Stock Watch Lists

Indices were more mixed this week as the market's focus remained on oil prices, inflation and interest rates. Oil ended last week at $54.84 a barrel and this week at $57.27. There were lots of economic data this week that have not been fully assimilated by the markets. So the markets remain directionless until earnings get into full swing in a couple of weeks. Many analysts have criticized Goldman Sachs’ analysis that it will take a large oil spike to $105 a barrel in order to quell demand. Are these the same analysts that discounted the idea that oil would approach $60 a barrel?

The 5 day RSI for the DOW, S&P500 and the NASDAQ are neutral. The 5 week RSI for the DOW, S&P500 and NASDAQ are oversold, neutral and very-oversold, respectively. Other sentiment indicators are given in Table 2 that shows traders are becoming more cautious.

Table 2

VTO Report on Market Sentiment Indicators

Sentiment Indicator	Value	Last Week	2 Weeks Ago	Complacent	Cautious
VIX	14.09	13.42	13.14	< 20	> 50
VXN	17.61	17.15	17.88	< 30	> 70
Put/Call Ratio	0.813	0.500	0.721	< 0.6	> 0.7

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3.0 Procedure

It was decided not to change any of the screening criteria simply to add more stock picks in a directionless market. Such a move could give undesirable results. When no new picks are screened by our filters it’s the market’s way of telling us to be cautious and perhaps even to stay out.

With a greater newsletter emphasis on stocks, it was also decided to treat each watch list more as if it were a portfolio by adding trailing stop information in place of options information that was relegated to the options advisory service. The last column on the right of each watch list gives the current price as a percentage relative to the maximum value the stock reached after it was listed in the watch list. Those selections that have declined by 15% or more from their maximums after being listed are highlighted with a red.

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.

Key

Open Trade

Passed Recent Filter

TXI was removed because its price declined too far below its 52 week high and its relative strength no longer met requirements of the filter. CRS and X were removed low relative strength and price declines

Table 3A

Stephen Cooper Stock Candidate Watch List 04/02/05

Stock	Reference	% Chg	Company	Sector	Industry	% of High
AAPL	01/10/05	18.6%	Apple Computer, Inc.	Technology	Computer Hardware	90.7%
AEOS	02/07/05	6.9%	American Eagle Outfitters	Services	Retail (Apparel)	97.3%
AET	01/03/05	20.2%	Aetna Inc.	Financial	Insurance (Accident & Health)	95.9%
APA	03/10/05	3.2%	Apache Corporation	Energy	Oil & Gas Operations	99.4%
BHP	02/24/05	-3.2%	BHP Billiton Limited (ADR)	Basic Materials	Metal Mining	92.3%
BTU	11/22/04	20.4%	Peabody Energy Corporation	Energy	Coal	95.1%
BYD	02/21/05	6.9%	Boyd Gaming Corporation	Services	Casinos & Gaming	92.9%
DO	03/04/05	2.1%	Diamond Offshore Drilling Inc.	Energy	Oil Well Services & Equipment	100.0%
FFIV	02/14/05	-7.9%	F5 Networks Inc.	Technology	Computer Networks	86.9%
GMR	02/25/05	-6.2%	General Maritime Corp.	Transportation	Water Transportation	93.8%
MGG	12/27/04	1.5%	MGM MIRAGE	Services	Casinos & Gaming	88.9%
MON	12/20/04	23.2%	Monsanto Company	Basic Materials	Chemical Manufacturing	100.0%
PCO	02/14/05	19.6%	Premcor Inc.	Energy	Oil & Gas Operations	100.0%
PCU	03/10/05	-3.3%	Southern Peru Copper Corp (USA)	Basic Materials	Metal Mining	91.3%
POT	12/20/04	5.4%	Potash Corp./Saskatchewan (USA)	Basic Materials	Non-Metallic Mining	94.8%
SIE	02/14/05	9.1%	Sierra Health Services, Inc.	Financial	Insurance (Accident & Health)	98.3%
SM	03/10/05	1.0%	St. Mary Land & Exploration Co.	Energy	Oil & Gas Operations	97.5%
SUN	03/04/05	3.3%	Sunoco, Inc.	Energy	Oil & Gas Operations	100.0%
SWN	11/22/04	18.0%	Southwestern Energy Company	Energy	Oil & Gas Operations	96.4%
TS	01/10/05	33.1%	Tenaris S.A. (ADR)	Capital Goods	Construction - Supplies and Fixtures	92.7%
TXU	11/22/04	25.2%	TXU Corporation	Utilities	Electric Utilities	100.0%
VLO	02/07/05	33.3%	Valero Energy Corp.	Energy	Oil & Gas Operations	100.0%
YELL	03/10/05	-4.5%	Yellow Roadway Corp.	Transportation	Trucking	95.0%

Average change for this watch list = 9.8%

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. It is observed that these stocks do not necessarily deteriorate quickly when the market turns down. Their declines seem to be consistently gradual. NYT was removed due to its relative strength increasing beyond filter requirements.

Table 3B

Put Option Candidate Watch List as of 04/02/05

Stock	Reference	% Chg	Company	Sector	Industry	% of High
BMET	03/25/05	-5.4%	Biomet, Inc.	Health Care	Medical Equipment & Supplies	91.6%
CPS	03/04/05	5.4%	ChoicePoint Inc.	Services	Business Services	98.5%
DJ	02/24/05	-2.7%	Dow Jones & Co.	Services	Printing & Publishing	95.9%
FITB	02/21/05	-6.2%	Fifth Third Bancorp	Financial	Regional Banks	92.4%
FRX	03/18/05	-1.2%	Forest Laboratories, Inc.	Health Care	Biotechnology & Drugs	96.9%
GM	02/07/05	-22.3%	General Motors Corporation	Consumer Cyclical	Auto & Truck Manufacturers	77.7%
LLY	03/18/05	-2.5%	Eli Lilly & Co.	Health Care	Major Drugs	96.8%
NBIX	04/01/05	0.0%	Neurocrine Biosciences, Inc.	Health Care	Biotechnology & Drugs	100.0%
MIL	02/07/05	-3.9%	Millipore Corporation	Technology	Scientific & Technical Instruments	93.6%
WL	02/24/05	3.1%	Wilmington Trust Corp.	Financial	Regional Banks	97.3%

Average change for this watch list = -3.6%

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 of $20.

Table 3C

Stephen Cooper Covered Call Writing Watch List as of 04/02/05

Stock	Reference	% Chg	Company	Sector	Industry	% of High
AES	02/24/05	0.3%	The AES Corporation	Utilities	Electric Utilities	93.7%
CCK	03/18/05	-9.5%	Crown Holdings Inc	Basic Materials	Containters & Packaging	90.5%
GLBL	02/24/05	-3.9%	Global Industries, Ltd.	Energy	Oil Well Services & Equipment	92.9%
MDR	03/18/05	-4.5%	McDermott International	Energy	Oil Well Services & Equipment	95.5%
MDRX	02/07/05	24.0%	Allscripts Healthcare Solutions, Inc.	Technology	Software & Programming	93.2%
RETK	03/04/05	32.3%	Retek Inc.	Technology	Software & Programming	96.4%
SGR	02/07/05	24.8%	The Shaw Group Inc.	Basic Materials	Misc. Fabricated Products	96.3%
SID	12/20/04	31.7%	Companhia Siderurgica Nacional (ADR)	Basic Materials	Iron & Steel	92.6%
SYXI	04/01/05	0.0%	IXYS Corporation	Technology	Semiconductors	100.0%
TIWI

1.0 Trading

2.0 Market Analysis

3.0 Procedure