Wiser Trader Stocks and Options Newsletter

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Issue No. 78  May 29, 2006 Prescott, Arizona Systems@WiserTrader.com

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1.0 Trading

      Volume lends perspective on recent market moves.

1.1 Volume

      Recent market declines were accompanied by slightly higher than average volume, as seen in Figure 1A.  One can infer that the S&P 500 may resume a downward move after the recent low volume bounce off its 200-day SMA.  Investors have sought to reduce risk, apparently.  A change in trading volume is critical to understanding the underpinnings of any market move.  Markets tend to be more volatile when volume is low and it is difficult to draw conclusions.  When volume is at least close to the average value, the move has more meaning. 

FIGURE 1A

      Various online portals report different volume levels for the NYSE and NASDAQ daily volumes.  For example, Yahoo.com consistently differs from corresponding data at BigCharts.com.  It is less important what absolute number you use to detect changes in volume as long as a consistent measure is used. 

      Intraday volume is important, as well.  Often it has occurred that strong volume in the morning  accompanied sharp rises in the major averages to be followed by lower afternoon volume with a sell off.  While it is easy to read off the volume at the end of a trading day, it is not easy to interpret intraday volume without information on how it compares with the average for that time of day.  This information is normally not supplied by online portals in an easy to understand format.

© 2006 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. 

     An Excel spreadsheet can supply this kind of information for you.  Below in Figure 1B are two Excel charts.  The one on the left is of intraday percentage price change.  On the right are plotted deviations from average volume for the NYSE and NASDAQ.  The two charts for Friday May 26, 2006 were updated by XLQPlus at 5-minute intervals.  The day began with futures showing a higher open.  Volume ticked up well above average for the first hour.  As the day wore on, volume dropped to average by the end of the second hour and then tailed off for the rest of the day to end at about 25% to 30% below average.  This is probably typical for the Friday before a holiday weekend.

FIGURE 1B

      As you might have guessed, the volume at each period in the trading day is proportionally compared to its daily average.  The trading day consisting of 6 ½ hours is 390 minutes long.  At each 5-minute interval, the elapsed time in minutes is divided by 390 to arrive at a time fraction for that time of day.  The time fraction at any point in the day is assumed equal to the normal volume percent of daily average for that time of day.  The percent difference between the volume percent of daily average and the time fraction is used to plot the chart.  When the volume percent of daily average is equal to the time fraction, the deviation from average volume is zero. 

      An automated chart such as this helps to confirm the importance of a rise or decline at each point in the trading day.  The chart is not yet available as a download.  However, details in the form of a preliminary spreadsheet will be forwarded upon request.

2.0 Market Analysis

      Inflation continues to run slightly above the Fed’s comfort zone but not greatly above expectations.  This leads one to expect another ¼-point rate hike in June.  An inability of the Fed to pause its tightening stance should lead the S&P 500 to migrate lower to its long-term support level below 1,240 before it resumes a sustained rally. 

      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 Housing 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	-0.8%	1.2%	-2.1%	-1.7%	1.9%
NASDAQ Composite Index	-4.8%	0.8%	-2.2%	-4.2%	0.9%
S & P 500 Index	-2.3%	1.0%	-1.9%	-2.6%	1.2%
NYSE Composite Index	-2.7%	0.8%	-2.8%	-2.6%	1.9%
Russell 2000 Index	-4.6%	1.0%	-2.7%	-5.0%	2.3%
HGX, Phil. Housing Index	-8.5%	0.1%	-4.4%	-5.1%	0.7%
IYR, Real Estate	-2.4%	1.7%	-1.5%	-3.2%	0.7%
GLD, GOLD	0.0%	-0.7%	-7.8%	4.6%	4.5%
RKH, Banking	-4.1%	0.7%	-1.9%	-3.4%	0.6%
IYT, Transportation	0.6%	1.1%	-4.2%	-2.4%	6.4%
SMH, Semiconductors	-9.2%	-2.8%	-2.1%	-5.6%	1.1%
BBH, Biotechnology	1.6%	2.3%	0.4%	-1.9%	0.9%
OIH, Oil Infrastructure	-4.7%	2.9%	-7.4%	-4.6%	4.8%
XLE, Energy	-3.6%	2.0%	-4.8%	-3.6%	3.0%
XLU, Utilities	1.0%	1.7%	-0.5%	-2.9%	2.7%
XLB, Materials	-2.8%	1.0%	-4.6%	-2.5%	3.4%
XLI, Industrial	-1.1%	0.3%	-2.5%	-2.1%	3.3%
XLK, Technology	-5.0%	0.8%	-1.8%	-4.3%	0.3%
XLV, Healthcare	-1.4%	0.9%	-0.4%	-1.3%	-0.7%
XLF, Financials	-3.0%	1.0%	-1.8%	-2.8%	0.6%
XLP, Consumer Staples	1.1%	2.0%	-0.2%	-1.6%	1.0%
XLY, Consumer Discretionary	-1.2%	0.0%	-1.2%	-1.5%	1.5%

