounces higher toward the upper band.

© 2005 WiserTrader.com, LLC. Members of wisertrader.com are neither licensed brokers nor licensed advisors.   Trades discussed represent trades 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

FIGURE 1A

1.3 Interest Rates

      As 10 year yields increase to between 5 and 5.5% over the next several months, utilities can be expected to pull back about 20% because they are so interest rate sensitive.  Investors have piled into them for their high dividend payout.  But with steady income and higher borrowing costs, enthusiasm for rate sensitive vehicles will cool rapidly.  REITs are a particularly vulnerable group operating by borrowing at low short term rates to finance lending at higher long term rates.  As FOMC activity narrows the yield spread between long and short term rates, profit margins are being squeezed.  Also in peril are many of the limited partnerships (LPs), closed-end bond funds, bank stocks and many Canadian royalty and income trusts.  Most of these groups have outrun their fundamentals by doubling their valuations over the last 5 years.

      Ten year yields have moved from 4.535 to 4.591% over the past week.  The theoretical status of our TNX December call TNX LI is shown in figure 1B.  A constant Bid/Ask spread is assumed.  Premiums shown are the latest asking price.

FIGURE 1B

2.0 Market Analysis

      Industry leadership in Table 1 below continues to take a short term view.  Leading industries are ranked from highest to lowest.  

Table 1

Market Summary

Week Ending 03/26/05
 

 Major Indices:
 Dow Jones     -1.8%
 NASDAQ        -0.8%
 S&P500 Index  -1.5%
 Russell 2000  -1.2%
 
 30 Year Bond 4.844%
 10 Year Note 4.591%
 
 Industry Leaders
 For the Past Week
 Drug Retailers 
 Aerospace & Defense 
 Food & Drug Retailers 
 Railroads 
 Food Retailers & Wholesalers 
 Computer Services 
 Biotechnology 
 Pharmaceuticals & Biotech 
 Pharmaceuticals 
 Airlines 
 
 Industry Leaders
 For the Past Month
 Railroads 
 Drug Retailers 
 Trucking 
 Coal 
 Health Care Providers 
 Forestry 
 Commercial Vehicles & Trucks 
 Industrial Suppliers 
 Financial Administration 
 Food & Drug Retailers 
 
 Crude Oil $54.84
 
 Gold for the past 30 days:
 USD    -2.02%
 CAD    -3.69%
 CHF    +1.02%
 GBP    +0.51%
 EUR    +0.12%
 JPY    -1.02%

Indices declined across the board again this week as the market's focus remained on oil prices, inflation and interest rates.  Oil ended last week at $56.72 a barrel and this week at $54.84.

The government reported the Consumer Price Index rose 0.4 percent in February as costs for everything from food and lodging to health care and education inched higher.  Strategists observe that it wasn't so long ago that Wall Street was worried about deflation. They believe the perception that inflation is directly linked to soaring oil prices is off-base as energy accounts for less than 3 percent of corporate costs -- a fraction of the 70 percent linked to labor. And as long as jobs and production can be outsourced, wage inflation is unlikely to become an issue. In the past, we have not seen inflation run away until it starts to get embedded into wages. The next government jobs report is due a week from Friday.  In the meantime there are pockets of pricing power.

      Strategists further note that the CPI is interesting in that you can sometimes see the trends before the stocks begin to move and before analysts are seeing things moving. The 5.6 percent year-over-year increase in dairy products, for example, is a trend grocery shoppers know all too well.  Food away from home, a category essentially comprised of restaurants, rose 3.2 percent in the last 12 months.  This group includes Yum Brands Inc. (YUM), the parent of the KFC, Pizza Hut and Taco Bell chains. Education prices rose 6.3 percent overall, year-over-year, and prices for books and other supplies increased 3.2 percent, including textbook publisher McGraw-Hill Companies Inc. (MHP).  The 7.4 percent year-over-year price hike in the lodging category also has been hard for professional investors to ignore. Starwood Hotels & Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR) are in this group. Supply constraints are helping create pricing power in the lodging industry. It takes years to acquire permits and to build new hotels, which limits the number of rooms available. An investment in Marriott would play right into that, he said. Pricing power also comes into play in the energy industry. While rising demand from the United States and China is driving oil prices, the real issue is that the industry can't increase supplies fast enough. That favors oil field services companies like Cooper Cameron Corp. (CAM).

