further correction likely before year-end rally€¦ · market teeters atop “wall of worry”...

In This Issue...

STOCK TRADER'S ALMANAC INVESTOR USPS 020658 ISSN 1541-2687 is published monthly.© Copyright 2005 by The Hirsch Organization Inc. • 79 Main Street, Suite 3, Nyack, NY 10960 • Website: www.stocktradersalmanac.com

EDITOR & PUBLISHER: Jeffrey A. Hirsch. SUBSCRIPTION RATE: $295 a year. POSTMASTER: Send address changes to 79 Main Street, Suite 3, Nyack, NY 10960Send subscription-related and editorial correspondence to above addresses or email [email protected] or call 845-358-4220.

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38 YEARS A Hirsch Organization Publication VOLUME 5, NUMBER 4, OCTOBER 2005

9/14/05: NASDAQ 2149.33 • S&P 1227.16 • Dow 10544.90 • Russell 2K 666.35 • NYSE 7577.29 • Value Line Arith 1885.50

Niche CRM Concern .............1

Pulse of the Market ...............2

Proving Grounds:

Housing Bubble .....................5

Energy Gage: Katrina ............6

ETF Updates & Lab Pages....8

Portfolio Updates...................7

Portfolio Table ......................15

October Strategy Calendar..16

Previous Doubler Returns to ProfitabilityNiche CRM Concern Trims Client’s Costs and Boosts SalesBy Jeffrey A. Hirsch

Oracles latest bid for Siebel Sys-tems has further hoisted Customer

Relationship Management (CRM) tothe forefront of the enterprise softwareand business solutions arena in thefinancial news media. If you run abusiness, you use some type of soft-ware to keep track of and service yourcustomer base. Our expanding global,service-oriented economy has generat-ed countless solutions and softwareapplications. Many are industry specif-ic and even company specific.

But the trend of late, as with word pro-cessing, spreadsheet and database soft-ware before, has been a narrowing ofchoices and a standardization of the offer-ings. Industry competition is vast withhundreds of participants yet it is becom-ing increasingly dominated by a few ofthe largest players thanks to recent con-solidation and a bit of natural selection.

Growing niches continue to materi-alize however. Previous recommenda-tion Astea International (ATEA) isa leader in “Service Lifecycle Manage-

(continued on page 4)

Market Teeters Atop “Wall of Worry”Katrina’s Impact Not Yet Felt Further Correction Likely Before Year-End RallyBy Jeffrey A. Hirsch

We admire the market’s and country’sresiliency in the face of Hurricane

Katrina’s devastation. Corporate Americaand the citizenry have been most generousand helpful in rising to the cause of our fel-low countrymen. But the impact of Katrinaon the region and the country — and per-haps the world — has yet to be realized.

Economic numbers released thismonth will not have factored in thetrue impact. It is encouraging to seeprogress in the cleanup, rebuilding get-ting underway and the displaced beingtaken care of. The reality though, isthat many of the relocated residents of

New Orleans and the rest of the regionmay never return; much like the GreatFlood of 1927 influenced the GreatMigration of Mississippi Delta inhabi-tants northward.

Good case forecasts call for the flood-ing of the crescent city to be pumped outby October 6 and for the Port of NewOrleans (the nation’s fourth busiest port)to be back at 100% capacity in threemonths. Drilling and refining in theregion promises to be at less than fullcapacity for at least that long.

This all comes at a time when thestock market is struggling to findfirm footing. Inflation is beginning to

become unmasked as manipulatedgovernment measures of PPI and CPIwill no longer be able to hide the factthat everyday goods and services con-tinue to rise in price. Gasoline pricesare already front-page news, reminis-cent of 1973-74. High summer air-conditioning bills land this month andjust around the corner will be thestratospheric winter heating tabs.

That 70s ShowOdd and even license plate number

days at the pump do not appear to bein the foreseeable future but the gas


NEWSLETTER

Net Net Net % % NYSE NYSE CBOE 90-Day Moody’sChange Change Change Change Change NYSE NYSE New New Put/Call Treas. AAA

Week End DJIA Week On Fri** Next Mon* S&P 500 Week NASDAQ Week Advances Declines Highs Lows Ratio Rate Rate

29-Apr-05 10192.51 + 34.80 + 122.14 + 59.19 1156.85 0.4% 1921.65 — 0.5% 1856 1655 120 241 0.73 2.85 5.23

6-May-05 10345.40 + 152.89 + 5.02 + 38.94 1171.35 1.3% 1967.35 2.4% 2458 1008 187 117 0.74 2.82 5.25

13-May-05 10140.12 – 205.28 – 49.36 + 112.17 1154.05 — 1.5% 1976.78 0.5% 1282 2240 185 167 0.66 2.82 5.20

20-May-05 10471.91 + 331.79 – 21.28 + 51.65 1189.28 3.1% 2046.42 3.5% 2854 658 209 127 0.54 2.82 5.10

27-May-05 10542.55 + 70.64 + 4.95 – 75.07 1198.78 0.8% 2075.73 1.4% 2271 1214 244 70 0.55 2.89 5.08

3-Jun-05 10460.97 – 81.58 – 92.52 + 6.06 1196.02 — 0.2% 2071.43 — 0.2% 2338 1559 373 47 0.62 2.92 4.95

10-Jun-05 10512.63 + 51.66 + 9.61 + 9.93 1198.11 0.2% 2063.00 — 0.4% 2086 1391 387 51 0.53 2.95 4.92

17-Jun-05 10623.07 + 110.44 + 44.42 – 13.96 1216.96 1.6% 2090.11 1.3% 2600 898 509 56 0.60 2.94 5.06

24-Jun-05 10297.84 – 325.23 – 123.60 – 7.06 1191.57 — 2.1% 2053.27 — 1.8% 1312 2191 412 65 0.55 2.98 4.96

1-Jul-05 10303.44 + 5.60 + 28.47 + 68.36 1194.44 0.2% 2057.37 0.2% 2500 1010 400 91 0.58 3.08 4.93

8-Jul-05 10449.14 + 145.70 + 146.85 + 70.58 1211.86 1.5% 2112.88 2.7% 2487 1007 611 51 0.50 3.11 5.03

15-Jul-05 10640.83 + 191.69 + 11.94 – 65.84 1227.92 1.3% 2156.78 2.1% 2078 1399 759 25 0.50 3.15 5.04

22-Jul-05 10651.18 + 10.35 + 23.41 – 54.70 1233.68 0.5% 2179.74 1.1% 2203 1286 545 33 0.54 3.25 5.09

29-Jul-05 10640.91 – 10.27 – 64.64 – 17.76 1234.18 0.0% 2184.83 0.2% 2127 1364 662 58 0.60 3.35 5.08

5-Aug-05 10558.03 – 82.88 – 52.07 – 21.10 1226.42 — 0.6% 2177.91 — 0.3% 1371 2131 703 65 0.61 3.41 5.16

12-Aug-05 10600.31 + 42.28 – 85.58 + 34.07 1230.39 0.3% 2156.90 — 1.0% 1859 1636 349 97 0.61 3.44 5.17

19-Aug-05 10559.23 – 41.08 + 4.30 + 10.66 1219.71 — 0.9% 2135.56 — 1.0% 1415 2094 222 72 0.60 3.45 5.09

26-Aug-05 10397.29 – 161.94 – 53.34 + 65.76 1205.10 — 1.2% 2120.77 — 0.7% 1621 1883 209 73 0.65 3.46 5.04

2-Sep-05 10447.37 + 50.08 – 12.26 + 141.87 1218.02 1.1% 2141.07 1.0% 2533 971 416 105 0.59 3.43 4.95

9-Sep-05 10678.56 + 231.19 + 82.63 + 4.38 1241.48 1.9% 2175.51 1.6% 2465 1022 471 45 0.59 3.42 5.05

Bold Red: Down Friday, Down Monday * On Monday holidays, the following Tuesday is included in the Monday figure** On Friday holidays, the preceding Thursday is included in the Friday figure

9/13/05 DOW JONES INDUSTRIALS & MACD 10597.44

2 / STOCK TRADER’S ALMANAC INVESTOR OCTOBER 2005

Pulse of the Market

3 3 34 5 6

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MACD Buy 8-17-9

MACD Sell 12-25-9

October 3, 2003 Dow 9572.31MACD Seasonal BUY Signal

October 4, 2004 Dow 10216.54 Half Position &October 27, 2004 Dow 10002.03 Confirmation

MACD Seasonal BUY Signal

April 20, 2004 Dow 10314.50MACD Seasonal SELL Signal

April 1, 2005 Dow 10404.30MACD Seasonal SELL Signal – Sold Half

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OCTOBER 2005 STOCK TRADER’S ALMANAC INVESTOR / 3

lines in the Gulf Region after Katrinahearkened back to the OPEC OilEmbargo days of 1973 and 1974. Thismay not be an embargo imposed bythe will of humans but it may ineffect impact our economy in muchthe same way. The energy demandside of the equation this time aroundis much higher. Additionally theimpact will not only be energy relatedas a vibrant chunk of the country willbe hamstrung for several months.

Comparisons to 1973 are hard for usto overlook. The two accompanyingcharts, with red circles indicating thetime of the crises, illustrate that muchlike the initial rally after the OPECembargo hit, stocks rose in the wake ofKatrina. Once the impact was realizedin ’73 stocks retreated, posting newlows for the year before rallying atyear-end. 1973 was also a post-electionyear of the second term of a reelectedRepublican (Nixon). The Dow reachedits high in January of 1973; its high todate was in March 2005.

1974 was a midterm year where thebottom of the last secular bear cycle wasreached. This adds to our belief that aftera late 2005/early 2006 rally we expectthe market to work its way lower in 2006

in the vicinity of the 2002 lows reachingthe bottom of the current secular bearcycle. For now the market seems poisedto come down the other side of thisproverbial “Wall of Worry” it appears toclimbing. However, this should coincideopportunistically for Almanac Investorswith October’s perennial horn-of-plentyin the stock market just ahead of the BestMonths of the year.

The big, post-Labor Day rally cameas it has the last several years but themarket was unable to surpass its lateJuly/early August highs with Dow10700 ❶ proving to be formidableresistance indicated by the red line in thechart at the bottom of page 2. This shortrally caused the MACD Buy indicatorlines to cross ❷ but this is too early totrigger our Best Months Buy Signal.

The “Summer Rally” appears tohave peaked in late July/early Augustwith the Dow only able to muster a5.6% gain but NASDAQ surged animpressive 15.0%.