      The VIX and VXN volatility indexes are listed in Table 2B.

Table 2B

Volatility

Indicator	Current	Last Week	2 Weeks Ago	Complacent	Cautious
VIX **	14.3	17.2	14.2	< 20	> 50
VXN ***	18.6	21.0	17.1	< 30	> 70
**   Above 20 day SMA = Short-term sell signal. *** Above 20 day SMA = Short-term sell signal.

      Figure 2A compares the major averages with key ETF’s and Sector SPDR’s.

FIGURE 2A

Table 2C

Market Summary

Industries are listed according to the Dow Jones Classification System

Major Indices  For the Past Week: Dow Jones     1.2% NASDAQ        -1.1% S&P500 Index  1.0% Russell 2000  1.0% NYSE           0.8% 30 Year Bond 5.157% 10 Year Note 5.052% Leading Industries For the Past Week: Specialized Consumer Services  Automobiles  Internet  Coal  Nonferrous Metals  Steel  Consumer Electronics  Mining  Industrial Metals  Automobiles & Parts Lagging Industries For the Past Week: Tires  Mobile Telecommunications  Semiconductors  Restaurants & Bars  Apparel Retailers  Defense  Specialty Retailers  Recreational Services  Travel & Tourism  Travel & Leisure

Leading Industries For the Past Month: Hotels  Transportation Services  Broadcasting & Entertainment  Soft Drinks  Automobiles  Beverages  Food & Beverage  Food Producers  Food Products  Media Lagging Industries For the Past Month: Platinum & Precious Metals  Home Construction  General Mining  Recreational Services  Toys  Forestry  Gold Mining  Forestry & Paper  Software  Travel & Tourism Crude Oil $71.29 Gold for the past 30 days: USD    +2.67% CAD    +1.26% CHF    +0.05% GBP    -0.28% EUR    +1.15% JPY    +1.44%

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.  The information is not meant to imply any endorsement or sponsorship by these 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 Monday	1 Month	1 Week Ago	2 weeks Ago	3 Weeks Ago	4 Weeks Ago
Net Insider Buying	3.9%	0.2%	3.6%	4.7%	-2.1%	-0.6%	1.8%
Cash Rich Companies	2.2%	0.0%	-0.7%	-1.6%	-6.3%	2.6%	4.6%
Price to Free Cash Flow	5.0%	-0.3%	1.2%	0.2%	-2.5%	0.7%	3.0%
Growth Momentum	10.4%	1.4%	-2.6%	1.1%	-5.4%	-2.4%	4.4%
Lynch	23.3%	1.0%	-4.3%	-0.4%	-3.1%	-3.4%	2.8%
Buffett	19.9%	0.9%	-3.6%	0.6%	-3.5%	-3.8%	3.2%
Graham	5.8%	0.6%	-1.0%	2.3%	-1.9%	-2.8%	1.5%
Templeton	4.8%	0.2%	-1.6%	0.4%	-1.0%	-1.4%	0.3%
Zweig	4.7%	0.5%	-2.2%	1.2%	-3.3%	-2.9%	3.1%
Average	8.9%	0.5%	-1.2%	1.0%	-3.2%	-1.5%	2.7%

