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Issue No. 29 – June 6, 2005 Prescott, Arizona Systems@WiserTrader.com

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1.0 Trading

      The John Templeton Value filter and the Martin Zweig Growth filter added last week are looking promising.  As we near the mid point of 2005, it’s a good time to report how stock and options trading have faired with respect to goals and objectives.  But first I want to say a word about building confidence in your trading methods.

1.1 Confidence in Trading

      It is worthwhile to make a conscious effort to instill confidence in the methods used for trading.  Confidence in your method promotes stability by reducing the number of trades and conserving funds that would otherwise be used in excessive broker fees.  It promotes efficiency in that less time and energy are spent worrying.  Worry is replaced by systematic inspection with the knowledge of what needs checking and what doesn’t.  The more confident you are in a method, the better you will learn it.  Confidence is created gradually after a sufficient number of cases for a given trading system have been observed and you can see how it holds up.  Thus, it can not be a case of blind faith.  Careful observation of system limits need to be made. These limitations tell you when to stay out of the markets and the conditions for which a different system is needed.  The process involves understanding the causes of gains and losses along the way. All this takes time.  There is no substitute for this time absorbing process for any given trading system. 

      One of the best confidence builders can be found in money management that is used to avoid large draw-downs by appropriate selection of trailing stops and position size.  Another is setting realistic achievable goals.  Yet another is restricting yourself to the system you know until you know it thoroughly before expanding to other systems. Although it may seem boring, you should select an approach that can be repeated successfully over and over again.  At the same time, confidence in a single trading method gives you a great deal of freedom.

© 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

      Option trading has met objectives so far this year.  The published goal is to increase total risk capital by 6% at a compounded monthly rate.  I know, 6% a month doesn’t seem very aggressive for options trading.  But we need a goal that is easily met.  Compounded monthly it works out to just over 100% a year.   If one doubles his total risk capital each year for 4 years, he multiplies it by a factor of 16.  Sticking to this plan leads to a significant accomplishment.

      The trick is to do it without the kind of over trading that can result in large draw downs.   We pursue our goal while committing only 10% of total risk capital to any single trade.   This requires the average profit per trade to run around 14%.  We are running slightly above that.

      Every month in 2005 has been profitable, some better than others.  February was the worst month (+7%) and March was the best (+28%).  Table 1 compares the target profit with monthly and cumulative actual profit as a percentage of total risk capital.  A graphical representation of columns 2 and 5 is presented in Figure 1.

Table 1 - Options Trading for 2005

Month	Target	Profit per Trade for the Month	Profit as % of Total Capital	Actual Cumulative Profit as % of Total Capital
January	6%	25%	11%	11%
February	12%	7%	3%	14%
March	19%	28%	12%	28%
April	26%	19%	8%	39%
May	34%	14%	6%	47%

FIGURE 1

      Members who commit up to 20% of risk capital per trade have nearly met their 100% goal after just a few months of trading.  We continue to recommend the standard 10% of risk capital per trade.

1.3 Stocks

      The goal for stocks is equally modest. The goal is to increase total investment capital by 1.88% at a compounded monthly rate.   This will increase total capital by about 25% a year and double it in about three years.   The long term average for the S&P 500 is a positive 10% a year, which doubles one’s capital in 7.25 years.  

      Once again, we want to avoid the kind of over trading that can result in large draw downs.   We commit only 10% of total capital to any single trade while using a -15% trailing stop.  The way this works is by maintaining a small portfolio of about 10 stocks while updating on average 1 stock per week.  Meeting the target requires the average profit per trade to run around 4.34%.  It currently runs at 5.1%.  The current stock portfolio of open trades shows a profit of 4.5%.  However, after two months of operation, compounded total profits based on closed trades, were 3.7% as compared with the target of 3.8% after the second month. 

      Figure 2 compares the target profit with cumulative actual profit as a percentage of total capital.  Mid April to mid May was a difficult period.

FIGURE 2

1.4 Last day for A Free Month of Advisory Service

       If you want a free month of either the stock or options advisory, just send an email to Systems@WiserTrader.com by June 6, 2005 with a brief constructive comment or testimonial about the quality of this newsletter.  Be sure to include whether you prefer the stock advisory or the options advisory.  Your email gives WiserTrader.com permission to use your name on the website, but not your email address.  All constructive responses, positive or negative, will earn a free month of advisory service, whether or not it is used on the site.  Your input is appreciated.