Extracted from Bureau of Labor Statistics
Table A.  Percent changes in CPI for Urban Consumers (CPI-U)
Un-adjusted 12-mos. Ended Feb.'05
 

 All Items                                              3.0
  Food and beverages                            2.6
  Housing                                               3.0
  Apparel                                               0.1
  Transportation                                     4.6
  Medical care                                       4.3
  Recreation                                           0.6
  Education and communication              1.4
  Other goods and services                     2.8                                                   
  Energy                                                 10.4
  Food                                                   2.6
 All items less food and energy               2.4

      The 5 day RSI for the DOW, S&P500 and the NASDAQ are very oversold.  The 5 week RSI for the DOW and NASDAQ are oversold while for the S&P500 it is neutral.  Other sentiment indicators are given in Table 2.

Table 2

Sentiment Indicators 03/26/05

Sentiment Indicator	Value	Last Week	2 Weeks Ago	Complacent	Cautious
VIX	13.42	13.14	12.80	< 20	> 50
VXN	17.15	17.88	18.57	< 30	> 70
Put/Call Ratio	0.500	0.721	0.621	< 0.6	> 0.7
%Bulls - %Bears	25.8	30.2	34.1	> 29%	< 25%

3.0 Procedure

      The following stock screens were generated with tools from AAII.   The short term trading filter used for Table 3A looks for optionable stocks whose percentage relative strength over the past 6 months is greater than 90%, EPS Growth over the past 12 months is greater than 80% and are within 5% of their 52 week  high  with  a  minimum  price  of  $50.   When a trigger, price gap up or unusually high up volume occurs, call options are supplied. 

Key

Open Trade

Passed Recent Filter

"0"       = No discernable trend

"GAP" = Price gap

"V"      = Higher than average volume

"+T"    = Positive trend

"-T"     = Negative trend

"TT"    = Trigger received

"TTC" = Confirmation received

      BRY and CDIS were removed due to weak price action.  It should be noted that the only stock to filter through the screen this week was PCO.  The large number of stocks showing a trigger is due to poor market conditions.