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
EQS	04/13/06	0.0%	Equus II Incorporated	Financial	Investment Services	-5.9%	-1.8%	-74	-69
LXU	12/23/05	32.1%	LSB Industries, Inc.	Basic Materials	Chemical Manufacturing	-6.8%	-1.4%	-54	-54
CWEI	05/12/06	0.0%	Clayton Williams Energy, Inc.	Energy	Oil & Gas Operations	0.0%	-1.5%	-56	-54
NAHC	05/12/06	-0.9%	National Atlantic Holdings Corporation	Financial	Insurance (Property & Casualty)	-2.3%	0.5%	-68	-50
ACME	05/12/06	-4.0%	ACME Communications, Inc.	Services	Broadcasting & Cable TV	-4.0%	2.1%	-22	-39
RGNC	05/26/06	0.0%	Regency Energy Partners LP	Utilities	Natural Gas Utilities	0.0%	-1.9%	-33	-39
MOCC	05/26/06	0.0%	Moscow CableCom Corp.	Services	Broadcasting & Cable TV	0.0%	24.8%	-8	-8

      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	05/19/06	-0.3%	Hurray! Holding Co., Ltd. (ADR)	Services	Communications Services	-0.3%	-22.3%	-94	-91
WSC	03/11/06	-2.4%	Wesco Financial Corporation	Conglomerates	Conglomerates	-4.4%	-0.6%	-76	-76
SCIX	04/07/06	7.7%	Scailex Corp., Ltd.	Technology	Computer Networks	-3.4%	4.5%	-32	-34
ACTS	05/05/06	3.9%	Actions Semiconductor Co., Ltd. (ADR)	Technology	Semiconductors	-3.9%	15.5%	-23	-28

      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
TGS	05/26/06	0.0%	Transportadora de Gas del Sur S.A (ADR)	Energy	Oil & Gas Operations	0.0%	-2.8%	-64	-80
RHD	05/19/06	1.5%	R.H. Donnelley Corp.	Services	Advertising	0.0%	1.5%	-72	-62
FIS	05/12/06	0.8%	Fidelity National Information Services	Services	Business Services	-0.5%	0.9%	-73	-59
KWD	03/04/06	22.7%	Kellwood Company	Consumer Cyclical	Apparel/Accessories	-3.2%	1.8%	-53	-43
MFW	05/19/06	0.1%	M & F Worldwide Corp.	Consumer Non-Cyclical	Beverages (Non-Alcoholic)	-1.7%	0.1%	-26	-34

      For the Peter Lynch style 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
TM	12/13/04	46.9%	Toyota Motor Corporation (ADR)	Consumer Cyclical	Auto & Truck Manufacturers	-10.7%	-5.9%	-77	-77
AZN	02/03/06	13.0%	AstraZeneca PLC (ADR)	Health Care	Major Drugs	-5.0%	-4.0%	-75	-75
PKX	02/17/06	17.9%	POSCO (ADR)	Basic Materials	Iron & Steel	-11.9%	-5.3%	-73	-73
CAE	04/21/06	-4.9%	Cascade Corporation	Capital Goods	Misc. Capital Goods	-7.7%	-5.5%	-68	-68
SKM	02/07/05	27.3%	SK Telecom Co., Ltd. (ADR)	Services	Communications Services	-7.4%	-3.9%	-64	-64
KOF	04/29/05	36.7%	Coca-Cola FEMSA, S.A. (ADR)	Consumer Non-Cyclical	Beverages (Non-Alcoholic)	-9.3%	-3.0%	-60	-60
BTI	08/12/05	26.1%	British American Tobacco (ADR)	Consumer Non-Cyclical	Tobacco	-2.8%	-0.6%	-51	-51