2.0 Market Analysis

      This week’s economic data, on balance, reflected economic growth at a slower pace than in recent months.  That didn't disturb the stock market.  Slower economic growth was generally accepted as probable, but now it comes with the benefit of perhaps an improved interest rate outlook.  If short-term rates don't go much higher, and long-term rates stay near present levels, current stock valuations look all that much better.

      The market has come back solidly the past six weeks.  It has come off its lows from the six-month trading range.  Trading volume has been moderate, however, and there isn't that much enthusiasm for a possible summer rally.  Interest rates won't come down much further.  Oil prices might not either. Slower economic growth means slower profit growth.  There are plenty of worries to offset the support from overall good valuations on the market. 

      The stock market may be looking at some slow summer months in which a trading range mentality persists.  Industry leaders in Table 2 rank from highest to lowest.   Relative strength is given in Table 3 and VTO market sentiment in Table 4.

Table 2 - Market Summary

Major Indices:
 Dow Jones     -0.8%
 NASDAQ        -0.2%
 S&P500 Index  -0.2%
 Russell 2000  +0.6%
 
 30 Year Bond 4.281%
 10 Year Note 3.979%
 
 Industry Leaders
 For the Past Week:
 Distillers & Vintners 
 Coal 
 Mobile Telecommunications 
 Hotels 
 General Mining 
 Gambling 
 Heavy Construction 
 Clothing & Accessories 
 Nonferrous Metals 
 Mining   
 
 Industry Leaders
 For the Past Month:
 Internet 
 Home Construction 
 Real Estate Holding & Develop 
 Heavy Construction 
 Semiconductors 
 Telecommunications Equip 
 Hotels 
 Technology Hardware & Equip 
 Coal 
 Electrical Components & Equip   
 
 Crude Oil $55.03
 
 Gold for the past 30 days:
 USD    -1.31%
 CAD    -0.96%
 CHF    +3.07%
 GBP    +3.03%
 EUR    +4.38%
 JPY    -1.22%

Table 3

Relative Strength Index

	5 Day RSI	5 Week RSI
DOW	Neutral	Neutral
S&P 500	Neutral	Neutral
NASDAQ	Neutral	Neutral

Table 4

VTO Report on Market Sentiment Indicators

Sentiment Indicator	Value	Last Week	2 Weeks Ago	Complacent	Cautious
VIX **	12.15	12.24	13.14	< 20	> 50
VXN ***	15.59	15.00	15.88	< 30	> 70
Put/Call Ratio	0.611	0.574	0.459	< 0.6	> 0.7
%Bulls - %Bears	22.8%	20.6%	17.6%	> 29%	< 20%
**   Below 20 day SMA = Buy signal. *** Below 20 day SMA = Buy signal.

      Taking a look from the top down in Table 5, the major averages paused this week to take a look at what oil is doing.  Utilities got a boost from the downward movement in long term interest rates.  Other than that, not much happened.  However, it appears that the market is delicately balanced and could tip on any bad news.

Table 5

Index Tracking Stocks, Key Industry ETF’s and Sector SPDR’s

Industry or Sector	1 month	1 wk ago	2 wks ago	3 wks ago	4 wks ago
SPY (S&P 500)	2.6%	-0.1%	0.9%	2.9%	-1.2%
DIA (DOW)	1.2%	-0.6%	0.7%	2.9%	-1.7%
QQQQ (NASDAQ)	6.2%	-0.3%	1.5%	3.9%	1.1%
IWM (Russell 2000)	4.1%	0.5%	1.4%	4.3%	-2.1%
GOLD	-0.8%	0.7%	0.6%	-0.7%	-1.3%
Transportation	3.1%	0.3%	0.1%	6.3%	-3.5%
Semiconductors	8.7%	0.8%	2.0%	3.1%	2.5%
Biotechnology	5.6%	-0.3%	2.6%	2.0%	1.2%
Banking (Regional)	1.0%	-0.4%	-0.8%	3.6%	-1.3%
Real Estate	3.9%	1.5%	-2.1%	4.7%	-0.1%
Oil	4.1%	2.2%	6.1%	2.4%	-6.2%
Energy	3.7%	1.5%	5.9%	2.2%	-5.6%
Materials	-2.3%	0.2%	0.5%	3.3%	-6.1%
Financials	1.8%	-0.2%	0.3%	3.6%	-1.8%
Utilities	2.2%	1.5%	0.6%	2.4%	-2.2%
Healthcare	0.3%	-0.4%	-0.3%	1.3%	-0.3%
Industrial	2.2%	-0.4%	0.2%	3.7%	-1.4%
Technology	5.9%	-0.3%	1.4%	3.5%	1.2%
Consumer Staples	1.2%	-0.2%	-0.6%	2.9%	-1.0%
Consumer Discretionary	3.9%	-0.2%	0.7%	4.6%	-1.3%

