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Hello out there stock charting fans. What an incredible week this was in the stock market. The very best that
America has to offer in the way of "an investment", "safe stocks", "It will be there when I retire". Got hammered
hard to the downside in the past 2 weeks. Yes they may be there when you retire, but you may need a
magnifying glass to nd them.
The selling of stocks to Americans. "Buy and hold for the long term", "Yes there expensive, but….." Great
slogans aren’t they. These great phrases got just about everybody in the country into the stock market. We
may be witnessing the end to the "buy and hold" slogan. We have for sure seen an end to the "they are
expensive, but…" slogan. We may be also witnessing an end the one of the greatest pyramiding schemes ever.
All markets have terri c growth phases and in time, all growth phases expire, and I do mean ALL growth
phases. You name it, Gold, Oil, Real estate, Tulips, Diamonds, wine, art, and of course stocks. I know many of
you think I’ve lost it here. But think about it. After the end of world war II, stocks had a 18 to 20 year bull run
into 1968. Buy and hold for the long term was the rallying cry then. Then came the disastrous next 15 years
from 1968 to 1982. It was well known by 1978 that trading stocks was the only way to own stocks. Then in
1982 Newsweek proclaimed stocks as "dead" on their front cover and sure enough it was that year that stocks
exploded into the greatest bull market ever. The rallying cry then became "buy the dips". and those that
"traded" got left out in the greatest bull ever.
But in 1982 only about 8 percent of all households owned stock. That gure is now up about 42 percent. It
took one person to tell two friends, that told two friends, that in turn, told two friends, that made this massive
bull. A very large pyramid scheme if you ask me. For this grand bull market to continue as it has, you would
have to go out and convince another 35 percent of households to invest for the long haul. I suspect it is
these households, which are at lower income levels or poverty level, so you really won’t nd any money there
to make a dent in this 6 trillion dollar market.
As you may know the average big board stock is down 44% from it’s high of this year. I think it somewhat
fortunate that stocks were up 15 to 25% this year before the sell off, or this 44% decline could be cause for a
recession in consumer spending. To be sure it this 44% decline has wiped out the average margin investor.
This step decline in stocks has done a lot of unwinding of record levels of speculative and leveraged
positions. This includes the record levels of margin that many rookie and newer investors were on.
I have included a chart of the Dow and it’s support levels. On the S&P the support line is at 953. As of Friday
the Dow Utility is breaking off the right shoulder of a head and shoulder top. This could spell a back up in
interest rates.
Oil and gold both had nice moves this week. The strong showing could be as a result of the strong jobs
number out this past week.
So until proven otherwise, the trend in the averages is down. We are so very over sold that we are at least
entitled to a bounce of some sort. We could see another 3 to 5% one or maybe or little more. We must be on
guard at all times here and remember, this market is for the very active and experienced trader and not the
long term investor or rookie. So, for those of you that are that type of trader, I have complied a very nice list
of stocks to short. Many of them are just about to roll over and go though some support lines which will be
you entry point. Some stock are extended to the downside, but very dead and should continue lower. You will
need to wait for a snap back to enter these stocks or have big!!!!
Most of the stocks, that I will list here, are on the big board as that seems to be where most of the expensive
stocks are. I think most of the damage is done for now on the NASDAQ except for Microsoft and Cisco which
are lowering daily.
WEEKLY STOCK PICKS
America Online Inc. (AOL) - $86

Stock has already had a tremendous slide from $140 to $86. Stock is trading at a P/E of 154 and it’s setting on the 200 day
moving average. I like this little reverse cup that it has formed here. The stock could turn and shoot though the 200 day at
any time. Buy point is as the stock enters a new low off this upside down ag. The short or buy point is at the 200 day
moving average which is at 78. But if you see a large amount of selling coming in, then you may want to consider shorting
early. This could be a$ 40 stock before you know it. The same could go for AMZN and YHOO
Telefonica S.A. (TEF) - $111

This stock is like the other 3d world stocks. They are in a fast retreat as are all other stocks from this region. This stock is way
over valued at a P/E of 27 and growing at 2% per quarter. Heavy volume on the sell off and the stock has just broken the 200
day moving average line. I love this little upside down cup on the ag pole here. Short as the stock goes though the support
line at $109. This could be a very fast mover to $90 or less. This has got to be one of my favorites for the week.