      For the Growth Momentum 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
HCC	10/21/05	13.6%	HCC Insurance Holdings, Inc.	Financial	Insurance (Property & Casualty)	-11.2%	-7.8%	-90	-90
CHE	05/06/05	35.0%	Chemed Corporation	Services	Business Services	-14.5%	-3.8%	-87	-87
CSR	05/12/06	-8.5%	Credit Suisse Group (ADR)	Financial	Insurance (Life)	-8.5%	-6.0%	-81	-81
JEF	04/21/06	-9.6%	Jefferies Group, Inc.	Financial	Investment Services	-12.4%	-9.7%	-72	-72
ENDP	02/17/06	-0.7%	Endo Pharmaceuticals	Health Care	Biotechnology & Drugs	-11.5%	2.9%	-72	-72
APC	02/10/06	0.0%	Anadarko Petroleum Corporation	Energy	Oil & Gas Operations	-12.5%	-5.3%	-72	-71
BEN	11/04/05	-0.8%	Franklin Resources, Inc.	Financial	Investment Services	-12.7%	-2.9%	-64	-63
KCS	05/12/06	-4.2%	KCS Energy, Inc.	Energy	Oil & Gas Operations	-4.2%	-3.1%	-62	-62
BHP	09/09/05	39.6%	BHP Billiton Limited (ADR)	Basic Materials	Metal Mining	-10.4%	-3.3%	-68	-61
SYT	04/08/05	29.3%	Syngenta AG (ADR)	Basic Materials	Chemical Manufacturing	-10.2%	-0.5%	-60	-60
GS	04/21/06	-7.8%	Goldman Sachs Group, Inc.	Financial	Investment Services	-7.8%	-4.6%	-57	-57
ET	10/21/05	36.2%	E*TRADE FINANCIAL Corporation	Financial	Investment Services	-11.7%	-2.1%	-56	-56
MDR	05/12/06	-3.1%	McDermott International	Capital Goods	Construction Services	-3.1%	10.2%	-46	-46
GRMN	03/03/06	26.9%	Garmin Ltd.	Technology	Communications Equipment	-3.9%	8.7%	-37	-37

      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
PSUN	05/05/06	-9.9%	Pacific Sunwear of CA	Services	Retail (Apparel)	-11.0%	-4.4%	-85	-81
RCII	10/21/05	52.8%	Rent-A-Center, Inc	Services	Rental & Leasing	-12.5%	-10.7%	-81	-81
MTH	05/12/06	-8.8%	Meritage Homes Corporation	Capital Goods	Construction Services	-8.8%	-14.1%	-43	-79
APA	05/12/06	-6.1%	Apache Corporation	Energy	Oil & Gas Operations	-6.1%	-9.0%	-48	-77
NAT	05/12/06	-3.9%	Nordic American Tanker Shipping Limited	Transportation	Water Transportation	-3.9%	-7.9%	-78	-75
CCRT	12/30/05	0.3%	CompuCredit Corporation	Financial	Consumer Financial Services	-8.3%	-3.5%	-73	-73
RS	04/15/05	117.4%	Reliance Steel & Aluminum	Basic Materials	Misc. Fabricated Products	-14.4%	-6.2%	-72	-72
STR	05/26/06	0.0%	Questar Corporation	Utilities	Natural Gas Utilities	0.0%	-10.5%	-71	-71
ANF	03/03/06	0.4%	Abercrombie & Fitch Co.	Services	Retail (Apparel)	-7.8%	-1.3%	-71	-71
RI	09/02/05	33.2%	Ruby Tuesday, Inc.	Services	Restaurants	-10.3%	-3.3%	-59	-59
UNT	03/03/06	4.4%	Unit Corporation	Energy	Oil & Gas Operations	-8.2%	3.9%	-45	-57
OXY	03/03/06	2.9%	Occidental Petroleum Corporation	Energy	Oil & Gas Operations	-8.8%	-4.9%	-57	-57
ABFS	04/29/05	34.4%	Arkansas Best Corporation	Transportation	Trucking	-7.2%	-1.3%	-57	-57
AH	02/03/06	16.8%	Armor Holdings, Inc.	Capital Goods	Aerospace and Defense	-8.6%	-3.4%	-57	-57
AEOS	03/10/06	9.6%	American Eagle Outfitters	Services	Retail (Apparel)	-5.1%	-0.5%	-55	-55
BTI	12/30/05	12.8%	British American Tobacco (ADR)	Consumer Non-Cyclical	Tobacco	-2.8%	-0.6%	-51	-51
JBHT	03/31/06	14.3%	J.B. Hunt Transport Services, Inc.	Transportation	Trucking	-4.7%	3.3%	-40	-45
NKE	09/23/05	-0.3%	NIKE, Inc.	Consumer Cyclical	Footwear	-11.4%	-1.0%	-37	-37
NUE	04/15/05	130.3%	Nucor Corporation	Basic Materials	Iron & Steel	-5.8%	3.3%	-34	-34
HDI	10/14/05	3.3%	Harley-Davidson, Inc.	Consumer Cyclical	Recreational Products	-8.9%	-0.1%	-32	-32
FNF	10/21/05	14.7%	Fidelity National Financial	Financial	Insurance (Property & Casualty)	-3.6%	0.0%	-28	-28