      Figures 3 and 4 are becoming a regular feature.  Figure 3 compares index tracking stocks for the major averages with Sector SPDR’s.  Figure 4 compares index tracking stocks with key industry ETF’s and the five leading ETF’s for the week.  Key industry ETF’s 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 important indicators of the health of the currency and the economy in general, respectively.

      Of the five leading ETF’s, EWZ Brazil and ILF the Latin American 40 look good.  IIH Internet Infrastructure, RWR REIT’s and OIH Oil service holders have been rising for a couple of weeks now.

      As an FYI, the dozen or so weakest ETF’s for the past week were: EWN iShares MSCI-Netherlands (-1.4%), IEV iShares S&P Europe 350 (-1.5%), EWP iShares MSCI-Spain (-1.6%), EWK iShares MSCI-Belgium(-1.7%),  EWI iShares MSCI-Italy (-1.8%), EWG iShares MSCI-Germany (-1.9%), EZU iShares MSCI-EMU(_2.0%), FEZ streetTRACKS Dow Jones Euro STOXX 50 (-2.1%), IBB iShares Nasdaq Biotechnology (-2.5% surprise!), EWD iShares MSCI-Sweden (-2.7%) and EZA iShares MSCI-South Africa (-5.2%). 

FIGURE 3

FIGURE 4

3.0 Procedure

      The following watch lists contain stock candidates for consideration.  They are not necessarily recommended trades.  The “Reference” is the date that a stock passed the indicated filter and was added to or returned to the list.  The “% Change” is how the price has changed since a stock first passed the filter.  Stocks that are down 10% or more after being listed are removed. 

      The “% from Max” is the percentage the price has declined from the maximum price reached after a stock first passed the filter.  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.  More information on filters is available on the web site.  Send an email if you need more details.

Key

Passed Recent Filter

      Companies that have experienced net insider buying within the past 6 months of 5% or more of issued stock are listed in Table 3A.  These stocks should also appear in one of the Master Trader screens or meet additional screening criteria before being given serious consideration.

Table 3A

Net Insider Buying Check List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max
ACAD	04/29/05	17.3%	ACADIA Pharmaceuticals Inc.	Health Care	Biotechnology & Drugs	-4.4%
AFT	05/20/05	0.8%	Axesstel, Inc.	Technology	Communications Equipment	-3.2%
AFT	05/20/05	0.8%	Axesstel, Inc.	Technology	Communications Equipment	-3.2%
AGCC	06/03/05	0.0%	Anchor Glass Container Corporation	Basic Materials	Containters & Packaging	0.0%
ASPV	05/27/05	1.7%	Aspreva Pharmaceuticals Corporation	Health Care	Biotechnology & Drugs	0.0%
FTD	04/08/05	-8.6%	FTD Group, Inc.	Services	Retail (Catalog & Mail Order)	-8.8%
FVRL	04/22/05	2.1%	Favrille, Inc.	Health Care	Biotechnology & Drugs	-5.1%
INHX	04/08/05	-5.5%	Inhibitex, Inc.	Health Care	Biotechnology & Drugs	-10.7%
IPSU	05/20/05	4.0%	Imperial Sugar Company	Consumer Non-Cyclical	Food Processing	0.0%
IPXLE	04/29/05	0.9%	Impax Laboratories Inc.	Health Care	Biotechnology & Drugs	-3.4%
IRN	05/20/05	2.1%	Rewards Network Inc.	Services	Business Services	0.0%
ITMN	04/08/05	9.5%	InterMune, Inc.	Health Care	Biotechnology & Drugs	-3.1%
KIRK	05/27/05	0.9%	Kirkland's, Inc.	Services	Retail (Specialty Non-Apparel)	-1.1%
MERCS	05/20/05	-1.1%	Mercer International Inc.	Basic Materials	Paper & Paper Products	-1.1%
MWY	05/20/05	-0.8%	Midway Games Inc.	Technology	Software & Programming	-1.1%
ONXS	05/20/05	19.7%	Onyx Software Corporation	Technology	Software & Programming	-0.7%
OSHC	04/08/05	6.0%	Ocean Shore Holding Co.	Financial	S&Ls/Savings Banks	0.0%
TAGS	05/27/05	12.9%	Tarrant Apparel Group	Consumer Cyclical	Apparel/Accessories	0.0%
THLD	05/06/05	8.0%	Threshold Pharmaceuticals, Inc.	Health Care	Biotechnology & Drugs	-0.4%
TRCA	04/29/05	12.3%	Tercica, Inc.	Health Care	Biotechnology & Drugs	-11.7%
VSTA	05/20/05	10.6%	VistaCare, Inc.	Health Care	Healthcare Facilities	-0.4%
ZHNE	05/06/05	3.4%	Zhone Technologies, Inc.	Technology	Communications Equipment	-11.6%