Table 3A

Stephen Cooper Stock Candidate Watch List   03/26/05

Stock	Reference	% Chg	Company	Sector	Industry	OPTION	Key
AAPL	01/10/05	23.3%	Apple Computer, Inc.	Technology	Computer Hardware	-	+T
AEOS	02/07/05	1.6%	American Eagle Outfitters	Services	Retail (Apparel)	AQU HK AUG 55.00 CALL	+TT
AET	01/03/05	18.8%	Aetna Inc.	Financial	Insurance (Accident & Health)	AET JK AUG 155.00 CALL	+TT
APA	03/10/05	-1.8%	Apache Corporation	Energy	Oil & Gas Operations	YWA AL JAN 60.00 CALL	+TT
BHP	02/24/05	-4.6%	BHP Billiton Limited (ADR)	Basic Materials	Metal Mining	BHP HF AUG 30.00 CALL	+TT
BTU	11/22/04	19.3%	Peabody Energy Corporation	Energy	Coal	BTU IT SEP 100.00 CALL	+TT
BYD	02/21/05	8.8%	Boyd Gaming Corporation	Services	Casinos & Gaming	-	+T
CRS	02/14/05	-6.0%	Carpenter Technology Corp	Basic Materials	Iron & Steel	CRS IN SEPT 70.00 CALL	+TT
DO	03/04/05	-4.0%	Diamond Offshore Drilling Inc.	Energy	Oil Well Services & Equipment	DO IJ SEP 50.00 CALL	+TT
FFIV	02/14/05	-2.7%	F5 Networks Inc.	Technology	Computer Networks	FLK JK OCT 55.00 CALL	+TT
GMR	02/25/05	-7.9%	General Maritime Corp.	Transportation	Water Transportation	-	+T
MGG	12/27/04	5.7%	MGM MIRAGE	Services	Casinos & Gaming	MGG IO SEP 75.00 CALL	+TT
MON	12/20/04	12.8%	Monsanto Company	Basic Materials	Chemical Manufacturing	MON JM OCT 65.00 CALL	+TT
PCO	02/14/05	11.3%	Premcor Inc.	Energy	Oil & Gas Operations	PCO IL SEP 60.00 CALL	+TTC
PCU	03/10/05	-3.8%	Southern Peru Copper Corp (USA)	Basic Materials	Metal Mining	PCU IL AEP 60.00 CALL	+TT
POT	12/20/04	1.0%	Potash Corp./Saskatchewan (USA)	Basic Materials	Non-Metallic Mining	POT FQ JUN 85.00 CALL	+TT
SIE	02/14/05	7.4%	Sierra Health Services, Inc.	Financial	Insurance (Accident & Health)	SIE IL SEP 60.00 CALL	+TTC
SM	03/10/05	-1.1%	St. Mary Land & Exploration Co.	Energy	Oil & Gas Operations	SM HJ AUG 50.00 CALL	+TT
SUN	03/04/05	-2.4%	Sunoco, Inc.	Energy	Oil & Gas Operations	-	+T
SWN	11/22/04	12.9%	Southwestern Energy Company	Energy	Oil & Gas Operations	SWN IL SEP 60.00 CALL	+TT
TS	01/10/05	31.8%	Tenaris S.A.  (ADR)	Capital Goods	Construction - Supplies and Fixtures	QAA GT JUL 100.00 CALL	+TT
TXI	12/20/04	3.9%	Texas Industries, Inc.	Capital Goods	Construction - Raw Materials	TXI JM OCT 65.00 CALL	+TT
TXU	11/22/04	22.2%	TXU Corporation	Utilities	Electric Utilities	-	+T
VLO	02/07/05	23.8%	Valero Energy Corp.	Energy	Oil & Gas Operations	YGY AP JAN 80.00 CALL	+TTC
X	12/20/04	4.8%	United States Steel Corp.	Basic Materials	Iron & Steel	X JM OCT 65.00 CALL	+TT
YELL	03/10/05	-3.3%	Yellow Roadway Corp.	Transportation	Trucking	YBQ AL JAN 60.00 CALL	+TTC

      Stocks selected by the put option filter are listed in Table 3B.  This filter looks for stocks having the potential to decline in a down market.  They are optionable stocks priced above $30 having less than 20% year over year EPS growth, a 26 week %Rank Relative Strength of less than 20% and are within 5% of their 52 week lows.  The status of this experimental filter is discussed in Section 4.  BUD was removed due to its price action and relative strength being too strong for this filter.  It is observed that these stocks do not necessarily deteriorate quickly when the market turns down.  Their declines seem to be consistently gradual.

Table 3B

Put Option Candidate Watch List as of   03/26/05

Stock	Reference	% Chg	Company	Sector	Industry	OPTION	Key
BMET	03/25/05	0	Biomet, Inc.	Health Care	Medical Equipment & Supplies	-	-T
CPS	03/04/05	6.3%	ChoicePoint Inc.	Services	Business Services	-	-T
DJ	02/24/05	-1.9%	Dow Jones & Co.	Services	Printing & Publishing	-	-T
FITB	02/21/05	-8.0%	Fifth Third Bancorp	Financial	Regional Banks	-	-T
FRX	03/18/05	0.5%	Forest Laboratories, Inc.	Health Care	Biotechnology & Drugs	-	-T
GM	02/07/05	-22.5%	General Motors Corporation	Consumer Cyclical	Auto & Truck Manufacturers	-	-T
LLY	03/18/05	0.7%	Eli Lilly & Co.	Health Care	Major Drugs	-	-T
MIL	02/07/05	0.2%	Millipore Corporation	Technology	Scientific & Technical Instruments	-	0
NYT	02/21/05	-4.4%	The New York Times Company	Services	Printing & Publishing	-	-T
WL	02/24/05	3.4%	Wilmington Trust Corp.	Financial	Regional Banks	-	0

      The stock filter resulting in Table 3C is for the potential to write covered call options.  The filter looks for optionable stocks whose percentage relative strength over the past 6 months is greater than 90%, EPS Growth over the past 12 months is greater than 80% and are within 5% of their 52 week highs with a  maximum stock price is $20.  MXT and OS were removed due to weak price activity.