      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
WPS	05/26/06	0.0%	WPS Resources Corp	Utilities	Electric Utilities	0.0%	-2.1%	-75	-75
VVC	03/03/06	0.7%	Vectren Corporation	Utilities	Natural Gas Utilities	-5.0%	-2.2%	-58	-58
SRE	01/10/05	25.0%	Sempra Energy	Utilities	Natural Gas Utilities	-7.3%	-1.8%	-52	-52
OKE	11/11/05	18.3%	ONEOK, Inc.	Utilities	Natural Gas Utilities	-5.6%	-3.6%	-51	-51
ATO	04/01/05	-0.8%	Atmos Energy Corporation	Utilities	Natural Gas Utilities	-10.2%	0.6%	-47	-47
WGL	12/23/05	-5.9%	WGL Holdings, Inc.	Utilities	Natural Gas Utilities	-8.8%	-2.6%	-45	-45
EON	03/10/06	6.2%	E.ON AG (ADR)	Utilities	Electric Utilities	-4.6%	-4.1%	-45	-45
PGN	01/10/05	-4.7%	Progress Energy, Inc.	Utilities	Electric Utilities	-8.2%	-1.8%	-43	-43
ATG	10/21/05	8.1%	AGL Resources Inc.	Utilities	Natural Gas Utilities	-1.6%	1.2%	-32	-32
UGI	12/30/05	12.5%	UGI Corporation	Utilities	Natural Gas Utilities	-2.2%	3.5%	-30	-31
UU	06/10/05	4.4%	United Utilities PLC (ADR)	Utilities	Electric Utilities	-0.4%	1.6%	-17	-17