      Companies with net cash positions that comprise at least 40% of their share price 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. 

Table 3B

Capital Rich Companies Check List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max
ACP	04/08/05	1.4%	American Real Estate Partners, L.P.	Services	Casinos & Gaming	-3.1%
ADZA	04/08/05	-0.4%	Adeza Biomedical Corporation	Health Care	Biotechnology & Drugs	-13.4%
CDCO	04/22/05	3.0%	COMDISCO HLDG CO INC	Services	Rental & Leasing	0.0%
CFNB	05/13/05	15.6%	California First National Bancorp	Services	Rental & Leasing	0.0%
CLCT	05/20/05	-6.0%	Collectors Universe, Inc.	Services	Business Services	-6.0%
DITC	06/03/05	0.0%	Ditech Communications	Technology	Communications Equipment	0.0%
EXAR	05/20/05	10.5%	Exar Corporation	Technology	Semiconductors	-1.8%
EXM	05/27/05	9.2%	Excel Maritime Carriers	Transportation	Water Transportation	0.0%
FDRY	04/29/05	11.9%	Foundry Networks, Inc.	Technology	Communications Equipment	-2.2%
HWG	06/03/05	0.0%	The Hallwood Group Incorporated	Consumer Cyclical	Textiles - Non-Apparel	0.0%
KEYN	05/13/05	12.4%	Keynote Systems, Inc.	Technology	Computer Services	-2.3%
MFW	05/13/05	3.3%	M & F Worldwide Corp.	Consumer Non-Cyclical	Beverages (Non-Alcoholic)	-1.8%
NCTY	04/08/05	32.0%	The9 Limited	Services	Business Services	-2.6%
VNUS	05/06/05	19.6%	VNUS Medical Technologies, Inc.	Health Care	Medical Equipment & Supplies	-3.8%
WSC	04/08/05	-3.5%	Wesco Financial Corporation	Conglomerates	Conglomerates	-4.7%
WZEN	04/22/05	1.3%	Webzen Inc. (ADR)	Technology	Computer Services	-3.3%

      For the screen in Table 3C, the number of selections is reduced by eliminating stocks having P/E’s greater than 30.  