This week’s September Triple Witch-ing and the week after are notoriouslydangerous for the market. Once thatperiod has passed and the market likelycorrects to levels near point 14 of thecurrent Three Peaks and DomedHouse pattern being tracked on theDow-MACD chart on page 2, we expectthe year-end rally to ensue.

Pulse of the MarketTwo weeks of solid gains ❸ were

unable to push the market any higher for2005 and even though breadth ❹ andnew highs and new lows ❺ were clearlypositive they were not the sort of lop-sided numbers associated with majorbull moves. Weekly CBOE equity onlyPut/Call readings remain at indecisivelevels ❻ indicating complacency amongindividual investors. However, OEXPut/Call readings have been decidedlypessimistic. OEX option traders areoften considered to represent the smartmoney. Mark Dodson at Don HaysAdvisory notes that these traders havebeen, “piling into OEX puts,” pushingthe readings to the highest levels since2002. The interest rate conundrum iseven more pronounced with no consen-sus on what Greenspan will do nextweek. Short and long rates continue tomove closer together, tightest two weeksago ❼. Any further flattening may fore-

shadow a recession.

October AlmanacOctober often evokes fear on Wall

Street as memories of crashes in 1929,1987, the 554-point drop on October27, 1997, back-to-back massacres in1978 and 1979 and Friday the 13th in1989 are stirred. But it has become aturnaround month — a “bear killer” ifyou will. Ten post-WWII bear marketshave ended in October: 1946, 1957,1960, 1962, 1966, 1974, 1987, 1990,1998 and 2002.

October used to be a horrible monthfor stocks and from 1950-1997 heldthe record for most cumulative DowJones Industrials points lost. Since thebeating in 1997 it has been the bestmonth, up significantly six of the lastseven years. Only December andNovember are better for small caps.Big October gains five years in a rowfrom 1999-2003 came after atrociousSeptembers. October does fairly well inpost-election years as other monthstake the brunt of bearish cross-currents.

Our “Worst Months” of the yearend with October. With October a ris-ing market star and a frequent bearkiller it has become one of the besttimes of the year to take long posi-tions. October is a great time to buydepressed high-tech stocks. OurMACD Seasonal Buy Signals cantrigger anytime after October 1 andwill be emailed to subscribers.

Options expiration week in Octoberprovides plenty of opportunity. On theMonday before expiration the Dow hasonly been down three times since 1982and the Russell 2000 is up the last fif-teen years straight. Expiration day hasa more spotty record as does the weekas a whole. After a market bottom inOctober, the week after is most bullish,otherwise it is susceptible to down-drafts. Any weakness can be used totake new long positions.

After mild gains the first couple ofdays’ stocks tend to drift lower. Mid-month trading is more robust aroundoptions expiration. Weakness thenplagues the third week of the month.Strength the last several days is mostdependable the second to last day withthe Dow Industrials and S&P 500 upseventeen of the last twenty-one years,

Market Teeters Atop “Wall of Worry”(continued from page 1)


ment (SLM)” which adds supply chainand logistics capability to CRM for theservice and support needs of a widerange of businesses large and small.

Though not a customer of Astea,Wal-Mart was recently lauded for itsrapid response and delivery of vital sup-plies to Hurricane Katrina victims onthe Gulf Coast. It was the retailinggiant’s supply chain and logistics systemthat enabled them to deliver truckloadsof provisions to the beleaguered regiondespite having suffered damage fromKatrina at over 100 of their own stores.

Growing PainsAstea has suffered from growing

pains the last few years posting someblockbuster quarters, followed by los-ing quarters. In the recent second quar-ter 2005 they announced a return toprofitability from a loss in Q1 2005.ATEA earned 21 cents per dilutedshare, a 110% increase over last yearsQ2, on revenue of $5.4 million. In theconference call CEO Zack B.Bergreen suggested to a questionerthat due to the complexity of the firm’sofferings it takes quite some time toclose new clients and that ATEA mightbe better analyzed on an annual basisinstead of a quarterly one. That’s notthe easiest way to lure Wall Street ana-lysts. Though there has been anincrease in institutional holdings sincelast Q1 2004’s blowout number, westill find no analyst coverage.

Founded in 1979 by Mr. Bergreen,Astea is one of the forerunners ofCRM. In January 2004 we recom-mended the stock at 3.32 and soldhalf in May 2004 at our automaticdouble price as ATEA vaulted to ahigh 13.75 on a sparkling first quarterearnings report. Sales jumped 48% to$5.9 million and net was a remarkable51 cents a share versus a loss. Thestock sold off as Astea was not able tomaintain that torrid pace of sales andprofitability. ATEA hit our stop of6.64 in August 2004 and the positionwas closed out of our portfolio.

We have tracked the company’s devel-

opments since and after returning to prof-itability this past quarter and continuingto exhibit top and bottom line growth ona year-over-year basis as well as addingnew clients and producing arguably thetop solution in the space we believeATEA is poised for another double.

Astea earned 71 cents a share in2004 on revenue of $19.3 million. Inthe first six months of 2005 revenueslipped about 11%, or $1.2 million,while costs and expenses increasedroughly 7%, or $615K, due to highercosts for services and maintenance,product development and G&A. Tomatch last year’s numbers a bannersecond half of 2005 is necessary. Wefeel management is confident that theycan at least meet last year’s results.

Best-in-ClassManagement’s focus and spending on

research and development is partiallyresponsible for the company’s choppyquarterly results but it has manifested inrobust solutions for clients. AsteaAlliance service management suite is thecompany’s integrated and comprehensiveSLM offering. Using hand-held devices,software, hardware and of course, theInternet the suite enables enterprises toservice clients expeditiously, improvesales, track products easily; and bettermonitor, engage, deploy mobile workers.

A typical customer call comes in andthe system determines the location, sta-tus, warranty and ownership of the itemin real-time. It also ascertains whichworker is in vicinity, if he has the righttools and is qualified for this taskallowing all service steps taken to berecorded on the fly, and billed. Asteaalso provides clients and prospectiveclients with service impact assessments,consulting, training and support.

The big players in the field, Oracle,SAP, and the like are technically com-

petitors of Astea but they don’t providethe niche SLM and “Field ServiceManagement (FSM)” capabilities thatAstea does. Frost and Sullivan esti-mates FSM currently to be a $150 mil-lion market that will grow to $650 mil-lion in 2007. Indus International (IINT)is also a terrific player in the niche butthe shares have run up and would bemore attractive at substantially lowerprices. MDSI Mobile Data Solutions(MDSI) is similarly positioned but isbeing taken private. In any event ATEAmay prove to have the most robust andcomplete solution in this space.

Recent developments include strate-gic partnerships and a $4.5 million dealwith a major European service integra-tor. We have heard rave reviews ofATEA’s products from unbiased sourcesand management seems focused onlarger engagements. The stock is thinlytraded and on the move so buy limitsand careful trading are a must. We likeATEA on a slight pullback to 7.50.

Ruling Reason: Best-in-class nicheproduct gaining market share in grow-ing industry and relatively cheap stock.

Previous Doubler Returnsto Profitability(continued from page 1)

ALMANAC INVESTOR TRADE HISTORYATEA: Bought 1/16/04 @ 3.32Sold Half 5/13/04 @ 6.64Sold Rest 8/12/04 @6.64Total Return: 100%

VITAL STATSShares: ................................3.05MMarket Value: ................ $24.13MRevenue: ........................$18.15MBook Value Per Share: ........$2.07EBITDA: ............................$2.89MDiluted EPS: ........................$0.12Total Cash:........................$4.33MDebt: ....................................NonePrice/Sales:............................1.33Price/Book: ............................3.82P/E: ......................................65.9252-Week High/Low: ....10.99-5.1930-Day High/Low:..........8.21-6.52

9/14/05 ASTEA INTERNATIONAL 7.88

ASTEA INTERNATIONAL INCNASDAQ — ATEA — 7.88

Buy Limit: 7.50

240 Gibraltar RoadHorsham, PA 19044215-682-2500www.astea.com

CEO: Zack Bergreen

By J. Taylor Brown

In case you haven’t heard there isrumor of a housing bubble. The thing

about a housing bubble is that there hasnever really been one! There have beenmini booms and busts, and regionalstrength and softness, but never an allout nation-wide real estate crash.

We are not experts in housing mar-ket; we are historians who primarilyfollow the equities markets. But thispotentially devastating situationinvolves trillions of dollars and couldsend unprecedented shockwavesthrough the stock market and theeconomy as a whole affecting every-one including non-homeowners.

What impact will it have on theeconomy and the stock market? Hous-ing has always appreciated significantlyin the long run — right? It is the safestinvestment you can make — right? Thehousing bubble is only isolated to smallpockets of the country — right? Allvalid questions that are moot until theexistence of a bubble is accepted.

There are literally scores of eco-nomic indicators that track the hous-ing markets. Some of the indicatorsprove that there is a bubble while oth-ers prove that everything is hunky-dory. Quite frankly, most of the datais nothing short of confusing to thelayman (AKA the average homeown-er). After pouring through the data,we found one nugget of information

that is startling and best depicts thedevelopment of a bubble.

Note:All housing data in this articleis seasonally adjusted and annualized.

The number of single family homessold per month has skyrocketed to saythe least. The average number ofexisting single family homes soldannually over the past 37 years is 3.34million units and the average numberof new single family homes is 7.03million. The most current housingdata reveals that the rate of existinghomes sales have almost doubled to6.24 million and new homes havemore than doubled to 1.41 million!

The accompanying charts show thedisturbing trend. The only other timewe saw a dramatic rise was in the late70’s which preceded an extremelysoft housing market for years. That

mini bust occurred after a rise notnearly dramatic as the current ascent.

Yes there is a lot of cheap moneyfor people to buy houses with andshelter is a necessity. The country isthe highest percentage of people thathave ever owned houses which isadmirable, but what the heck is goingon here? This many houses swappinghands smacks of rampant speculationand the picture painted by laying thedata into graphic form conjuresimages of NASDAQ’s heyday.

What will happen when peoplestop buying? How many times can“investment grade” properties beflipped? A house has value and buildsequity because it is something that isowned for the long term. Now a slabof concrete is trading like whatthe-heckdowedo.com did in the nineties.A second house as an investment or avacation house is understandable, buta portfolio of multiple properties isbecoming commonplace. This is get-ting ridiculous and the ones that aregoing to suffer are families who areputting everything they own into buy-ing a house at inflated prices with anadjustable mortgage that they can’tafford. These conditions are reminis-cent of the situation just before nesteggs got destroyed when the stockmarket soured in early 2000.