Sunamerica Inc. (SAI) - $60

This company is being acquired by AIG. AIG is breaking hard and so is this stock. Short this stock and AIG.
.
Providian Financial Corp. (PVN) - $57

This stock has just shot though the 200 day on record volume. The stock may or may not rest here. If it does, then look to
short it as it starts to leave a 4 to 5 day base. The 200 day is now resistance, so you may take a small chance and pyramid in
your position. If a stock has the word "Financial" attached to the name then look to short it.
Omnicom Group (OMC) - $46

Stock has just completed a double top and now is sitting on the 200 day. The sell off, after the double top, was on high
volume. Buy point is as the stock goes though the 200 day which is at $46. P/E of 31 and an Acc/Dist rating of a "D".
Mekesson Corp. (MCK) - $76

Stock is now breaking off a right shoulder and closed below the 50 day moving average 7 trading days ago. The 200 day is at
66 so I think that will be this stocks next stop. Short as the stock makes a new low off this formation which is at $74.
General Re Corp. (GRN) - $203

Stock has just sold off hard from the news of the merger with Berkshire Hathaway. Berkshire Hathaway stock is breaking
hard and so is this one. Stock is still over valued and the one week consolidation gives you a good opportunity to enter a
short. Short as the stock leaves this formation which would be at $199 to $195.
Gateway 2000 (GTW) - $47

Stock is now sitting on the 200 day and could be ready to roll over and go though this line. Short as the stock rolls over and
crosses the 200 day at $45.
Estee Lauder Co. (EL) - $55

I gave this stock to you a few weeks ago at a higher level. People are now waking up and the volume is now coming in to
con rm my overvalued ideas. Of course, I use chart patterns and rarely use a value system. I would consider shorting here
using a pyramid method. The 200 day is at 62 and this will act as resistance.
Ciber Inc. (CBR) - $26

The snap back is complete, and you should short here at this price.
Ceridian Corp. (CEN) - $50

Stock is breaking out of a 6 month channel to the downside and has closed below the 200 day. Short here and use the 200
day moving average as you resistant point. P/E of 97 and growth is at a snails pace of 8% per quarter. Could be a stunner to
the downside.
Capital One Fin’l (COF) - $86

Stock is sitting on the 200 day and could rest here or rotate down and go below the 200, which would be your entry point.
Short point is at $85 down to $83. P/E of 25 and one of the most expensive P/E’s of any nancial stock. As you know, I
shorted this stock at 106 ½ and I have since added to it at 88. I will continue to hold this stock unless I can nd a better
short.
Cardinal Health Inc. (CAH) - $83

Stock has had a hard break off the top on steady high volume. May have to wait to short on a snap back to the 200 at $88.
Short from $85 to $88.
I N G Group N.V. (ING) - $56

Another life insurance company that is coming back down to earth. P/E of 22 and should be at10 to 12 based on historic
levels. Stock has just closed below the 200 day and should be shorted here. Cover if the stock has multiple closing days
above the 200 day.
Well that’s it for today folks. I am still short AMZN but covered my YHOO. My I suggest that you folks review
prior listed shorts as almost everyone of them has done well. I must admit I missed the banks and the
brokerages. But I have had many of the signi cant others.
I do see some volume drying up in many stocks, except for the banks and a few others, so we may have to
shoot through the support line of 956 on the S&P and 7,350 on the Dow before volume picks back up.
I will have more for you during the week. Thank you. Dan
P.S
How about that AVP. Down 20 in 2 weeks, not to mention U and DAL.

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