Table 3C

Stephen Cooper Covered Call Writing Watch List as of   03/26/05

Stock	Reference	% Chg	Company	Sector	Industry	Covered Calls	Key
AES	02/24/05	-1.2%	The AES Corporation	Utilities	Electric Utilities	AES DD APR 20.00 CALL	+TT
CCK	03/18/05	-4.6%	Crown Holdings Inc	Basic Materials	Containters & Packaging	CCK DW APR 17.50 CALL	+TT
GLBL	02/24/05	-7.6%	Global Industries, Ltd.	Energy	Oil Well Services & Equipment	-	+T
MDR	03/18/05	-5.4%	McDermott International	Energy	Oil Well Services & Equipment	-	+T
MDRX	02/07/05	24.4%	Allscripts Healthcare Solutions, Inc.	Technology	Software & Programming	-	+T
RETK	03/04/05	31.8%	Retek Inc.	Technology	Software & Programming	-	+T
SGR	02/07/05	23.8%	The Shaw Group Inc.	Basic Materials	Misc. Fabricated Products	SGR DE APR 25.00 CALL	+TTC
SID	12/20/04	25.5%	Companhia Siderurgica Nacional (ADR)	Basic Materials	Iron & Steel	-	0
TIWI	02/14/05	0.2%	Telesystem International Wireless (USA)	Services	Communications Services	-	+T
USU	03/18/05	-5.3%	USEC Inc.	Basic Materials	Non-Metallic Mining	-	+T
WFR	03/04/05	-5.7%	MEMC Electronic Materials	Technology	Semiconductors	WFR DC APR15.00 CALL	+TT
XXIA	01/02/05	8.4%	Ixia	Technology	Electronic Instruments & Controls	-	+T

      For the screen in Table 3D, the number of selections is reduced by eliminating stocks having P/E’s greater than 30.  ELBO, SYT and ZQK were removed due to weak EPS growth,  relative strength and price action, respectively

Table 3D

Growth Momentum Watch List as of   03/26/05

Stock	Reference	% Chg	Company	Sector	Industry	Leaps
CRAI	03/18/05	-0.6%	Charles River Associates Incorporated	Services	Business Services	-
ELK	02/24/05	-1.0%	ElkCorp	Capital Goods	Construction - Supplies and Fixtures	-
KBH	01/10/05	15.5%	KB Home	Capital Goods	Construction Services	OHK AX JAN07 130.00 CALL
OSK	03/12/05	4.4%	Oshkosh Truck Corporation	Consumer Cyclical	Auto & Truck Manufacturers	-
PTRY	02/07/05	-0.8%	The Pantry, Inc.	Services	Retail (Grocery)	-
SFY	03/18/05	-6.3%	Swift Energy Company	Energy	Oil & Gas Operations	-
SPF	02/14/05	-1.0%	Standard Pacific Corp.	Capital Goods	Construction Services	-
TDY	03/18/05	-3.9%	Teledyne Technologies Incorporated	Services	Business Services	-
USNA	02/21/05	13.0%	USANA Health Sciences, Inc.	Consumer Non-Cyclical	Personal & Household Products	-
WFR	03/18/05	-3.0%	MEMC Electronic Materials	Technology	Semiconductors	-

      For the Peter Lynch screen in Table 3E, again the number of selections for this screen is reduced by eliminating stocks having P/E’s greater than 30.   GMK was removed due to its price decline.