J. Taylor Brown is Vice President atthe Hirsch Organization.


Proving Grounds: The Housing Bubble


By Dave Kamm

As we all know, headlines seldomtell the true story — they aren’t

designed to do so. Lost are detailsthat lend readers an appreciation ofthe events past, and a greater percep-tion of how they may affect them indays, weeks, months and years tocome. With the latter idea in mind Ioffer the following tidbits.

For many moons I’ve been follow-ing the Department of the Interiorestimates about production levelsfrom the GOM (Gulf of Mexico). AsKatrina approached, much of the pro-duction from that area was alreadycurtailed, but what has followed tellsan eerie tale.

On August 29th, 91% of all oil and83% of all gas production from theGOM had been “shut-in.” On August30th the figures had jumped to 95% ofoil production and 87% of natural gashad stopped flowing. On September12th production curtailments for oilstood at 57% and natural gas at 37%.

The numbers have been improvingwith each report, but each day theimprovement has been smaller. It’sgood business to get the minimallydamaged facilities generating incomefirst, and work on the tougher situa-tions as time permits. Thus theprogress from here may be slower.

I spoke with an officer of an explo-ration company that has virtually allof their facilities offshore or onshore

Louisiana. They were extremely luckyas 95% of their production was backflowing within the first week. But,they had not even been able to get outand look at the platforms that repre-sented the missing 5% of production.

While his company came throughthe storm relatively unscathed, he didoffer several thoughts to ponder.Many employees of the energy indus-try endured personal tragedies and itwas difficult for all companies toround up operating crews. Refiningfacilities at best were operating at ten-uous levels. Maintenance of operatingfacilities was a day-to-day situation.

I also made contact with a formermanager of a major energy companyoil field operation in the Florida pan-handle and west into Alabama. Hisearly assessment was that he couldforesee power to run field operations,“being curtailed to divert electricalpower to emergency needs and peoplestruggling in the aftermath of Katrina.”

I also contacted the trustee of aroyalty trust that derives virtually allof its revenue from the GOM area.The trust has three major sources ofrevenue. One is an oil field in thepanhandle of Florida, a gas field in anarea called South Pass 89, and anoth-er offshore Louisiana gas field.Inquiries he had made in the days fol-lowing landfall produced little con-crete data, but he also had heard thatmany workers in the energy industryhad flooded or destroyed homes.Almost apologetically he offered the

fact that once a well is “shut-in” itmust pass a rigid environmentalinspection before producing oil or gasagain. At the close of our conversa-tion I asked if he had any good news,the answer was negative.

Among the many press releasesconcerning GOM operational statusfrom the energy sector was one from acompany that related that they hadonly 5% of their production in theGOM, but those operations were shutdown, and no forecast for resumingthat production was offered. The shut-in operations were in an offshore blockcalled “South Pass 89.” See above.

Ironically, the “2005 Offshore Hur-ricane Readiness and Recovery Con-ference” was held last July 26-27.One presenter offered the following:“U.S. Government leases in the GOMin 1985 numbered 1,205. In 1995there were 1947 leases, and by 2005there were 7,414 leases. With all thatincreased drilling activity we’d expecta commensurate increase in naturalgas output. His estimates of GOMproduction in 2011 were just slightlyabove (1.1%) those of 1995. We’redrilling more but producing the sameamount of natural gas.”

Now that we are feeling good,remember that Andrew leveled thegulf coast after putting Homestead onlife support. Andrew damaged adozen pipelines of 16-inch diameterand resultant mudslides damaged 11more. In year 1 BK (before Katrina), ahurricane named Ivan roared through

The North American Energy Gage — Impact of Katrina

NORTH AMERICAN ENERGY GAGE STOCKSRecommendation 8.9/05 % Ann. Editor's Advice

Ticker Royalty Trust Date Price Price Change Div. Yield* STOP ONLY IF CLOSES BELOWOXY Occidental Petroleum 2/16/05 65.00 85.88 32.1% $1.48 1.7% Hold - re-entry into Libya may be hugeFXEN FX Energy 2/16/05 13.00 11.45 -11.9% — — Buy - Stock reversing downtrendTHY-UN.T Thunder Energy Trust †‡ 2/16/05 12.10 13.65 12.8% $1.49 10.9% Hold - "carve-out" completeACN.T Alberta Clipper Energy †‡ 2/16/05 4.35 4.79 10.1% — — Hold - "carve-out" completeATLS Atlas America 2/16/05 37.00 47.98 29.7% — — Hold - Spin-Off from Resource Am. completeFEL-UN.T Fairborne Energy Trust †‡ 3/16/05 10.93 14.85 35.9% $1.09 7.3% Hold - "carve-out" completeFQE.T Fairquest Energy †‡ 3/16/05 7.20 9.96 38.3% — — HoldGDP Goodrich Peteroleum 3/16/05 19.58 21.43 9.4% — — Hold - Huge insider buyingTUENF True Energy 4/13/05 3.26 5.24 60.7% — — Hold - Nice chart patternPHX Panhandle Royalty 4/13/05 25.60 36.56 42.8% $0.30 0.8% Hold - use limit orders, thinly tradedLRT LL&E Royalty Trust 6/15/05 6.50 4.91 -24.5% $0.40 8.1% SELL - Katrina Impact† Adjusted from carve-outs ‡ Canadian Dollars Average % Return** 35.0%* Not Including Tax Benefits ** Not Including Dividends or Closed Positions available on request

the GOM as well. Ivan also damaged12 pipelines of 16-inch diameter butresultant mudslides damaged 21 more.All early reports indicate the damagefrom “K” was much worse.

This summer the North Americannatural gas supply/demand equationhad already tightened considerably. Inthe six weeks prior to Hurricane Kat-rina, natural gas storage comparisonsshifted from a surplus to a shortfall,relative to the same time last year.

By my pencil, Katrina will have avery meaningful lasting impact forthe foreseeable future — positive forNorth American natural gas produc-ers, but negative on many consumers.

Investors in GOM stocks, not onlyenergy, but several other sectors mustbecome vigilant and do some of theirown research — the headlines will notbe sufficient. Energy investors woulddo well to learn about places such as

the Permian, Anadarko, and WillistonBasins, Pinedale Anticline, BarnettShale, Muskeg River, Okotoks Field,and Boundary Lake — all prolificnatural gas producing regions.

On the day before “K” struck, nat-ural gas was 89% higher than it wason the same date in 2004. Now it’sjumped another 9%. Natural gas is aclassic example of what happenswhen demand grows and supply fallsoff a cliff. The shut-in supply hascompounded the situation. Data tellsus that the industry is drilling faster,but the supply is not growing. Hous-ton, I think we have a problem!

Hopefully, energy shortages and/orrising prices will not create prolongedeconomic damages. But in the interimthe only conclusion I can draw is toown a few natural gas stocks — severalpay handsome dividends, while someothers are growing like the credit carddebt. Give me a ring/email and I’ll pass

on a grocery list of names to explore.

Dave Kamm is an Investment AdvisorRepresentative with Raymond James &Associates, Inc. Member New York StockExchange/SIPC. Past performance doesnot guarantee future results. There is noassurance these trends will continue.The market value of securities fluctuatesand you may incur a profit or a loss.Dividends will fluctuate and are notguaranteed. The foregoing material doesnot provide a complete description ofthe security, markets or developmentsreferred to. Investors should thoroughlyinvestigate these companies beforeinvesting. Further information is avail-able upon request. Send Dave yourcomments or questions to [email protected]. At the time of publicationDave Kamm, members of his family andclients own shares of TKEFF, OXY,FXEN, THY-UN.TO, ACN.TO, EBR.TO,ATLS, FELNF, FQE.T, GDP, TUENF,PHX, KFX and LRT.

By Robert Cardwell

In a classic case of Sell on the News,crude oil made its historic highs just

as Hurricane Katrina was about topounce. Despite the subsequent lossof production and infrastructure,crude has since declined a sharp $10from the intraday top, with gasolineand heating oil tumbling after. Natur-al gas followed the same path, but itscorrection has been milder.

The “Establishment” position onenergy prices is now sharply divided,but the majority on Wall Street stillholds to its long-standing (and so farvery wrong) position that oil should bemuch lower. Our view has been andremains contrary. Prices are correcting asharp spike, with the downside pressureaugmented by the release of petroleumfrom the U.S. and the European strategicreserves.

Long term, we may or may not be

approaching “peak oil,” a current hottopic among oil people and observers.But even if there is significant oilwaiting to be discovered and pro-duced, it’s almost certainly in geologi-cally and politically difficult loca-tions, and is unlikely to come to mar-ket at the $25-$30 prices that theenergy bears are longing for.

In the shorter term, latest reportsshow 3.8 billion cubic feet of naturalgas and 0.86 million barrels of dailyoil production still off line in the Gulfof Mexico. That represents 38% ofthe gas and 57% of the pre-Katrinaoil flow from the Gulf. While a small-er portion of the gas remains shut in,it is a more important loss due to ourinability to import significant addi-tional quantities of natural gas. Therecovery pattern is matching almostexactly the one following hurricaneIvan. In that case, oil and gas produc-tion bounced back strongly for about

a week, and after that the rate ofimprovement was very gradual. Thistime, there is almost twice as muchproduction shut in.

Energy stocks are consolidating inthe wake of crude’s correction, buthave not suffered much. Some pressedhigher even as oil was correcting.While most have tacked on very goodgains, as a group they remain histori-cally cheap in term of current oil andgas prices. We’ve made substantialmoney in oil and gas stocks, some ofwhich we sold along the way and someof which we still have. While they mayundergo gyrations, there are few betterplaces for long-term money.

Parallel Petroleum (PLLL) madeanother new high and is consolidatingjust below that level. It’s no longer thegreat bargain it was at a third of the cur-rent price, but PLLL still has potential



Portfolio Updates: Energy Stocks Continue To Shine while Others Back and Fill


By J. Taylor Brown

October is finally here! This is thesweetest time of year for

Almanac Investors who employ sectorseasonalities. In years past we havemade a killing in ETFs by jumpingheadlong into the market in October.This year, however, caution is advised.