Table 3C

Growth Momentum Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max
ADVNB	05/20/05	-0.8%	Advanta Corp.	Financial	Consumer Financial Services	-1.2%
BDK	04/29/05	5.4%	The Black & Decker Corporation	Consumer Cyclical	Appliances & Tools	0.0%
CHE	05/06/05	8.6%	Chemed Corporation	Services	Business Services	-1.2%
CRAI	03/18/05	10.4%	Charles River Associates Incorporated	Services	Business Services	-1.8%
HOV	06/03/05	0.0%	Hovnanian Enterprises	Capital Goods	Construction Services	0.0%
ORCC	05/06/05	12.7%	Online Resources Corp.	Technology	Computer Services	0.0%
OSK	03/12/05	-0.5%	Oshkosh Truck Corporation	Consumer Cyclical	Auto & Truck Manufacturers	-5.4%
PNR	05/06/05	6.0%	Pentair, Inc.	Conglomerates	Conglomerates	-5.0%
PTRY	04/29/05	12.6%	The Pantry, Inc.	Services	Retail (Grocery)	-6.8%
SFY	04/22/05	24.5%	Swift Energy Company	Energy	Oil & Gas Operations	0.0%
SGK	05/13/05	18.6%	Schawk, Inc.	Services	Printing Services	-0.8%
SPF	05/06/05	6.5%	Standard Pacific Corp.	Capital Goods	Construction Services	-2.6%
SYT	04/08/05	-1.6%	Syngenta AG (ADR)	Basic Materials	Chemical Manufacturing	-3.0%
TDY	04/29/05	2.1%	Teledyne Technologies Incorporated	Services	Business Services	-3.4%
UNH	04/15/05	8.5%	UnitedHealth Group Inc.	Financial	Insurance (Accident & Health)	0.0%
WOS	04/01/05	-2.0%	Wolseley plc (ADR)	Capital Goods	Misc. Capital Goods	-5.1%
ZNT	04/15/05	14.5%	Zenith National Insurance Corp.	Financial	Insurance (Property & Casualty)	-4.6%

      For the Peter Lynch screen in Table 3D, the number of selections is reduced by eliminating stocks having P/E’s greater than 30.  NOLD has not been trading and was removed.

Table 3D

Peter Lynch Value Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max
BLSC	04/22/05	-2.1%	Bio-Logic Systems Corp.	Health Care	Medical Equipment & Supplies	-10.3%
CAJ	01/31/05	3.5%	Canon Inc. (ADR)	Technology	Computer Peripherals	-1.4%
CHL	03/18/05	6.9%	China Mobile (Hong Kong) Limited (ADR)	Services	Communications Services	-2.6%
GMK	05/06/05	18.8%	Gruma S.A. de C.V. (ADR)	Consumer Non-Cyclical	Food Processing	0.0%
KEP	12/13/04	11.1%	Korea Electric Power Corporation (ADR)	Utilities	Electric Utilities	-1.3%
KOF	04/29/05	3.8%	Coca-Cola FEMSA, S.A. (ADR)	Consumer Non-Cyclical	Beverages (Non-Alcoholic)	-1.5%
LFL	05/13/05	4.7%	Lan Airlines S.A. (ADR)	Transportation	Airline	-0.8%
MKTAY	04/15/05	11.1%	Makita Corporation (ADR)	Consumer Cyclical	Appliances & Tools	-3.7%
NHY	04/29/05	5.0%	Norsk Hydro ASA (ADR)	Conglomerates	Conglomerates	-1.1%
NTE	05/06/05	-0.5%	Nam Tai Electronics, Inc.	Technology	Electronic Instruments & Controls	-2.6%
PKX	04/29/05	-0.6%	POSCO (ADR)	Basic Materials	Iron & Steel	-5.0%
RD	04/29/05	1.9%	Royal Dutch Petroleum Company (ADR)	Energy	Oil & Gas - Integrated	-0.8%
SAB	05/13/05	-3.1%	Grupo Casa Saba, S.A. (ADR)	Consumer Non-Cyclical	Personal & Household Products	-3.5%
SC	04/29/05	-1.3%	Shell Transport & Trading (ADR)	Energy	Oil & Gas - Integrated	-2.9%
SHI	06/03/05	0.0%	Sinopec Shanghai Petrochemical Co. (ADR)	Energy	Oil & Gas Operations	0.0%
SKM	02/07/05	6.6%	SK Telecom Co., Ltd. (ADR)	Services	Communications Services	-0.6%
TKS	04/15/05	-3.3%	Tomkins plc (ADR)	Conglomerates	Conglomerates	-4.3%
TM	12/13/04	-4.2%	Toyota Motor Corporation (ADR)	Consumer Cyclical	Auto & Truck Manufacturers	-12.2%
TMX	06/03/05	0.0%	Telefonos de Mexico, S.A. (ADR)	Services	Communications Services	0.0%
TP	05/27/05	-3.4%	TNT N.V. (ADR)	Transportation	Trucking	-3.4%
VCP	05/06/05	2.4%	Votorantim Celulose e Papel S.A (ADR)	Basic Materials	Forestry & Wood Products	-0.2%
VLCCF	06/03/05	0.0%	Knightsbridge Tankers Limited	Transportation	Water Transportation	0.0%
YPF	04/15/05	6.4%	YPF Sociedad Anonima S.A. (ADR)	Energy	Oil & Gas Operations	-6.6%