Table 3E

Peter Lynch Value Watch List as of   03/26/05

Stock	Reference	% Chg	Company	Sector	Industry	Leaps
BLSC	12/13/04	11.5%	Bio-Logic Systems Corp.	Health Care	Medical Equipment & Supplies	-
CAJ	01/31/05	-0.4%	Canon Inc. (ADR)	Technology	Computer Peripherals	-
CHL	03/18/05	-1.2%	China Mobile (Hong Kong) Limited (ADR)	Services	Communications Services	-
CSLMF	12/13/04	1.4%	Consolidated Mercantile (USA)	Basic Materials	Containters & Packaging	-
IMY	03/25/05	#DIV/0!	Grupo IMSA S.A. de C.V. (ADR)	Basic Materials	Iron & Steel	-
KEP	12/13/04	0.4%	Korea Electric Power Corporation (ADR)	Utilities	Electric Utilities	-
LFL	12/13/04	17.1%	Lan Airlines S.A. (ADR)	Transportation	Airline	-
MBT	01/10/05	4.5%	Mobile TeleSystems OJSC (ADR)	Services	Communications Services	OVD AI JAN07 45.00 CALL
MKTAY	02/07/05	3.1%	Makita Corporation (ADR)	Consumer Cyclical	Appliances & Tools	-
NOLD	12/13/04	8.9%	Noland Company	Capital Goods	Misc. Capital Goods	-
PCU	12/13/04	21.8%	Southern Peru Copper Corp (USA)	Basic Materials	Metal Mining	-
SHI	12/13/04	21.1%	Sinopec Shanghai Petrochemical Co. (ADR)	Energy	Oil & Gas Operations	-
SKM	02/07/05	0.0%	SK Telecom Co., Ltd. (ADR)	Services	Communications Services	-
TM	12/13/04	-0.3%	Toyota Motor Corporation (ADR)	Consumer Cyclical	Auto & Truck Manufacturers	-
TMIC	03/25/05	0	Trend Micro Incorporated (ADR)	Technology	Software & Programming	-
TMIC	02/21/05	-3.9%	Trend Micro Incorporated (ADR)	Technology	Software & Programming	-
VCP	03/25/05	0	Votorantim Celulose e Papel S.A (ADR)	Basic Materials	Forestry & Wood Products	-
VLCCF	12/13/04	6.6%	Knightsbridge Tankers Limited	Transportation	Water Transportation	-

      The filter for Warren Buffet style stock picking in Table 3F 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.  STLD was removed due to weak price action.

Table 3F

Warren Buffett Value Watch List as of   03/26/05

Stock	Reference	% Chg	Company	Sector	Industry	Leaps
ABFS	02/07/05	-3.3%	Arkansas Best Corporation	Transportation	Trucking	-
COLM	01/10/05	-2.7%	Columbia Sportswear Company	Consumer Cyclical	Apparel/Accessories	-
DHI	12/27/04	1.5%	D.R. Horton Inc.	Capital Goods	Construction Services	VEI AH JAN07 40.00 CALL
DSPG	02/07/05	3.4%	DSP Group, Inc.	Technology	Communications Equipment	-
DSPG	03/25/05	0	DSP Group, Inc.	Technology	Communications Equipment	-
ELBO	01/31/05	21.3%	Electronics Boutique Holdings Corp.	Services	Retail (Technology)	-
HOV	12/27/04	10.0%	Hovnanian Enterprises	Capital Goods	Construction Services	OZW AL JAN07 60.00 CALL
LNCR	12/27/04	-0.8%	Lincare Holdings Inc.	Health Care	Healthcare Facilities	OUN AI JAN07 45.00 CALL
PGR	12/27/04	5.8%	The Progressive Corp.	Financial	Insurance (Property & Casualty)	-
RS	12/27/04	6.7%	Reliance Steel & Aluminum	Basic Materials	Misc. Fabricated Products	-
VLCCF	02/21/05	-5.2%	Knightsbridge Tankers Limited	Transportation	Water Transportation	-

      The stocks from Benjamin Graham’s style of utility investing are listed in Table 3G.  A requirement was added to include only those stocks having a PE of 17 or less.   It should be noted that all of these stocks are expected to pull back about 20% or so as interest rates increase.  PGN is already in a down trend.