Banking — Seasonality:October Beginning to June BeginningAverage Return: 21.2%

Merrill Lynch Regional BankHOLDRS (RKH) has been in a virtualholding pattern between 130 and 140since the end of 2004. While this ETFhas been quite stable in the past, we areconcerned about exposure to bad mort-gage debt that may occur as overex-tended borrowers feel the heat as theirARMs become more expensive. BuyLimit: 120.00 Stop Loss: 108.00 TargetPrice: 145.44 Auto Sell: 159.98

Broker/Dealer — Seasonality:October Beginning to April MiddleAverage Return: 44.5%

iShares Dow Jones US Finan-cial Services (IYG) gets the nodover the iShares Dow Jones US Finan-cial Sector (IYF) due to less exposure

to the insurance sector. Broker/Dealerswill take a big hit if the market sours.Broker/Dealers generally lag the broad-er markets down and take the lead in arecovery. There will be money to bemade here, but we are setting the buylimit well below the current price. BuyLimit: 91.80 Stop Loss: 82.62 TargetPrice: 132.65 Auto Sell: 145.92

The second option is the SelectSector SPDR Financial (XLF).

Although the XLF has the same ten-dencies and exposure issues that theIYG has, it is a bit more diversified.We are looking to pick this up belowcurrent levels as well. Buy Limit:25.25 Stop Loss: 22.73 Target Price:36.49 Auto Sell: 40.13

Computer Tech — Seasonality:October Beginning to February BeginningAverage Return: 24.3%

iShares Goldman SachsTechnology (IGM) is heavilyweighted toward industry stalwartsMicrosoft, Intel, IBM, Cisco andDell. Tech has propped the market upas of late providing leadership in anuncertain market. It is amazing howtech, once considered a risky proposi-tion, has become the stabilizing force.

CYC ONE-YEAR SEASONAL PATTERN AVERAGE DAILY % CHANGE 1995 TO 2004

9/14/05 ISHARES D J US FINANCIAL SERV 107.73

9/14/05 SPDR FINANCIAL 29.65

9/14/05 ISHARES TECHNOLOGY 46.05

9/14/05 REGIONAL BANK HOLDRS 133.52

ETF’s are in Season — Caution is Advised


We envision that leadership from thissector will continue. Buy Limit:41.85 Stop Loss: 37.67 Target Price:50.02 Auto Sell: 55.02

Cyclical — Seasonality:October Beginning to May MiddleAverage Return: 21.0%

Materials — Seasonality:October Middle to May MiddleAverage Return: 17.2%

We are combining the Cyclical andMaterials recommendation by pickingup the Select SPDR Materials(XLB) only on a serious correction.Historically both sectors have had melt-downs followed by a sustained strength.

Both sectors are poised for a sharpcorrection. Buy Limit: 22.22 StopLoss: 20.00 Target Price: 26.04 AutoSell: 28.64

High Tech — Seasonality:October Beginning to January MiddleAverage Return: 28.5%

The Technology SelectSPDR (XLK) is more diversifiedthan the iShares Goldman SachsTechnology but has the same top-heavy weighting towards Microsoft,Intel, et al which we feel will be abuffering influence against our pre-dicted market pull-back. Buy Limit:19.00 Stop Loss: 17.10 Target Price:24.42 Auto Sell: 26.86

Internet — Seasonality:October Beginning to January BeginningAverage Return: 39.5%

We are going to recommend thesame troika of the Merrill LynchInternet Architecture (IAH), theMerrill Lynch Internet HOLDRS

(HHH) and the Merrill Lynch Inter-net Infrastructure (IIH) that has per-formed so well for us in the past. TheInternet has advanced past adolescenceand has proven to be a resilient sector.There will be pain felt sector wide in abad economy, but investors seem toalways jump back on this bandwagon atthe slightest hint of a turnaround.

IAH: Buy Limit: 31.57 Stop Loss:28.41 Target Price: 44.04 Auto Sell: 48.44

HHH: Buy Limit: 54.01 Stop Loss:48.61 Target Price: 75.34 82.87

IIH: Buy Limit: 3.27 Stop Loss:2.94 Target Price: 4.56 Auto Sell: 5.03

S5MATR ONE-YEAR SEASONAL PATTERN AVERAGE DAILY % CHANGE 1990 TO 2004

9/14/05 SPDR MATERIALS 27.79

9/14/05 INTERNET HOLDRS 59.32

9/14/05 SPDR TECH 20.90

9/14/05 INTERNET ARCHITECTURE HOLDRS 34.71

9/14/05 INTERNET INFRASTRUCTURE HOLDRS 3.60

Transports — Seasonality:October Beginning to May BeginningAverage Return: 20.4%

The transports sector is a new addi-tion this year. High oil prices and prob-lems with the airlines will weigh forsome time, but a knee jerk reactionnear term may cause an over correctionand a good entry point. We are settinga low buy limit for the iShares DowJones Transports (IYT) on thehopes of getting in after the forthcom-ing oil-fed bad earning that FedEx,UPS, Union Pacific, etc. are hinting at.Buy Limit: 54.82 Stop Loss: 49.34 Tar-get Price: 66.00 Auto Sell: 72.60

Real Estate — Seasonality:October End to July BeginningAverage Return: 18.8%

Many feel real estate has nowhereto go but down. Conversely many feelthat it has nowhere to go but up. Weare in the nowhere to go but downcamp, but the situation is too diceyhere to even consider a conservativeinvestment. We are avoiding thiscompletely this time around.

Semiconductors —Seasonality:October End to December BeginningAverage Return: 22.1%

Semiconductors have performedextremely well as of late and we feel will

continue to do so for at least the nearterm. We are going to try to get in on theiShares Goldman Sachs Semi-conductor (IGW) on a pullback. BuyLimit: 54.58 Stop Loss: 49.12 TargetPrice: 66.64 Auto Sell: 73.30

The market is frothy right now, andwe feel that picking a large number ofETFs at current levels is ill-advised.We obviously do not expect all ofthese recommendations to hit theirbuy limits. We may miss out on someof the sectors, but that’s ok. Remem-ber, one of the basic tenets of thisstrategy is to insulate against risk.


ETFs are in Season(continued from page 9)

AUGUST 2005 MOST ACTIVE ETFS BY SHARE VOLUME

Total August Avg. DailyTop 10 Most Active ETFs Volume August Vol

QQQQ NASDAQ 100 1,714,890 74,560SPY S&P 500 Spyder 1,306,565 56,807IWM iShares Russell 2000 505,783 21,991SMH Semiconductor HOLDRs 408,827 17,775EWJ iShares Japan 335,530 14,588XLE SPDR Energy 302,465 13,151XLF SPDR Financial 165,140 7,180DIA Diamonds DJIA 30 143,622 6,244OIH Oil Service HOLDRs 130,938 5,693RTH Retail HOLDRs 89,093 3,874Share volume numbers are in thousands.

AUGUST 2005 LARGEST ETFS BY MARKET CAP

Top 10 Largest ETFs Market Cap August % ChgSPY S&P 500 Spyder 49,284 -0.9%QQQQ NASDAQ 100 19,209 -1.5EFA iShares EAFE 18,490 3.8IVV iShares S&P 500 13,634 -1.0IWM iShares Russell 2000 8,479 -2.0MDY S&P Mid Cap 400 SPDR 8,284 -1.0DVY iShares DJ Select Dividend Index 7,252 -1.6EEM iShares Emerging Market Income 7,136 1.3DIA Diamonds DJIA 30 6,921 -1.3EWJ iShares Japan 6,852 8.6Market caps are in millions of dollars.

Week ETF ETFs ETFs Week ETF ETFs ETFsEnded Adv Decl Unch Ended Adv Decl Unch

2-Sep-05 180 9 1 25-Feb-05 147 23 126-Aug-05 33 154 3 18-Feb-05 65 105 119-Aug-05 21 169 0 11-Feb-05 121 46 412-Aug-05 126 62 2 4-Feb-05 163 8 05-Aug-05 55 134 1 28-Jan-05 105 56 829-Jul-05 148 37 5 21-Jan-05 20 147 222-Jul-05 145 43 2 14-Jan-05 88 79 215-Jul-05 163 27 0 7-Jan-05 3 166 08-Jul-05 167 21 2 31-Dec-04 126 43 01-Jul-05 123 58 1 23-Dec-04 162 7 0

24-Jun-05 19 163 0 17-Dec-04 150 18 117-Jun-05 176 5 1 10-Dec-04 34 13210-Jun-05 116 65 1 3-Dec-04 142 25 03-Jun-05 101 78 3 26-Nov-04 152 13 2

27-May-05 161 20 0 19-Nov-04 35 130 120-May-05 173 8 0 12-Nov-04 159 7 013-May-05 30 151 0 5-Nov-04 152 14 06-May-05 162 19 0 29-Oct-04 155 10 129-Apr-05 86 94 1 22-Oct-04 55 109 222-Apr-05 149 30 2 15-Oct-04 23 140 215-Apr-05 17 164 0 8-Oct-04 61 103 18-Apr-05 136 45 0 1-Oct-04 151 10 01-Apr-05 82 99 0 24-Sep-04 26 135 0

25-Mar-05 9 172 0 17-Sep-04 135 24 118-Mar-05 25 154 2 10-Sep-04 143 17 011-Mar-05 16 162 0 3-Sep-04 122 37 14-Mar-05 159 12 0 27-Aug-04 140 19 1

WEEKLY ADVANCES/DECLINES & HIGHS/LOWSWeekly ETF advances/declines using Friday closes.