      The filter for Warren Buffet style stock picking in Table 3E 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 3E

Warren Buffett Value Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max
ABFS	04/29/05	3.8%	Arkansas Best Corporation	Transportation	Trucking	-2.2%
ACS	04/29/05	5.2%	Affiliated Computer Services	Technology	Computer Services	-3.1%
APPB	04/29/05	10.0%	Applebee's Int'l, Inc.	Services	Restaurants	-1.4%
CACH	04/29/05	27.3%	Cache, Inc.	Services	Retail (Apparel)	-4.0%
DHI	04/15/05	30.3%	D.R. Horton Inc.	Capital Goods	Construction Services	-2.1%
DSPG	02/07/05	-6.7%	DSP Group, Inc.	Technology	Communications Equipment	-10.9%
ELBO	01/31/05	73.5%	Electronics Boutique Holdings Corp.	Services	Retail (Technology)	0.0%
FOSL	05/13/05	9.6%	Fossil, Inc.	Consumer Cyclical	Jewelry & Silverware	-0.5%
HDI	04/15/05	5.7%	Harley-Davidson, Inc.	Consumer Cyclical	Recreational Products	-3.2%
HELE	05/20/05	-4.1%	Helen of Troy Limited	Consumer Cyclical	Appliances & Tools	-6.5%
LNCR	12/27/04	3.0%	Lincare Holdings Inc.	Health Care	Healthcare Facilities	-5.6%
LXK	04/29/05	-1.3%	Lexmark International, Inc.	Technology	Computer Peripherals	-1.4%
NUE	04/15/05	10.3%	Nucor Corporation	Basic Materials	Iron & Steel	-0.8%
PGR	12/27/04	15.5%	The Progressive Corp.	Financial	Insurance (Property & Casualty)	-0.1%
RS	04/15/05	2.4%	Reliance Steel & Aluminum	Basic Materials	Misc. Fabricated Products	-4.1%
SRT	05/06/05	13.0%	StarTek, Inc.	Services	Business Services	-1.4%
STLD	05/20/05	-3.7%	Steel Dynamics, Inc.	Basic Materials	Iron & Steel	-3.7%
THO	04/15/05	15.6%	Thor Industries, Inc.	Capital Goods	Mobile Homes & RVs	-0.2%
TLK	04/29/05	10.2%	PT Telekomunikasi Indonesia (ADR)	Services	Communications Services	-0.4%
TSCO	04/22/05	10.7%	Tractor Supply Company	Services	Retail (Home Improvement)	0.0%

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

Table 3F

Benjamin Graham Utility Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max
ATG	04/29/05	3.6%	AGL Resources Inc.	Utilities	Natural Gas Utilities	0.0%
ATO	04/01/05	5.2%	Atmos Energy Corporation	Utilities	Natural Gas Utilities	-0.8%
CEG	04/29/05	1.6%	Constellation Energy Group	Utilities	Electric Utilities	-0.6%
CPK	05/06/05	12.7%	Chesapeake Utilities	Utilities	Natural Gas Utilities	-1.1%
KEP	01/10/05	19.9%	Korea Electric Power Corporation (ADR)	Utilities	Electric Utilities	-1.3%
NFG	04/08/05	0.0%	National Fuel Gas Co.	Utilities	Natural Gas Utilities	-2.3%
OKE	04/15/05	6.7%	ONEOK, Inc.	Utilities	Natural Gas Utilities	-0.8%
PGN	01/10/05	1.0%	Progress Energy, Inc.	Utilities	Electric Utilities	-1.1%
PNW	01/10/05	3.4%	Pinnacle West Capital	Utilities	Electric Utilities	-0.5%
SRE	01/10/05	10.0%	Sempra Energy	Utilities	Natural Gas Utilities	-5.7%
WPS	02/07/05	8.0%	WPS Resources Corp	Utilities	Electric Utilities	-1.0%

      The stocks from John Templeton’s style of investing are listed in Table 3G.

