SEVEN REASONS WHY NEXT WEEK MAY BE THE BEST BUYING OPPORTUNITY THIS YEAR.




Yes, we just had a 300 point rally Friday, but that was just a


precursor of what is yet to come, in my opinion. Monday, preferably


Tuesday, we will get a retracement of this latest rally, and that may


be your last best opportunity to get on board. This market is not


going to go straight up...it didn't go down that way, but it IS GOING


TO LEAVE MOST INVESTORS BEHIND.




Here are SEVEN reasons the market is going to recover, and recover


quicker than most believe.




1. Primary is earnings...yes I said earnings. In the next two weeks


we are going to have the beginnings of one of the strongest earnings


seasons on record, certainly within the last two years. Why do I say


that?, Because current estimates for the SP500 stocks are calling for


a 22.5% quarterly gain over the same quarter last year. Now of course


we know that last year was abysmal, so a big part of that number is


because of that poor performance, but Wall Street is only concerned


with the perception of improvement...and there really was some.




2. We are now entering the 7th month of economic recovery...yes, a


little touted fact is that this economy HAS been improving. What


has NOT improved and from your perspective makes things feel so


miserable is that the market has continued its downward spiral


throughout this period, DESPITE good economic numbers from just about


all sides.




3. Productivity has increased, six straight months ...more product


with less overhead means a fatter bottom line.




4. Everyone says that jobless numbers have increased meaning there


can be no turnaround. Jobs are a lagging indicator. What they are


not telling you is that Temporary services have increased 9% over the


last 6 months...always a LEADING indicator and that the average


workweek has lengthened...again adds to the bottom line without


substantially increasing overheads.




5. Core inflation remains under control...no rate increases in the


offing. The public has been taking money out of stocks and putting


it into Bonds...a sure sign the bottom is near. Bonds are about to


get trounced.




6. Friday's rally was on extremely light volume...Most traders were


taking a 4 day weekend and, of course were short going into the


holiday. They are also going to be scrambling to get themselves out


of short positions at the first signs of retreat, which will bring in


the momentum players and massive short covering to exit all those


positions that they have been piling up over the last 6 week slide.


We did leave some nasty gaps on the SP and the NASDAQs that I would


surely like to see filled, but unless we see some event or news


driven drop, we could also view these as the first true breakaway


gaps we have seen in this market in 2 years.




7.Technical indicators


Average VIX, (Volatility Index) levels have finally gotten


back above 30 with the upper band sitting at a comfortable 34 right


now. At one time the average levels were in the teens. It has taken


4 months for those levels to work themselves back to the point where


they are in a "normal" range and predicting not just a short term


rally, but a longer term bias to the upside.When the VIX drops


through the Upper Bollinger Band we can expect a major rally within


1-3 days. It dropped below again on Thursday and we began a rally


Friday. Currently VIX is at 30 with lower band at a normal 25, so we


have quite a ways to go before becoming over bought.


McClellan Summation Index. This normally slow to turn index


is one of the most accurate precursors to market turns and on Friday


we saw the NYSE, DOW, SP,OEX, NASDAQ Composite, NASDAQ NDX, and Total


Market Index ALL turn positive.


Investor Sentiment: A measurement of Bulls vs Bears where by


an imbalance in public sentiment, which of course is usually wrong


infers the opposite is about to happen. One of the most widely


followed, AAII is currently 27% Bulls,


TRIN5: When it is above 6 and turns down it's rally time.


Currently 7 after being as high as 9.5 last week.


New Lows: NYSE New Lows are at 35, under the warning level and


down from 235 the day before


Now...what about the downside...Can we go lower?. Of course. Any


world terrorism event is liable to have swift impact on the markets


and the the DOW is vulnerable on such an event to about 8715, but


that would be an even more viable area for purchase.