9/14/05 ISHARES SEMICONDUCTOR 60.309/14/05 ISHARES DJ TRANSPORTS 64.32

ETF LabTrading Diary


ETF LabTrading Diary

140 New 52-Week Highs High Close Date 140 New 52-Week Highs High Close DateDSG streetTRACKS DJ Small Cap Growth 81.20 Aug 2 2005 TMW streetTRACKS Fortune 500 89.48 Aug 3 2005ELG streetTRACKS DJ US LC Growth 49.04 Aug 2 2005 VGT IT VIPERS 47.76 Aug 3 2005EWS iShares Singapore 8.28 Aug 2 2005 VHT Health Care VIPERS 54.49 Aug 3 2005ICF iShares Cohen & Steers Realty 77.34 Aug 2 2005 VPU Utilities VIPERS 68.18 Aug 3 2005IGW iShares Semiconductor 60.20 Aug 2 2005 VTI Vanguard Total Market VIPERS 122.98 Aug 3 2005IJH iShares S&P Mid Cap 400 72.61 Aug 2 2005 VTV Vanguard Value VIPERS 56.99 Aug 3 2005IJK iShares S&P Md Cp 400/BARRA Gr 73.18 Aug 2 2005 VUG Vanguard Growth VIPERS 53.17 Aug 3 2005IJR iShares S&P Small Cap 600 59.05 Aug 2 2005 VV Vanguard Large Cap VIPERS 55.08 Aug 3 2005IJS iShares S&P Sm Cp 600/BARRA Va 66.19 Aug 2 2005 XLG Rydex Russell Top 50 * 94.16 Aug 3 2005IJT iShares S&P Sm Cp 600 BARRA Gr 117.14 Aug 2 2005 XLK SPDR Tech 21.41 Aug 3 2005ISI iShares S&P 1500 110.78 Aug 2 2005 XLU SPDR Utilities 32.68 Aug 3 2005IWM iShares Russell 2000 68.37 Aug 2 2005 XLV SPDR Healthcare 32.09 Aug 3 2005IWN iShares Russell 2000 Value 68.81 Aug 2 2005 EWM iShares Malaysia 7.60 Aug 9 2005IWO iShares Russell 2000 Growth 70.16 Aug 2 2005 ADRE BLDRS Emerging Market 50 101.70 Aug 10 2005IWP iShares Russell Mid Cap Growth 91.50 Aug 2 2005 EEM iShares Emerging Market Income 80.35 Aug 10 2005IWZ iShares Russell 3000 Growth 41.27 Aug 2 2005 EKH Europe 2001 HOLDRs 66.84 Aug 10 2005IYR iShares DJ US Real Estate 68.37 Aug 2 2005 ILF iShares S&P Latin America 40 105.30 Aug 10 2005JKG iShares Morningstar Mid Cap 72.20 Aug 2 2005 ADRA BLDRS Asia 50 ADR 72.63 Aug 11 2005JKJ iShares Morningstar Small Cap 72.84 Aug 2 2005 ADRD BLDRS Developed Market 100 70.60 Aug 11 2005JKK iShares Morningstar Sm Cap Gr 67.35 Aug 2 2005 ADRU BLDRS Europe 100 ADR 72.09 Aug 11 2005JKL iShares Morningstar Sm Cap Val 73.65 Aug 2 2005 EFA iShares EAFE 56.75 Aug 11 2005MDY S&P Mid Cap 400 SPDR 132.27 Aug 2 2005 EWD iShares Sweden 22.63 Aug 11 2005PBE PowerShares Dynamic Bio&Genom * 17.07 Aug 2 2005 EWG iShares Germany 19.82 Aug 11 2005PSI PowerShares Dynamic Semis * 16.30 Aug 2 2005 EWI iShares Italy 26.44 Aug 11 2005PWJ PowerShares Dynamic Mid Cap Gr * 16.19 Aug 2 2005 EWK iShares Belgium 19.64 Aug 11 2005PWO PowerShares OTC 48.27 Aug 2 2005 EWL iShares Switzerland 18.24 Aug 11 2005PWT PowerShares Dynamic Sm Cap Gr * 16.52 Aug 2 2005 EWP iShares Spain 37.00 Aug 11 2005PWY PowerShares Dynamic MidCap Val * 16.14 Aug 2 2005 EWQ iShares France 26.43 Aug 11 2005PXQ PowerShares Dynamic Networking * 15.92 Aug 2 2005 EZA iShares S Africa Index 85.62 Aug 11 2005QQQQ NASDAQ 100 40.08 Aug 2 2005 EZU iShares EMU 77.70 Aug 11 2005RWR StreetTRACKS Wilshire REIT 213.29 Aug 2 2005 FEU streetTRACKS DJ STOXX 50 39.83 Aug 11 2005SMH Semiconductor HOLDRs 38.24 Aug 2 2005 FEZ streetTRACKS DJ Euro STOXX 50 41.89 Aug 11 2005VB Small Cap VIPERS 60.67 Aug 2 2005 IEV iShares S&P Europe 350 80.88 Aug 11 2005VBK Small Cap Growth VIPERS 58.37 Aug 2 2005 IXJ iShares S&P Global Healthcare 52.24 Aug 11 2005VBR Vanguard Small Cap Val VIPERS 63.46 Aug 2 2005 MKH ML Market 2000+ HOLDRs 55.82 Aug 11 2005VNQ REIT VIPERS * 63.30 Aug 2 2005 VGK European VIPERS * 52.58 Aug 11 2005VO Mid Cap VIPERS 63.35 Aug 2 2005 VWO Emerging Markets VIPERS * 54.72 Aug 11 2005VOX Telecom VIPERS * 56.69 Aug 2 2005 WMH Wireless HOLDRS 60.22 Aug 11 2005VXF Extended Market VIPERS 90.09 Aug 2 2005 EPP iShares Pacific Ex-Japan 100.89 Aug 12 2005BBH Biotech HOLDRs 196.93 Aug 3 2005 EWA iShares Australia 18.93 Aug 12 2005DSV streetTRACKS DJ Small Cap Value 190.05 Aug 3 2005 EWY iShares South Korea 37.32 Aug 12 2005DVY iShares DJ Select Dividend Index 64.50 Aug 3 2005 IXC iShares S&P Global Energy 97.38 Aug 12 2005EWH iShares Hong Kong 13.47 Aug 3 2005 BDH Broadband HOLDRs 17.79 Aug 15 2005EWT iShares Taiwan 12.65 Aug 3 2005 EWU iShares United Kingdom 19.07 Aug 15 2005IBB iShares NASDAQ Biotech 77.91 Aug 3 2005 EWW iShares Mexico 30.65 Aug 15 2005IDU iShares DJ US Utilities 80.16 Aug 3 2005 FXI iShares FTSE/Xinhua China 25 * 65.80 Aug 15 2005IVE iShares S&P 500/BARRA Value 64.72 Aug 3 2005 IXG iShares S&P Global Financial 67.92 Aug 15 2005IVV iShares S&P 500 124.67 Aug 3 2005 NYC iShares NYSE Composite 69.55 Aug 15 2005IVW iShares S&P 500 BARRA Growth 59.51 Aug 3 2005 PBS PowerShares Dynamic Media * 15.11 Aug 15 2005IWB iShares Russell 1000 67.61 Aug 3 2005 PGJ PowerShares Golden Dragon Healthcare * 15.00 Aug 15 2005IWD iShares Russell 1000 Value 69.32 Aug 3 2005 IAU iShares Comex Gold * 44.54 Aug 16 2005IWF iShares Russell 1000 Growth 50.80 Aug 3 2005 EWJ iShares Japan 11.23 Aug 22 2005IWR iShares Russell Mid Cap 87.09 Aug 3 2005 ITF iShares S&P/TOPIX 150 96.12 Aug 22 2005IWS iShares Russell Mid Cap Value 124.66 Aug 3 2005 VPL Pacific VIPERS * 52.80 Aug 22 2005IWV iShares Russell 3000 71.98 Aug 3 2005 AGG iShares Lehman Aggregate Bond 102.51 Aug 31 2005IWW iShares Russell 3000 Value 90.52 Aug 3 2005 EWC iShares Canada 20.40 Aug 31 2005IYH iShares DJ US Healthcare 63.59 Aug 3 2005 EWO iShares Austria 26.90 Aug 31 2005IYW iShares DJ US Tech 49.40 Aug 3 2005 EWZ iShares Brazil 28.09 Aug 31 2005IYY iShares DJ US Total Market 60.25 Aug 3 2005 IGE iShares Natural Resources 86.34 Aug 31 2005IYZ iShares DJ US Telecom 24.39 Aug 3 2005 IYE iShares Energy 86.79 Aug 31 2005JKE iShares Morningstar Large Cap Growth 61.70 Aug 3 2005 LQD iShares Corporate Bond 111.50 Aug 31 2005JKH iShares Morningstar Mid Cap Growth 73.34 Aug 3 2005 OIH Oil Service HOLDRs 119.40 Aug 31 2005JKI iShares Morningstar Mid Cap Value 75.25 Aug 3 2005 PBW PowerShares Wilder Hill Energy * 17.22 Aug 31 2005KLD iShares KLD Select Social * 52.89 Aug 3 2005 PJP PowerShares Dynamic Pharma * 16.14 Aug 31 2005ONEQ Fidelity NASDAQ Composite 87.50 Aug 3 2005 SHY iShares Lehman 1-3 Yr Bonds 80.87 Aug 31 2005OOO streetTRACKS SPDR O-Strip * 54.18 Aug 3 2005 UTH Utilities HOLDRs 115.61 Aug 31 2005PSJ PowerShares Dynamic Software * 16.18 Aug 3 2005 VDE Energy VIPERS * 72.70 Aug 31 2005PWC PowerShares Dynamic Market 44.65 Aug 3 2005 XLE SPDR Energy 50.64 Aug 31 2005PWP PowerShares Dynamic Sm Cap Val * 16.38 Aug 3 2005 2 New 52-Week Lows Low Close DatePWV PowerShares Dynamic Lg Cap Val * 15.84 Aug 3 2005 PBJ PowerShares Dynamic Food & Bev * 14.24 Aug 30 2005RSP Rydex S&P Equal Weight 164.83 Aug 3 2005 PEJ PowerShares Dynamic Leis & Ent * 13.98 Aug 30 2005SPY S&P 500 Spyder 124.72 Aug 3 2005 * New Issue

JULY 2005 NEW 52-WEEK HIGHS & LOWS


BONDS INTERNETAugust YTD 1-Year August YTD 1-Year

TLT iShares Lehman 20+yr Bond 3.5% 11.2% 14.4% BHH B2B Internet HOLDRs 5.8% -11.3% 22.3%IEF iShares Lehman 7-10 Year 2.0 3.7 4.2 BDH Broadband HOLDRs 2.0 5.8 20.3TIP iShares Lehman TIPS Bond 1.9 0.0 2.2 HHH Internet HOLDRs -1.3 -16.1 8.9LQD iShares Corporate Bond 1.5 3.2 4.9 IAH Internet Architecture HOLDRs -3.1 -8.3 9.6AGG iShares Lehman Aggregate Bond 1.2 2.7 4.2 IIH Internet Infrastructure HOLDRS -8.3 -23.5 15.0SHY iShares Lehman 1-3 Yr Bonds 0.7 1.2 1.0 Average: -1.0 -10.7 15.2

Average: 1.8 3.7 5.1CONSUMER MAJOR INDICES

August YTD 1-Year August YTD 1-YearYK iShares DJ US Consumer Goods -0.5% 2.0% 10.7% SPY S&P 500 Spyder -0.9% 2.2% 12.5%XLP SPDR Consumer Staples -1.7 0.9 5.1 MDY S&P Mid Cap 400 SPDR -1.0 8.4 24.3VDC Consumer Staples VIPERS -2.0 2.3 9.1 DIA Diamonds DJIA 30 -1.3 -1.1 5.3XLY SPDR Consumer Discretionary -3.3 -4.8 11.1 QQQQ NASDAQ 100 -1.5 -2.3 15.8IYC iShares DJ US Consumer Cyclical -3.8 -2.7 12.4 IWM iShares Russell 2000 -2.0 3.5 24.3VCR Consumer Discretionary VIPERS -4.5 -3.4 14.5 Average: -1.4 2.1 16.4RTH Retail HOLDRs -6.3 1.2 13.5