Table 3G

John Templeton Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max
BRO	05/27/05	1.5%	Brown & Brown, Inc.	Financial	Insurance (Miscellaneous)	0.0%
CACH	05/27/05	8.1%	Cache, Inc.	Services	Retail (Apparel)	-4.0%
CPS	05/27/05	0.1%	ChoicePoint Inc.	Services	Business Services	-0.6%
DGX	05/27/05	0.0%	Quest Diagnostics Incorporated	Health Care	Healthcare Facilities	0.0%
EASI	06/03/05	0.0%	Engineered Support System	Capital Goods	Misc. Capital Goods	0.0%
EDMC	06/03/05	0.0%	Education Management Corp	Services	Schools	0.0%
FCBP	05/27/05	-0.3%	First Community Banc./CA/	Financial	Regional Banks	-0.8%
HDI	05/27/05	-3.0%	Harley-Davidson, Inc.	Consumer Cyclical	Recreational Products	-3.0%
HELE	05/27/05	-5.5%	Helen of Troy Limited	Consumer Cyclical	Appliances & Tools	-5.5%
JNJ	05/27/05	-1.5%	Johnson & Johnson	Health Care	Major Drugs	-1.5%
MTB	05/27/05	0.1%	M&T Bank Corporation	Financial	Regional Banks	-0.8%
SFG	05/27/05	0.3%	StanCorp Financial Group, Inc.	Financial	Insurance (Life)	0.0%
SNV	05/27/05	-1.3%	Synovus Financial Corp.	Financial	Regional Banks	-1.3%
SQM	05/27/05	10.2%	Sociedad Quimica y Minera (ADR)	Basic Materials	Chemical Manufacturing	0.0%
SYY	05/27/05	0.2%	SYSCO Corporation	Services	Retail (Grocery)	-0.9%
WMAR	05/27/05	0.3%	West Marine, Inc.	Services	Retail (Specialty Non-Apparel)	-1.4%
WSM	05/27/05	-0.3%	Williams-Sonoma, Inc.	Services	Retail (Specialty Non-Apparel)	-1.1%

      The stocks from Martin Zweig’s style of investing are listed in Table 3H.

Table 3H

Martin Zweig Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max
ABNS	05/27/05	14.0%	ALLIANCE BANCSHS CALIF	Financial	Regional Banks	-0.7%
APA	05/27/05	1.6%	Apache Corporation	Energy	Oil & Gas Operations	0.0%
AQNT	05/27/05	3.1%	aQuantive Inc.	Services	Advertising	-2.4%
BMHC	05/27/05	0.3%	Building Materials Holding Corp.	Services	Retail (Home Improvement)	-2.6%
CLFC	05/27/05	3.6%	Center Financial Corporation	Financial	Regional Banks	0.0%
DHI	05/27/05	1.4%	D.R. Horton Inc.	Capital Goods	Construction Services	-2.1%
EPL	05/27/05	2.7%	Energy Partners, Ltd.	Energy	Oil & Gas Operations	0.0%
EXP	05/27/05	-2.8%	Eagle Materials, Inc.	Capital Goods	Construction - Raw Materials	-2.8%
LEN	05/27/05	2.1%	Lennar Corporation	Capital Goods	Construction Services	-1.0%
MIKR	05/27/05	3.7%	Mikron Infrared, Inc.	Technology	Scientific & Technical Instruments	-3.1%
MKL	05/27/05	-1.2%	Markel Corporation	Financial	Insurance (Property & Casualty)	-1.2%
MPAC	05/27/05	9.1%	MOD-PAC CORP.	Basic Materials	Paper & Paper Products	0.0%
NICK	05/27/05	7.0%	Nicholas Financial Inc.	Financial	Consumer Financial Services	-1.1%
NOBH	05/27/05	0.8%	Nobility Homes, Inc.	Capital Goods	Construction Services	-5.9%
RESP	06/03/05	0.0%	Respironics, Inc.	Health Care	Medical Equipment & Supplies	0.0%
RIMG	05/27/05	-4.0%	Rimage Corporation	Technology	Computer Peripherals	-4.0%
SPF	05/27/05	1.1%	Standard Pacific Corp.	Capital Goods	Construction Services	-2.6%
TOL	05/27/05	3.5%	Toll Brothers, Inc.	Capital Goods	Construction Services	-2.5%
VSEC	05/27/05	2.4%	VSE Corporation	Services	Business Services	-3.2%
ZQK	05/27/05	4.3%	Quiksilver, Inc.	Consumer Cyclical	Apparel/Accessories	0.0%

4.0 Results

      This section lists historical results of stock and options trades.