Table 3G

Benjamin Graham Value Watch List as of   03/26/05

Stock	Reference	% Chg	Company	Sector	Industry	Leaps
KEP	01/10/05	8.4%	Korea Electric Power Corporation (ADR)	Utilities	Electric Utilities	-
PGN	01/10/05	-6.4%	Progress Energy, Inc.	Utilities	Electric Utilities	OPM AJ JAN07 50.00 CALL
PNW	01/10/05	-2.2%	Pinnacle West Capital	Utilities	Electric Utilities	-
SRE	01/10/05	9.1%	Sempra Energy	Utilities	Natural Gas Utilities	-
WPS	02/07/05	1.7%	WPS Resources Corp	Utilities	Electric Utilities	-

4.0 Results

4.1 Trades This Week

      Alert number 9 is the TNX DEC 45.00 CALL with the symbol TNX LI.  This trade is down -11.4% and remains open.

      Alert number 10 is the QQQQ JUN 36.00 PUT with the symbol QQQ RJ.  This trade is pending, waiting for the NASDAQ and the QQQQ to be down from their previous day close an hour after the markets are open.

      Alert number 11 is the NYT July 40.00 PUT, just sent recently, with the symbol NYT SH.  This trade is pending, waiting for the DOW and NYT to be down from their previous day close an hour after the markets are open.

      The BHP August 30.00 Call with the symbol BHP HF was closed for a small profit of 6.7%. 

      A PCO September 60.00 CALL with the symbol PCO IL remains open.  This trade is currently up 34%.

4.2 Trading History

The portfolio trading history in Table 4A lists all trades since the newsletter’s inception.

Table 4A

Option Portfolio Trading History as of 03/26/05
 

Stock	Buy Date	Buy Price	Last	Action	P/L(%)	Option
URBN	11/23	11.50	$9.00	Sold 11/30	-21.7%	URQ FG JUN 35.00 CALL
TXU	11/23	11.30	$6.30	Sold 12/2	-44.2%	TXU DK APR 55.00 CALL
USG	11/23	8.40	$12.80	Sold 12/15	52.4%	MAY 25.00 CALL
ADSK	12/20	8.20	$9.20	Sold 12/23	12.2%	ADQ GN JUL 70.00 CALL
MON	12/20	3.80	$4.80	Sold 12/23	26.3%	MON GJ JUL 50.00 CALL
POT	12/20	7.00	$8.00	Sold 12/23	14.3%	POT FP JUN 80.00 CALL
TXI	12/20	5.50	$9.00	Sold 12/23	63.6%	TXI GL JUL 60.00 CALL
AET	1/7	5.70	$7.10	Sold 01/19	24.6%	AET GX JUL 135.00 CALL
CLF	1/7	7.30	$9.20	Sold 01/19	26.0%	CLF GJ JUL 50.00 CALL
MTH	1/21	6.80	$9.20	Sold 02/01	35.3%	MTH FZ JUN 62.50 CALL
BZH	1/31	13.70	$17.30	Sold 02/01	26.3%	BZH HJ AUG 150.00 CALL
KBH	1/31	9.20	$11.10	Sold 02/01	20.7%	KBH GU JUL 110.00 CALL
BHP	1/28	2.25	$2.70	Sold 02/01	20.0%	BHP HE AUG 25.00 CALL
X	1/25	5.30	$4.90	Sold 02/02	-7.5%	X GK JUL 55.00 CALL
SFI	1/24	0.75	$0.30	Sold 02/04	-60.0%	SFI PH APR 40.00 PUT
EBAY	2/7	6.80	$5.60	Sold 02/08	-17.6%	XBA SO JUL 75.00 PUT
CCJ	2/4	6.60	$10.20	Sold 02/11	54.5%	CCJ IG SEP 35.00 CALL
MON	2/4	8.00	$8.20	Sold  02/15	2.5%	MON GJ JUL 50.00 CALL
TOL	1/2	7.10	$7.30	Sold 02/17	2.8%	TOL IR SEP 90.00 CALL
BZH	2/9	14.60	$16.90	Sold 02/17	15.8%	BZH HN AUG 170.00 CALL
KBH	2/7	11.10	$10.40	Sold 02/18	-6.3%	KBH GC JUL 115.00 CALL
VLO	2/24	6.98	$8.70	Sold 03/02	24.6%	VLO IN SEP 70.00 CALL
TXU	2/25	3.55	$4.70	Sold 03/04	32.4%	TXU GP JUL 80.00 CALL
SWN	3/3	6.50	$5.00	Sold 03/11	-23.1%	SWN IL SEP 60.00 CALL
GM	3/9	2.20	$5.80	Sold 03/17	163.6%	GM UZ SEP 32.50 PUT
VLO	3/17	6.60	$7.50	Sold 03/18	13.6%	YGY AP JAN 80.00 CALL
BHP	2/24	2.25	$2.40	Sold 03/22	6.7%	BHP HF AUG 30.00 CALL
PCO	3/17	5.00	$6.70	Long	34.0%	PCO IL SEP 60.00 CALL
TNX	3/14	6.80	$6.00	Long	-11.8%	TNX LI DEC 45.00 CALL