Average: -3.2 -0.6 10.9ENERGY MATERIALS

August YTD 1-Year August YTD 1-YearPBW PowerShares Wilder Hill Energy 8.6% — — IYM iShares DJ US Basic Materials -3.2% -4.3% 7.9%XLE SPDR Energy 6.4 40.3% 60.8% VAW Materials VIPERS -3.6 -5.3 8.8IXC iShares S&P Global Energy 6.3 32.4 52.0 XLB SPDR Materials -4.2 -6.9 5.1VDE Energy VIPERS 6.3 38.7 — Average: -3.7 -5.5 7.3IYE iShares Energy 6.1 35.7 53.5OIH Oil Service HOLDRs 5.6 40.9 63.7

Average: 6.6 37.6 57.5 MEDICAL

FINANCIAL August YTD 1-YearAugust YTD 1-Year BBH Biotech HOLDRs 2.2% 28.2% 39.6%

IXG iShares S&P Global Financial 0.1% -0.4% 14.1% IBB iShares NASDAQ Biotech 0.3 1.1 12.6IYG iShares DJ US Financial Serv -1.5 -4.6 4.0 IXJ iShares S&P Global Healthcare -0.2 4.4 10.3RKH Regional Bank HOLDRs -1.6 -3.2 3.2 VHT Health Care VIPERS -0.2 6.9 13.0XLF SPDR Financial -1.6 -2.5 4.3 IYH iShares DJ US Healthcare -0.3 6.7 11.8IYF iShares DJ US Financial -2.3 -2.1 6.0 XLV SPDR Healthcare -0.3 5.4 9.0VFH Financial VIPERS -2.3 -1.8 7.0 PPH Pharmaceutical HOLDRs -1.1 0.4 -2.1

Average: -1.5 -2.4 6.4 Average: 0.1 7.6 13.5INDUSTRIALS/TRANSPORTS

August YTD 1-Year NATURAL RESOURCES

IYJ iShares DJ US Industrial -1.5% -2.0% 11.3% August YTD 1-YearXLI SPDR Industrial -2.4 -3.6 8.4 IGE iShares Natural Resources 6.8% 32.3% 50.9%VIS Industrial VIPERS -2.7 -2.1 — GLD streetTRACKS Gold 1.4 -0.9 —IYT iShares DJ Transports -3.0 -3.2 18.8 IAU iShares Comex Gold 1.3 — —

Average: -2.4 -2.7 12.8 Average: 3.1 15.7 50.9

ETF LabSector Performance

1-MONTHLeaders Laggards

EWZ iShares Brazil 10.7% IIH Internet Infrastructure HOLDRS -8.3%PBW PowerShares Wilder Hill Energy 8.6 PEJ PowerShares Dynamic Leis & Ent -6.5EWJ iShares Japan 8.6 RTH Retail HOLDRs -6.4EWO iShares Austria 8.4 PBJ PowerShares Dynamic Food & Bev -5.2ITF iShares S&P/TOPIX 150 8.3 VCR Consumer Discretionary VIPERS -4.5EZA iShares S Africa Index 7.5 IYR iShares DJ US Real Estate -4.3IGE iShares Natural Resources 6.8 XLB SPDR Materials -4.2XLE SPDR Energy 6.4 RWR StreetTRACKS Wilshire REIT -4.1IXC iShares S&P Global Energy 6.3 EWT iShares Taiwan -4.1VDE Energy VIPERS 6.3 VNQ REIT VIPERS -4.1


PBW PowerShares Wilder Hill Energy 17.9% IIH Internet Infrastructure HOLDRS -10.7%OIH Oil Service HOLDRs 17.3 PEJ PowerShares Dynamic Leis & Ent -4.2BDH Broadband HOLDRs 17.3 PBJ PowerShares Dynamic Food & Bev -3.0BBH Biotech HOLDRs 17.2 EWT iShares Taiwan -2.9EZA iShares S Africa Index 16.7 PPH Pharmaceutical HOLDRs -1.7VDE Energy VIPERS 14.0 TIP iShares Lehman TIPS Bond -1.3XLE SPDR Energy 13.9 IYG iShares DJ US Financial Serv -0.8IGE iShares Natural Resources 13.8 VFH Financial VIPERS -0.8PBE PowerShares Dynamic Bio&Genom 13.3 PBS PowerShares Dynamic Media -0.6EWZ iShares Brazil 13.2 IEF iShares Lehman 7-10 Year -0.2


OIH Oil Service HOLDRs 28.4% IIH Internet Infrastructure HOLDRS -16.2%PBW PowerShares Wilder Hill Energy 27.4 PPH Pharmaceutical HOLDRs -3.0EZA iShares S Africa Index 22.3 TIP iShares Lehman TIPS Bond -1.3IGE iShares Natural Resources 22.2 XLI SPDR Industrial -1.3VDE Energy VIPERS 22.0 BHH B2B Internet HOLDRs -0.9XLE SPDR Energy 21.9 XLB SPDR Materials -0.9IYE iShares Energy 20.0 EWT iShares Taiwan -0.8IXC iShares S&P Global Energy 19.6 XLP SPDR Consumer Staples -0.6ILF iShares S&P Latin America 40 18.9 SWH Software HOLDRs -0.5EWO iShares Austria 18.9 XLG Rydex Russell Top 50 -0.5


BBH Biotech HOLDRs 43.5% XLB SPDR Materials -11.0%OIH Oil Service HOLDRs 23.0 VAW Materials VIPERS -9.8BDH Broadband HOLDRs 21.4 IYM iShares DJ US Basic Materials -9.1ICF iShares Cohen & Steers Realty 17.9 IIH Internet Infrastructure HOLDRS -8.1RWR StreetTRACKS Wilshire REIT 17.0 EWT iShares Taiwan -5.6ILF iShares S&P Latin America 40 16.6 BHH B2B Internet HOLDRs -4.8IGN iShares Multimedia Networking 16.6 IAH Internet Architecture HOLDRs -2.7XLE SPDR Energy 16.2 XLI SPDR Industrial -1.9UTH Utilities HOLDRs 16.0 DIA Diamonds DJIA 30 -1.6EWC iShares Canada 15.9 OEF iShares S&P 100 -1.5

ETF LabLeaders & Laggards


REAL ESTATE SEMICONDUCTORSAugust YTD 1-Year August YTD 1-Year

ICF iShares Cohen & Steers Realty -4.0% 10.9% 28.6% IGW iShares Semiconductor 0.2% 9.6% 28.9%VNQ REIT VIPERS -4.1 9.2 — SMH Semiconductor HOLDRs -0.9 11.4 26.8RWR StreetTRACKS Wilshire REIT -4.1 10.3 27.0 Average: -0.3 10.5 27.8IYR iShares DJ US Real Estate -4.3 7.6 23.6Average: -4.1 9.5 26.4 TELECOM/WIRELESS

TECHNOLOGY August YTD 1-YearAugust YTD 1-Year WMH Wireless HOLDRS 0.7% 2.9% 22.3%

IGN iShares Multimedia Networking 1.2% 0.2% 18.0% IYZ iShares DJ US Telecom -1.2 -0.6 10.3IXP iShares S&P Global Tech 0.5 -3.0 16.6 TTH Telecom HOLDRs -2.5 -3.9 4.8IXN iShares S&P Global IT -0.5 -1.6 15.1 VOX Telecom VIPERS -3.0 -0.4 —VGT IT VIPERS -0.6 -0.6 16.4 Average: -1.5 -0.5 12.5IYW iShares DJ US Tech -0.7 -0.1 17.7 UTILITIESIGV iShares Software -0.8 -6.1 23.4 August YTD 1-YearIGM iShares Technology -0.9 -2.2 16.4 UTH Utilities HOLDRs 1.6% 22.1% 41.9%XLK SPDR Tech -1.0 -1.2 14.6 IDU iShares DJ US Utilities 0.9 17.7 33.1SWH Software HOLDRs -1.0 -5.7 19.2 XLU SPDR Utilities 0.7 18.5 33.8MTK streetTRACKS High Tech 35 -1.1 -2.4 17.8 VPU Utilities VIPERS 0.6 17.5 33.3

Average: -0.5 -2.3 17.5 Average: 0.9 18.9 35.5

FOREIGNAugust YTD 1-Year August YTD 1-Year

EWZ iShares Brazil 10.7% 26.3% 68.6% EWK iShares Belgium 1.5% 2.6% 29.7%EWJ iShares Japan 8.6 1.9 12.0 EWI iShares Italy 1.5 1.3 30.7EWO iShares Austria 8.4 16.9 57.0 VWO Emerging Markets VIPERS 1.4 — —ITF iShares S&P/TOPIX 150 8.2 1.8 11.7 EWQ iShares France 1.3 7.1 26.4EZA iShares S Africa Index 7.5 6.3 42.3 EEM iShares Emerging Market Income 1.3 16.1 47.1IXC iShares S&P Global Energy 6.3 32.4 52.0 EWN iShares Netherlands 1.1 4.7 24.8EWC iShares Canada 6.2 18.0 44.6 EWP iShares Spain 1.0 1.8 32.0VPL Pacific VIPERS 6.0 — — FEZ streetTRACKS DJ Euro STOXX 50 0.8 3.6 26.4ILF iShares S&P Latin America 40 5.6 29.2 68.9 IOO iShares S&P Global 100 0.7 1.3 10.8EWU iShares United Kingdom 4.0 4.0 20.3 EKH Europe 2001 HOLDRs 0.7 5.4 24.6ADRA BLDRS Asia 50 ADR 3.9 2.4 15.5 IXP iShares S&P Global Tech 0.5 -3.0 16.6EFA iShares EAFE 3.8 4.9 23.2 IXG iShares S&P Global Financial 0.1 -0.4 14.1IEV iShares S&P Europe 350 3.0 5.4 24.8 FXI iShares FTSE/Xinhua China 25 0.0 11.4 —VGK European VIPERS 2.8 — — IXJ iShares S&P Global Healthcare -0.2 4.4 10.3ADRE BLDRS Emerging Market 50 2.8 20.2 48.0 IXN iShares S&P Global IT -0.5 -1.6 15.1ADRD BLDRS Developed Market 100 2.8 4.1 22.2 DGT streetTRACKS DJ Global Titans 50 -0.5 0.6 8.7EWA iShares Australia 2.7 10.7 41.4 EWW iShares Mexico -0.6 16.2 52.3ADRU BLDRS Europe 100 ADR 2.3 4.7 24.6 EWH iShares Hong Kong -0.9 8.0 22.1EWD iShares Sweden 2.0 4.1 30.0 PGJ PowerShares Golden Dragon Healthcare -1.4 -2.5 —EWL iShares Switzerland 1.9 3.4 22.4 EWM iShares Malaysia -2.4 1.5 14.7EWG iShares Germany 1.9 3.6 30.1 EWY iShares South Korea -2.5 20.0 45.3FEU streetTRACKS DJ STOXX 50 1.8 4.9 23.3 EWS iShares Singapore -3.5 9.2 24.3EZU iShares EMU 1.6 4.1 28.6 EWT iShares Taiwan -4.1 -2.6 11.2EPP iShares Pacific Ex-Japan 1.6 9.6 34.8 Average: 2.2 7.4 29.4