4.1 Stock Trades

For Stock Trades:

 Average fractional profit for 24 trades, F_P = 5.1%
      Fraction of trades in the correct direction, F_C = 54%
      Average fractional gain for 13 winning trades, F_G = 15.4%
      Average fractional loss for 11 losing trades, F_L = -7.2%
      The dollar profit goal D_G is set equal to the average capital used per trade C such that
N = 1 / F_P = 19.8 is the average number of trades needed to earn the average traded amount.
      The Profit Factor for this trading system, F_G F_C / [F_L (1 - F_C)] = 1.71
      Gross Profits divided by Gross Losses (includes 1% commission)

Number of trades in 2005 =	24	( 1 Trade per Week)
Average Trade Size =	$1,000.00
Total Share costs =	$24,000.00
Gross Profit =	$1,213.67	(5.1%)
Broker Commission (Etrade) =	-$479.52
Subscription Cost to date =	-$60.00
Net Profit After Expenses =	$674.15

Major Indices through 06/04/05
DOW	-3.1%
NASDAQ	-4.8%
S&P500	-1.3%
Russell 2000	-4.8%

Closed Stock Trades

Stock	Ref Date	Ref.  Price	Last	Trade	P/L(%)	Status
TXU	11/22/04	63.98	$82.75	Long	29.3%	Closed 04/14
SID	12/20/04	18.49	$21.95	Long	18.7%	Closed 04/08
AET	01/03/05	61.40	$71.24	Long	16.0%	Closed 04/14
AAPL	01/10/05	34.48	$37.26	Long	8.1%	Closed 04/14
TS	01/10/05	46.61	$54.89	Long	17.8%	Closed 04/14
MDRX	02/07/05	11.25	$13.50	Long	20.0%	Closed 04/14
VLO	02/07/05	58.26	$72.18	Long	23.9%	Closed 04/14
PCO	02/14/05	53.51	$57.49	Long	7.4%	Closed 04/14
BYD	02/18/05	49.96	$54.38	Long	8.8%	Closed 04/14
RETK	03/04/05	8.49	$11.25	Long	32.5%	Closed 04/12
WDC	04/09/05	13.78	$12.67	Long	-8.1%	Closed 04/14
ISRG	04/15/05	47.92	43.15	Long	-10.0%	Closed 04/22
WYNN	04/21/05	55.65	57.68	Short	-3.6%	Closed 04/26
UTHR	04/21/05	51.37	48.62	Long	-5.4%	Closed 05/02
DJ	04/15/05	33.98	33.08	Short	2.6%	Closed 05/02
GM	04/15/05	25.60	30.29	Short	-18.3%	Closed 05/03
VLO	04/21/05	75.13	67.60	Long	-10.0%	Closed 05/11
OPTN	04/15/05	14.09	13.05	Long	-7.4%	Closed 05/11
KWK	04/21/05	53.46	50.40	Long	-5.7%	Closed 05/16
TRI	04/15/05	50.59	48.82	Long	-3.5%	Closed 05/16
WYNN	05/02/05	52.89	46.81	Short	11.5%	Closed 05/18
JNY	05/02/05	31.00	32.10	Short	-3.5%	Closed 05/23
EWM	05/09/05	7.11	6.86	Long	-3.5%	Closed 05/23

4.2 Option Trades

For options trades:
      Average fractional profit for 42 trades, F_P = 14.1%
      Fraction of trades in the correct direction, F_C = 61.9%
      Average fractional gain for 26 winning trades, F_G = 37.1% per trade.
      Average fractional loss for 16 losing trades, F_L = -23.3% 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 = 7.1 is the average number of trades needed to earn the average traded amount.

      The Profit Factor for this trading system, F_G F_C / [F_L (1 - F_C)] = 2.22
      Gross Profits divided by Gross Losses (includes 1% commission)

Number of trades in 2005 =	35	(1.5 Trades per Week)
Number of contracts per trade  =	2
Avg. Premium Cost per trade =	$1,497.89
Total Premium costs =	$52,426.00