Overall Average Profit = 16.5% per trade.

4.3 Experimental Filter Results

      The goal of the filter tracking experiment is to observe the use of stock candidate filters to buy call options and write covered calls in rising and sideways markets and the down-market filter for use in buying put options in declining and sideways markets.  So far we have not had a significant sustained down market environment in which to test the down-market filter.  Essential features of the 3 filters are described in Table 4B.

Table 4B

Filter Criteria

Description	(1) Stock Candidate	(2) Down-market	(3) Stock Candidate
Purpose	Buy Call Options	Buy Put Options	Write Covered Calls
Market direction	Up, Sideways	Down, Sideways	Up, Sideways
Price	> $50	> $30	< $20
12 m EPS growth	> 80%	< 20%	> 80%
Relative Strength	26 wk >90%	26 wk < 20%	26 wk >90%
Price within	5% of 52wk high	5% of 52 wk low	5% of 52wk high
Exchanges	NASDAQ, NYSE	NASDAQ, NYSE	NASDAQ, NYSE

      The relative average filter performance for the three groups of filtered stocks is compared with proxies for the major averages in Table 4C.  Filter 1 stocks are those listed in Table 3A and filter 2 stocks, for the experimental filter, are listed in Table 3B.  Filter 3 stocks are listed in Table 3C.  Filter 2 stocks did not decline as much as filter 1 and 3 stocks 3 weeks ago and last week but they have underperformed for the past month.  I am beginning to appreciate the wisdom of Dr. Cooper’s statement that when markets decline, money is pulled out of the momentum stocks (Filters 1 and 3) at as high a rate as it flowed into them when the markets were rising.

Table 4C

Average Filter Performance as of 03/26/05

Instrument	Past month	1 Week ago	2 weeks ago	3 weeks ago	4 weeks ago
SPY (S&P500)	-3.5%	-1.2%	-1.5%	-1.9%	1.1%
DIA (DOW)	-3.6%	-1.4%	-1.7%	-1.6%	1.1%
QQQQ (NASDAQ)	-3.6%	-0.7%	-1.8%	-0.9%	-0.3%
IWN (Russell 2000)	-3.9%	-1.4%	-1.0%	-2.8%	1.3%
Filter 1 > $50	-3.8%	-3.0%	1.4%	-4.0%	2.0%
Filter 2 > $30	-5.0%	0.4%	-3.5%	-1.7%	-0.2%
Filter 3 < $20	3.4%	-2.8%	1.4%	-0.9%	4.8%

5.0 Conclusion

      The CPI indicates pricing power in restaurants, education, lodging and energy.           Stocks may experience a short term bounce before heading lower.  Expect weakness in utilities, high dividend rate sensitive vehicles, REITs, limited partnerships (LPs), closed-end bond funds, bank stocks and many Canadian royalty and income trusts.  

      Average fractional profit for 29 trades, F_P = 16.55% per trade.

      Fraction of trades chosen in the correct direction, F_C = 72.4%

      Average fractional gain for 21 winning trades, F_G = 32.01% per trade.

      Average fractional loss for 8 losing trades, F_L = -24.04% per trade.