ETF LabSector Performance

1-YEARLeaders Laggards

ILF iShares S&P Latin America 40 68.9% PPH Pharmaceutical HOLDRs -2.1%EWZ iShares Brazil 68.6 SHY iShares Lehman 1-3 Yr Bonds 1.0OIH Oil Service HOLDRs 63.7 TIP iShares Lehman TIPS Bond 2.2XLE SPDR Energy 60.8 RKH Regional Bank HOLDRs 3.2EWO iShares Austria 57.0 IYG iShares DJ US Financial Serv 4.0IYE iShares Energy 53.5 AGG iShares Lehman Aggregate Bond 4.2EWW iShares Mexico 52.3 IEF iShares Lehman 7-10 Year 4.2IXC iShares S&P Global Energy 52.0 XLF SPDR Financial 4.3IGE iShares Natural Resources 50.9 OEF iShares S&P 100 4.5ADRE BLDRS Emerging Market 50 48.0 TTH Telecom HOLDRs 4.8


EWO iShares Austria 158.9% IIH Internet Infrastructure HOLDRS -2.5%EWZ iShares Brazil 138.5 SMH Semiconductor HOLDRs -0.3ILF iShares S&P Latin America 40 122.6 BHH B2B Internet HOLDRs 0.5XLE SPDR Energy 111.8 PPH Pharmaceutical HOLDRs 2.0EWW iShares Mexico 106.8 IBB iShares NASDAQ Biotech 3.4IYE iShares Energy 103.0 SHY iShares Lehman 1-3 Yr Bonds 3.8OIH Oil Service HOLDRs 99.5 IGW iShares Semiconductor 4.9IXC iShares S&P Global Energy 97.7 EWT iShares Taiwan 6.5IGE iShares Natural Resources 92.5 IAH Internet Architecture HOLDRs 8.7EWK iShares Belgium 89.5 OEF iShares S&P 100 11.7


EWZ iShares Brazil 267.7% PPH Pharmaceutical HOLDRs 3.0%EWO iShares Austria 244.9 SHY iShares Lehman 1-3 Yr Bonds 6.0HHH Internet HOLDRs 192.2 XLP SPDR Consumer Staples 13.4BDH Broadband HOLDRs 142.3 IEF iShares Lehman 7-10 Year 16.1BBH Biotech HOLDRs 137.1 XLV SPDR Healthcare 20.9EWW iShares Mexico 136.4 OEF iShares S&P 100 22.9XLE SPDR Energy 132.9 LQD iShares Corporate Bond 24.6IGN iShares Multimedia Networking 132.1 RTH Retail HOLDRs 26.8EWD iShares Sweden 129.4 ELG streetTRACKS DJ US LC Growth 27.5OIH Oil Service HOLDRs 127.2 IXJ iShares S&P Global Healthcare 28.9


EWO iShares Austria 265.0% BHH B2B Internet HOLDRs -94.5%IYR iShares DJ US Real Estate 131.7 IIH Internet Infrastructure HOLDRS -93.9EWA iShares Australia 115.0 BDH Broadband HOLDRs -81.3IWN iShares Russell 2000 Value 100.8 IAH Internet Architecture HOLDRs -66.9EWW iShares Mexico 95.5 IYW iShares DJ US Tech -64.1IJJ iShares S&P Md Cp 400/BARRA Va 91.8 SMH Semiconductor HOLDRs -62.2EWY iShares South Korea 91.1 XLK SPDR Tech -61.9IJS iShares S&P Sm Cp 600/BARRA Va 86.1 QQQQ NASDAQ 100 -61.2IYE iShares Energy 77.0 IYZ iShares DJ US Telecom -50.9XLE SPDR Energy 69.8 TTH Telecom HOLDRs -47.1

ETF LabLeaders & Laggards


with its combination of high potentialexploration projects balanced by lowrisk development properties.

American Oil & Gas (AEZ) alsotopped its earlier high before taking aslight dip. The company earned a pennya share in the second quarter on substan-tially higher sales. While it’s nice thatAmerican is now profitable, the compa-ny remains not far beyond the startupstage, and its potential lies with majorproperties that are not yet producing. Inthe Fetter field, the first well has beensidetracked after encountering high pres-sures and things are now proceeding asplanned. The first well on the Krejci proj-ect should spud soon. Today’s productprices are attracting potential partners forother projects that were on the back burn-er. AEZ’s stock has come a long way, butthe company is in the early stages of whatcould be a very rewarding growth curve.Newcomers can still buy corrections.

Vintage Petroleum (VPI) hasbeen one more energy stock on thenew high lists. CEO Charles Stephen-son made the company’s most forth-coming statement yet about the impor-tant Palo Duro project — not that hesaid a lot. Stephenson did allow thatthey had encountered nothing unex-pected and that work was proceeding.As Vintage now has a lot of data aboutthe area, that seemed fairly bullish andthe market took it as such. After threewells, the project is still on go.

The junior companies involved in theplay, including our Bankers Petrole-um (BNK.V), moved farther and faster.Bankers has been very aggressive aboutthe Palo Duro play, accumulating by farthe largest land position in the area. Thisis a home run if the play succeeds, butthere is still some risk.

Alternative energy stocks are alsobenefiting, though somewhat moreselectively. Ballard Power (BLPD)took another leg up on news it wouldsupply 100 fuel cells for lift trucks.It’s encouraging to see the companyopen new markets.

We caught Fuel Cell Energy(FCEL) very close to its bottom, andthe stock has continued to advance asthe company secures new orders forits large-capacity units. Since lastissue we have picked up PacificEthanol (PEIX) at our limit (a levelwhere the stock has good technicalsupport) and PEIX has bounced nice-ly from there. Last month’s other sug-gestion, New Frontier Energy(NFEI) moved up without trading atour limit. We’d still like to buy it if acorrection gives us a chance.

The Metals FrontGold has been edging steadily higher,

platinum is not too far from its all timehighs, and copper has just made an his-toric high. Yet the metals stocks, particu-larly the juniors, continue to meander.Most of our selections are up in the lastmonth, but not by much. They remaincheap on assets, discovery potential orboth, and remember that they are a bit ofan insurance policy as well.

White Knight Resources(WKR.V), our biggest recent winnerin the sector, will soon start drilling anew target in Nevada with partnerTech Cominco. The zone has beenidentified by promising surface show-ings as well as geophysics. VictoriaResources (VIT.V) is in the samegame but hasn’t yet found anything aspromising and the stock remainsdepressed.

Oriel Resources (ORL.TO) hasdecided to give priority to developingits Voskhod chrome ore project. Thisprojected mine can be put on linefaster and much cheaper than themuch larger nickel project. Moreover,the economics are better, with an inde-pendent study putting the internal rateof return at 62%. Voskhod alone has anet present value more than twice themarket cap of ORL. The stock is goodvalue here and a better value near therecent low ($0.60 Canadian).

Thoroughly MixedWhile the averages have put on a

good performance, market breadth has

not been impressive, and our portfolioreflects this. Aside from energy, ourstocks are decidedly mixed. Investorsare punishing disappointing results atleast as much as they are rewardinggreat news — and they are ignoringanything in between.

Datatrak (DATA) reported slowersales growth for the second quarterand the stock collapsed, setting off ourprotective sell stop. Earnings tripled tothree cents a share but sales were“only” up 42%. Those would be greatresults for 98% of all companies, butthe market was used to faster top-linegrowth (59% in the previous quarter).This is still a very young companywhose business depends on landinglong-term contracts — they don’tcome like clockwork. The market overreacted, but still gave us a 977% profiton the recent position. We are watch-ing for a possible reentry point.

eMagin (EMA) also took a hit ona disappointing report; second quartersales were flat (and minimal) with thefirst quarter. We’ve been holding tosee whether the company wouldfinally be able to execute—so far ithasn’t. A new, improved visor isattracting a lot of customer interestaccording to management. At the cur-rent depressed price, risk is limitedand we’ll hold at least for a bounce.

Conceptus (CPTS), by contrast,has continued to forge ahead on thestrength of its sterling second quarterreport. Traders are betting that thesales momentum will continue, and wehave no reason to doubt it. Our auto-matic trigger to sell half on a doublewas executed as the stock traded above12 this week. The stock is getting a bitrich, but should be held here andbought on any decent correction.

Spectrum Signal Processing(SSPI) was selected by the French Inte-rior Ministry to provide software definedradio technology and services for a newhomeland security communications sys-tem. The contract is important in itselfand as a precedent. At this writing thecompany has also just unveiled a con-

Portfolio Updates(continued from page 7)

tract with General Dynamics to work onsuch a system for the Canadian military.Finally Spectrum’s cutting-edge radiotechnology seems to be getting traction.New products argue for a brighter futureeven though SSPI is currently sufferingfrom the decline of older lines. The stock

should be accumulated for the long term.

Robert Cardwell is an Equity ResearchConsultant to the Hirsch Organization.

Disclosure Note: At press timeOfficers of the Hirsch Organizationhave positions in American Oil &

Gas, AVI BioPharma, Bankers Petro-leum, Biomira, Cambridge Display,Datatrack, eMagin, European Miner-als, FX Energy, New Frontier Energy,Northern Orion, Orezone, PacificNorthwest Capital, Parallel Petrole-um, and Vintage Petroleum.