      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
SPLS	05/26/06	0.0%	Staples, Inc.	Services	Retail (Specialty Non-Apparel)	0.0%	-9.3%	-94	-91
SNV	05/27/05	-9.8%	Synovus Financial Corp.	Financial	Regional Banks	-12.0%	-5.8%	-90	-90
LEN	05/19/06	0.5%	Lennar Corporation	Capital Goods	Construction Services	0.0%	0.5%	-88	-87
ORLY	01/20/06	2.3%	O'Reilly Automotive, Inc.	Services	Retail (Specialty Non-Apparel)	-14.4%	-6.0%	-85	-84
UNH	05/26/06	0.0%	UnitedHealth Group Inc.	Financial	Insurance (Accident & Health)	0.0%	-13.3%	-82	-82
GTRC	03/03/06	0.5%	Guitar Center, Inc.	Services	Retail (Specialty Non-Apparel)	-8.1%	-7.1%	-68	-68
SPF	05/12/06	2.1%	Standard Pacific Corp.	Capital Goods	Construction Services	0.0%	-2.6%	-69	-67
MMM	05/12/06	-3.1%	3M Company	Conglomerates	Conglomerates	-3.7%	-1.8%	-64	-64
GBCI	05/05/06	-3.5%	Glacier Bancorp, Inc.	Financial	Regional Banks	-3.5%	-2.0%	-59	-59
LOW	11/18/05	-6.2%	Lowe's Companies, Inc.	Services	Retail (Home Improvement)	-10.9%	-1.9%	-57	-57
DGX	08/19/05	12.5%	Quest Diagnostics Incorporated	Health Care	Healthcare Facilities	-4.1%	0.9%	-31	-56
CHD	11/18/05	9.8%	Church & Dwight Co., Inc.	Consumer Non-Cyclical	Personal & Household Products	-3.3%	0.0%	-55	-55
CPS	05/27/05	11.0%	ChoicePoint Inc.	Services	Business Services	-3.9%	1.0%	-47	-47
AMSG	10/14/05	11.7%	AmSurg Corp.	Health Care	Healthcare Facilities	-4.5%	0.6%	-40	-40
EWBC	12/30/05	9.2%	East West Bancorp, Inc.	Financial	Regional Banks	-2.6%	0.5%	-58	-40
HHS	10/28/05	6.8%	Harte-Hanks, Inc.	Services	Printing & Publishing	-9.3%	-0.4%	-38	-38
HDI	02/24/06	-3.3%	Harley-Davidson, Inc.	Consumer Cyclical	Recreational Products	-4.7%	2.3%	-32	-32
MIK	12/30/05	9.4%	Michaels Stores, Inc.	Services	Retail (Specialty Non-Apparel)	-1.2%	2.2%	-26	-28
GISX	12/30/05	16.2%	Global Imaging Systems, Inc.	Technology	Office Equipment	-1.2%	7.7%	-16	-16
JNJ	02/17/06	2.7%	Johnson & Johnson	Health Care	Major Drugs	-0.5%	1.3%	-8	-8
FLIR	04/28/06	8.0%	FLIR Systems, Inc.	Capital Goods	Aerospace and Defense	0.0%	8.0%	-3	-3
EDMC	12/16/05	28.8%	Education Management Corp	Services	Schools	0.0%	1.0%	-2	-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	Monthly % Gain	%R1	%R2
PCP	05/12/06	-8.6%	Precision Castparts Corp.	Capital Goods	Aerospace and Defense	-8.6%	-8.4%	-92	-92
POOL	06/10/05	27.4%	Pool Corporation	Consumer Cyclical	Recreational Products	-12.5%	-6.7%	-80	-80
UCBH	04/13/06	-7.2%	UCBH Holdings, Inc.	Financial	Regional Banks	-9.6%	-0.7%	-76	-76
RRC	05/05/06	-8.1%	Range Resources Corp.	Energy	Oil & Gas Operations	-10.1%	-4.4%	-74	-74
MINI	03/03/06	17.2%	Mobile Mini, Inc.	Services	Business Services	-9.7%	-4.9%	-73	-73
HTLD	01/27/06	2.9%	Heartland Express, Inc.	Transportation	Trucking	-11.2%	-6.9%	-73	-73
STRA	01/13/06	12.3%	Strayer Education, Inc.	Services	Schools	-7.4%	-2.2%	-72	-72
JEF	04/21/06	-9.6%	Jefferies Group, Inc.	Financial	Investment Services	-12.4%	-9.7%	-72	-72
ANF	04/13/06	3.4%	Abercrombie & Fitch Co.	Services	Retail (Apparel)	-7.8%	-1.3%	-71	-71
MDU	01/27/06	0.5%	MDU Resources Group, Inc.	Utilities	Natural Gas Utilities	-6.0%	-5.0%	-70	-70
SII	04/28/06	-4.5%	Smith International, Inc.	Energy	Oil Well Services & Equipment	-9.6%	-4.5%	-68	-68
MRO	04/28/06	-4.2%	Marathon Oil Corporation	Energy	Oil & Gas Operations	-7.5%	-4.2%	-66	-66
BEN	10/28/05	4.4%	Franklin Resources, Inc.	Financial	Investment Services	-12.7%	-2.9%	-64	-63
FSH	05/05/06	0.5%	Fisher Scientific International Inc.	Technology	Scientific & Technical Instruments	-3.9%	5.0%	-63	-62
LSTR	02/10/06	0.4%	Landstar System, Inc.	Transportation	Trucking	-10.0%	1.6%	-60	-60
RARE	05/19/06	-2.2%	RARE Hospitality International, Inc.	Services	Restaurants	-2.2%	1.7%	-55	-54
ERF	05/05/06	-3.6%	ENERPLUS RESOURCES FUND SR G TR UNITS	Energy	Oil & Gas Operations	-4.8%	-2.3%	-37	-37
GRMN	02/24/06	40.1%	Garmin Ltd.	Technology	Communications Equipment	-3.9%	8.7%	-37	-37
ESI	11/04/05	10.1%	ITT Educational Services	Services	Schools	-0.4%	2.5%	-7	-7
EDMC	02/10/06	22.9%	Education Management Corp	Services	Schools	0.0%	1.0%	-2	-2

4.0 Results & Conclusions

      This section highlights trading performance.  Only a summary is provided here to save space.  Detailed lists of closed trades can be found on the portfolio page of the website.

Major Indices Year to Date				Relative to SMA 200		200 Day High Close	Relative to High	200 Day Low Close	Relative to Low
	12/30/05	5/27/06	% Chg	Today	Last Week
DOW