      The dollar profit goal D_G is set equal to the average capital used per trade C such that
N = 1 / F_P = 6.0 becomes the average number of trades to earn the average traded amount.

The Profit Factor for the trading system, F_G F_C / [F_L (1 - F_C)] = 2.91
      Gross Profits divided by Gross Losses (includes 1% commission)

______________________________________________________________________________

______________________________________________________________________________

Appendix

Investment Conference Schedule

      Below are links to conference registration sites where you can sign up.  

• 04-10-05 Calgary, Alberta "Calgary Resource Investment Conference"
• 04-10-05 Calgary, Alberta "Calgary Resource Investment Conference"
• 05-02-05 Chicago, IL "2005 Healthcare M&A & Corporate Development"
• 05-03-05 Acapulco, Mexico "SRI Conference on Foreign Investment Opportunities in Mexico's New Consumer and Small Business Lending Industry "
• 05-04-05 Atlanta, GA "Global Debt Collection Summit"
• 05-11-05 Minneapolis , MN "Medtech Investing Conference (4th Annual)"
• 05-11-05 New York, NY " IIR's Inaugural Forum on IP Rights Protection in Financial Services - Strategies for Building Patent Portfolios and Managing IP Risk "
• 05-17-05 London, United Kingdom "Corporate Venturing & Spinouts Conference "
• 05-17-05 New York, NY "Hedge Funds Regulation and Compliance 2005 - Gain Advanced Operational, Legal and Accounting Strategies to Achieve full Compliance in Today's Regulatory Environment "
• 05-23-05 New York, NY -Both professional and sophisticated private investors meet with the world's leaders in gold, silver, precious metals, copper and oil and gas exploration and production "New York Institutional Gold Conference"
• 06-01-05 San Francisco, CA "Venture Capital Investing Conference"
• 06-12-05 Vancouver, BC "World Gold, PGM & Diamond Investment Conference" Resource Investment Conferences featuring small cap opportunities in gold, diamonds, oil & gas, industrial and emerging growth situations are being presented in Canada. Pre-registration is complimentary to: investors who are clients of sponsoring firms which include discount and full service brokerage houses; subscribers of participating newsletters, sponsoring media and sponsoring internet investment services; shareholders of participating exhibitors; accredited investment advisors and investors who take an interest in managing their own personal portfolios.
• 09-07-05 Las Vegas, Nevada "Gold and Precious Metals Investment Conference" The gold and metal resource market has demonstrated its strength and longevity, achieving sustained growth and multi-decade highs in the last year. Explore the shining prospects of gold, silver, copper, uranium and other fast-rising commodities. Realize your full potential in this sustained bull market, with Natural Resources the clear profit leaders.
• 09-29-05 Las Vegas, Nevada  "Tradestation World Users Conference" Trade Station World Conference and Expo, the premier conference for TradeStation users, is coming to the Venetian Hotel in Las Vegas, September 29 - October 2, 2005. Here's where you learn about how to design your personal trading strategies, and to test those strategies against historical data.
• 10-02-05 Toronto, Ontario "Toronto Resource Investment Conference"
• 10-30-05 New Orleans, LA "New Orleans Investment Conference"
• 11-10-05 Millbrae, CA "Biotech Investing Conference" Continuing advances in genomics, proteomics and enabling technologies makes the Biotech sector a favorite among private equity investors and venture capitalists. The Biotech Investing Conference is an industry gathering of the leading private equity investors, venture capitalists, biotech companies, pharmaceutical companies, corporate investors and institutional investors. 
• 11-27-05 San Francisco, CA "Gold and Precious Metals Conference"
  Both professional and sophisticated private investors meet with the world's leaders in gold, silver, precious metals, copper and oil and gas exploration and production. The Natural Resource industry's newest opportunities are presented, together with educational seminars, executive panels and investment workshops led by top finance specialists, economic analysts and newsletter editors. Admission is complimentary with pre-registration.

Conference Search

• By Date, Category, Country and Organizer
  
• By Topic and Region
  
• Financial reporting and corporate news - "Corporate News Announcements"