Almanac Investor Stock PortfolioRecommended 9/13/05 Net % Buy Stop

Ticker Company Date Price Price Value*** Return*** Limit1 Loss1 Current Advice 1

GPX GP Strategies 2 10/16/02 4.20 8.64 $1,028.57 102.9% 7.00 6.00 BUY DIPSOZN Orezone Resources 2 1/15/03 0.25 1.60 $3,200.00 320.0% 1.20 BUY DIPSDATA Datatrak 2 2/12/03 1.30 10.08 Closed 619.2% SPLIT 3:2 on 8/31, STOPPED OUT 9/1/05 @ 9.35EMA eMagin 2 2/12/03 0.75 0.66 $440.00 44.0% HOLDEPM.T European Minerals ** 2 9/17/03 0.44 0.66 $750.00 75.0% 0.44 BUY DIPSAVII AVI BioPharma 3/17/04 3.12 2.22 $711.54 -28.8% 2.44 BUY CURRENT LEVELPLLL Parallel Petroleum 2 5/12/04 3.90 12.60 $1,615.38 161.5% 7.80 HOLDNTO Northern Orion 6/9/04 2.22 2.64 $1,189.19 18.9% HOLDPFN.T Pacific Northwest Capital ** 6/9/04 0.57 0.33 $570.18 -43.0% HOLDAEZ American Oil & Gas 2 8/11/04 1.52 5.85 $1,924.34 192.4% 3.04 HOLDBNK.V Bankers Petroleum ** 2 10/20/04 0.60 1.60 $1,333.33 133.3% 0.84 HOLDANGO AngioDynamics * 2 10/29/04 9.15 22.67 $1,238.80 123.9% 18.30 HOLDOLED Cambridge Display Tech 1/13/05 6.25 6.95 $1,111.36 11.1% HOLDVIT.V Victoria Resources * 3/16/05 0.55 0.46 $836.36 -16.4% 0.45 BUY DIPSWKR.V White Knight Resources * 2 3/16/05 0.73 1.55 $1,061.64 106.2% HOLD, SOLD HALF 8/3/05 @ 1.46ORL.T Oriel Resources * 4/1/05 1.06 0.76 $716.98 -28.3% 0.65 BUY DIPSEGHT 8x8 5/5/05 1.50 2.19 $1,460.00 46.0% 1.50 BUY DIPSBLDP Ballard Power Systems 5/12/05 3.51 6.21 $1,769.23 76.9% 4.00 HOLDFCEL FuelCell Energy 5/12/05 7.93 10.99 $1,385.88 38.6% HOLDVPI Vintage Petroleum 5/12/05 26.20 41.52 $1,584.73 58.5% HOLDCPTS Conceptus 2 6/15/05 6.00 11.89 $990.83 99.1% HOLD, SOLD HALF 9/12/05 @ 12.00DAIO Data I/O 7/13/05 2.70 2.37 $877.78 -12.2% 2.70 BUY CURRENT LEVELEZEM E-Z-EM 7/28/05 14.75 13.75 $932.20 -6.8% 14.75 BUY CURRENT LEVELSSPI Spectrum Signal 7/28/05 1.36 1.31 $963.24 -3.7% 1.36 BUY CURRENT LEVELPEIX Pacific Ethanol 8/10/05 7.75 8.75 $1,129.03 12.9% 7.75 BUY DIPSSPIR Spire 7/13/05 6.25 10.06 Not Yet Executed 6.25 BUY CORRECTIONNFEI New Frontier Energy 8/10/05 1.55 2.20 Not Yet Executed 1.55 BUY DIPSATEA Astea International 9/13/05 7.50 8.07 New Recommendation 7.50 BUY DIPS

Cash From Half & Closed Positions $41,183.04Total Portfolio Value $70,003.64

% Change from Last Issue 1.8%% Change from Last 12 Issues 39.8%

Portfolio % Gain Since Inception - July 2001 218.2%

Almanac Investor ETF PortfolioRecommended 9/13/05 Net % Buy Stop Auto

Ticker Company Date Price Price Return*** Limit1 Loss1 Sell Current Advice 1

YG iShares D J US Financial Serv 2/16/05 110.00 108.00 -2.3% 110.00 107.50 134.31 HOLDPBW PowerShares WilderHill Clean Energy 5/12/05 12.92 18.14 40.4% 13.75 N/A Buy DipsIYZ iShares D J US Telecom 8/10/05 23.50 23.82 1.4% 23.50 31.33 Buy Dips - End SeptIXJ iShares S&P Global Healthcare 8/10/05 50.75 52.27 3.0% 50.75 61.97 Buy Dips - Begin SeptIYH iShares D J Healthcare 8/10/05 60.50 63.43 Not Yet 60.50 75.13 Buy Dips - End SeptPPH Pharmaceutical HOLDRS 8/10/05 69.00 72.43 Not Yet 69.00 80.53 Buy Dips - Begin SeptRTH Retail HOLDRS 8/10/05 87.50 95.73 Not Yet 87.50 108.28 Buy Dips - End SeptIAH Internet Architecture HOLDRs 9/14/05 31.57 35.04 New 31.57 28.41 48.44 Buy Dips - Begin OctHHH Internet HOLDRS 9/14/05 54.01 60.01 New 54.01 48.61 82.87 Buy Dips - Begin OctIIH Internet Infrastructure HOLDRs 9/14/05 3.27 3.63 New 3.27 2.94 5.03 Buy Dips - Begin OctIYG iShares D J US Financial Serv 9/14/05 91.80 108.00 New 91.80 82.62 145.92 Buy Dips - Begin OctIYT iShares DJ Transports 9/14/05 54.82 64.49 New 54.82 49.34 72.60 Buy Dips - Begin OctIGW iShares Semiconductor 9/14/05 54.58 60.64 New 54.58 49.12 73.30 Buy Dips - End OctIGM iShares Technology 9/14/05 41.85 46.50 New 41.85 37.67 55.02 Buy Dips - Begin OctRKH Regional Bank HOLDRs 9/14/05 120.00 133.62 New 120.00 108.00 159.98 Buy Dips - Begin OctXLF SPDR Financial 9/14/05 25.25 29.71 New 25.25 22.73 40.13 Buy Dips - Begin OctXLB SPDR Materials 9/14/05 22.22 27.77 New 22.22 20.00 28.64 Buy Dips - Mid OctXLK SPDR Tech 9/14/05 19.00 21.12 New 19.00 17.10 26.86 Buy Dips - Begin Oct

Open Position Average % Return 10.6%Average Total % Return 6.4%

1 STANDARD POLICY: SELL HALF ON A DOUBLE, Buy Limits good til cancel, Stop only if closed below Stop Loss. 2 Half position. * Adjusted. ** Canadian Dollars.*** Based on $1000 initial investment in each stock, Net % Return includes half & closed positions available on request, Value is open position value.


Pursuant to the provisions of Rule 206 (4) of the Investment Advisers Act of 1940, we advise all readers to recognize that they should not assume that all recommendations made in the future will be profitable or will equal the performance of any recommendations referred to in this issue. The information presented in this issue has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.The security portfolio of our employees, officers or affiliated companies may, in some instances, include securities mentioned in this issue.

MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SAT SUN

10 11 12 13 14

17 18 19 20 21

24 25 26 27 28

3 4 5 6 7

22 23

29 30

15 16

31

Economic release dates obtained from sources believed to be reliable. All dates subject to change.

OCTOBER 20058 9

Market at a GlanceFundamental: Dismal. Companies are already alluding to Katrina impacted earnings. Were earnings going to be badanyway? Is this really just an excuse? Oil, Deficits, China, Terror, the list goes on and on.Technical: Faltering. Volume has picked up on down days. Every attempt at making a new high on the Dow hasfailed for over six months. Monetary: Muddy. Pity whoever replaces Mr. Greenspan. Monetary policy is in its worst shape in decades.Seasonal: Bullish. October can be tough, but we are finally entering the seasonally favorable period on Wall Street.But we are not advocating jumping headlong into the market as we have in years past. Prudence is paramount.

Bull symbol signifies a favorable day based onthe S&P 500 Rising 60% or more of the time on a particular trading day 1984-2004.

Bear symbol signifies an unfavorable day based on the S&P 500 Falling 60% or more of the time on a particular trading day 1984-2004.

FOMC Minutes

Import/Export PricesInt'l Trade DeficitTreasury Budget

Business InventoriesCPIIndustrial ProductionSept Retail SalesU Mich Consumer Sentiment

NAHB Housing Mrkt IndexPPISEMI Book to Bill Ratio

Beige BookHousing Starts

Leading IndicatorsPhiladelphia Fed Survey

Consumer ConfidenceExisting Home Sales

Durable GoodsNew Home Sales

ECIAdvance Q3 GDPU Mich Consumer Sentiment

Agricultural PricesChicago PMIPersonal Income/SpendingSemiconductor Billings

*Tuesdays: Weekly Chain Store Sales & Average Hourly Earnings

*Wednesdays: Oil & Gas Inventories*Thursdays: Weekly Unemployment Report,Weekly Mutual Fund Flows &

Weekly Natural Gas Storage Report*Fridays: Weekly Leading Economic Index

*Except holidaysNote: Economic Releases in Bold are especially important

Construction SpendingISM IndexSemiconductor BillingsVehicle Sales Factory Orders ISM Non-Mfg. Index Sept Chain Store Sales

Consumer DebtECRI Future Inflation IndexSept Employment RateWholesale Trade

Average October Gains Last 21 Years:NAS: 0.8% Dow: 1.0% S&P: 1.1%

Up 12 Down 9 Up 14 Down 7 Up 14 Down 7Rank #7 Rank #6 Rank #5

Bullish Sector Seasonalities: Start: Banking,Broker/Dealer, Computer Tech, Cyclical, High-Tech,Internet, Materials, Real Estate, Semiconductors,Transports In Play: Biotech, Utilities, Consumer,Healthcare, Pharma, Telecom Finish: None

End of the "Worst Six Months" and "Worst Four Months"Start Looking for the Almanac Investor MACD BUY Signal in your Inbox

Rosh Hashanah

Columbus Day(Bond Market Closed)

Monday beforeExpiration Dow Down

Only 3 TimesSince 1982

Halloween

1929 Crash Oct 28-29Dow Down 23% in 2 DaysHistoricaly one of the BestTrading Days of the Year

Late October is time to Buy Depressed High-Tech & Small Cap StocksDaylightSavingTimeEnds

Expiration DayDow Up

5 of Last 7

Crash Oct 19, 1987,Dow Down 22.6%

in One Day

Yom KippurHistoricaly one of the WorstTrading Days of the Year

further correction likely before year-end rally€¦ · market teeters atop “wall of worry”...

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