Dow Theory

Dow Theory is all about confirmations. What happens in one index should occur for the other index. Without confirmation, the theory says, then all bets are off in terms of the preceding direction of the index. Today's action in the Dow Industrials was impressive, with the index hitting a brand new high since the March 9, 2009 low. Not to be outdone, the Transports were in a mood to go to new highs as well. As a critic of the markets and one who practices Dow Theory, I feel that the new highs are not completely to my liking.

First, let's review a little about what Dow's theory has done for us lately. From a literal and practical perspective, Dow Theory has definitely pointed the way to the increase in the market since June 23rd and possibly since my March 20, 2009 posting. So far, the March 20th article has been 100% accurate about the direction and extent of this market move upward. It is worth rereading that article to glean the nuances about Dow Theory that is seldom found anywhere else. However, attention to the details of the changes in the Transports and Industrials on March 9th made it possible for me to feel confident about my research recommendation of March 10th.

Additionally, Dow Theory served its purpose quite well when, on November 12, 2007 in Barron's, Richard Russell was explicit in his interpretation of Dow's Theory calling for a vicious bear market. A greater piece on the instructions to get out of stocks hasn't been written since WSJ editor William Peter Hamilton's "Turn of the Tide" call of the market peak of October 25, 1929 (using Dow Theory, of course.)

The chart below is a continuation of the chart that I posted on September 2, 2009. In that article, I expressed the view that future market movement was clearly being transmitted in the Transportation Index. At the time, it was clear that the Transports were exhibiting double tops and double bottoms as a means to provide support and resistance levels. Each test of double bottoms were easily resolved by the Transports moving above prior double tops. As we now know, every new high in the Industrials, since the March 9th low, has been grudgingly accompanied by new highs in the Transportation index. This is powerful stuff since the Transports have acted as the proving ground for any moves upward. Basically, we've needed the Transports to co-sign on the Industrials claims that this is a bull market. Up to this point, the Industrials have had their checks cashed. However, the current market moves hasn't had the full endorsement of the Transports based on the November 4, 2008 peak.

On September 11, 2009, I spoke at length about that fact that the Transports couldn't seem to go above the November 4th peak. Although both indexes have gone to new highs, the Transports have been able to close above 4,071.81. Without this barrier being crossed resoundingly, the bull market will be on hold. The chart below shows how close we are to a true confirmation of a continuation in the cyclical bull market trend within a secular bear market. Note that the volume in the Transports has been in a declining trend since March. This is in stark contrast to the volume on the Industrials, NYSE, and S&P 500 which has been relatively flat since mid-June. The declining volume in the Transports tells us to party while we can because when the music stops there'll be a big mess to clean up afterwards (a major retest of old lows.)

While most might be focused on the Dow Industrials or S&P 500, the Transports tell us what we need to know. Despite the fact that confirmation of this index is likely, even though the economic conditions don't seem to match the markets outlook, we should continue to watch closely for any signs of capitulation. Touc.

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Research Recommendation: Northwest Natural Gas (NWN) at $40.94

As I attempt to gather as much information on Northwest Natural Gas (NWN) before deciding to actually buy NWN, I found one bit of information that was almost astounding. As I have mentioned before, NWN has increased it's dividend every year for 53 years in a row. I have also talked about the fact that NWN will probably do everything in its power to maintain that dividend increasing history. So it is no surprise that the company announced on October 1, 2009 that they will be increasing the dividend for the 54th year in a row.

In today's research recommendation of NWN, I will cover the issue of cyclicality, the Coppock Curve, natural gas prices, and Dow's theory as it relates to the stock. I have compiled this information as I consider buying NWN. It is hoped that you thoroughly review NWN from all angles before committing any money to this accomplished Dividend Achiever.

When someone asks me about any cyclical stocks that I might be able to suggest, I often stammer at the thought. In fact, I'm clueless as any true cyclical stocks. However, after a considerable review of NWN, I can prove that it is definitely a true cyclical stock. First, NWN has exhibited a pattern of hitting a relatively low price between the months of January and May since 1970.

The stock hitting a low during the first five months of the year occurred 87% of the time. New lows during the months of February, March and April took place 78% of the time within the period from January to May. The month of February comprised 33% of the new lows between January and May. From the numbers that I ran, February and April are the most optimum month to consider buying this stock.

Next up is the Coppock Curve for NWN. In the chart below, you can seen that the Coppock Curve along with a 14-month trendline. After falling below the zero line, the rise crossing over the trendline indicated a ideal buying point on the first day of November 1994 at an adjusted price of $7.67. Subsequently, the stock reached an adjusted high of $16.74 in December of 1997.

The next point when the Coppock Curve was crossed by the 14-month trendline was in February 2000. If you bought the stock on the first day of March 2000 at the adjusted price of $12.70, you would have seen the shares rise to an adjusted price of $52.19 on September 18, 2008. The rise from March 2000 to September 2008 is in spite of the bear market which began in October 2007. Currently, NWN's Coppock Curve has just crossed above the 14-month trendline. All indications are that this is a buying point based on the Coppock Curve.

Next up is the natural gas wellhead price from 1977 to the present. In the chart below, I have indicated the points where, based on the Coppock Curve, the price crossed above the 14-month trendline. It appears that the Curve accurately called the bottom in the price, almost to the very lowest point possible. From this indication, it appears that the natural gas wellhead price is about to rise from here.

Finally, we'll look at the prospective upside and downside targets for NWN based on Dow's Theory.

Upside:

• $42.31
• $48.01
• $53.71
  

Downside:

• $36.20 (fair value)
• $30.30
• $18.50

All of the data points that I have mentioned should be included in your fundamental analysis of this stock. Pay particular attention to the downside targets since this is your best gauge of the risk you might be taking.

It appears that management feels confident about the prospects for the company down the road based on the most recent dividend increase. However, as the number of years of consecutive dividend increases ratchet higher the probability of a dividend cut increases. I am putting this stock on my personal watchlist so that I can buy it at the most optimal price, hopefully lower than the current level. Touc.

related Articles:

• NWN Altimeter

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Coppock Curve Review

The last day of each month means that we can review the Coppock Curve. Below I have the data of the curve from when the index made its first reversal since hitting bottom in the month of May.

• Apr 2009: -388
• May 2009: -383
• Jun 2009: -378
• Jul 2009: -359
• Aug 2009: -321
• Sept 2009: -266

A visual representation of the same data can be found in the chart below.

If you'd like a long term perspective on the Coppock then click on the link from my end of May posting. The predictive value of the Coppock Curve over the long term has been eerily prescient. Please read my end of July notes on the Curve, as I stated that I wouldn't be satisfied with the rising trend of the index unless it went above the -260 level over a subsequent 3 month period. Without this happening I would believe that we've received a false signal as per the May 2002 "fake out." If the month of October remains around the current level then my parameters would have been met which would suggest that Dow 12,000 could be in the cards.

The market's ability to remain at current levels thus far continues to confound me, however I think that discussions of a disastrous October will be turned on its head just to perplex the critics of the market rise since March 9th. I'd go so far as to suggest that if we have a melt up then I wouldn't be surprised. Hold onto your hats everybody, here comes October.

Sidebar:

In an upcoming post, I will provide what I believe to be astounding data on Northwest Natural Gas (NWN.) For those who I have personally discussed the company with, please refrain from any action on this stock until I publish what could prove useful in your analysis of this Dividend Achiever. Touc.

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Wal-Mart Stores (WMT) Altimeter

Below is a chart of Wal-Mart's altimeter. As mentioned before, the purpose of the altimeter, created by Edson Gould, is to determine the relative value of a company based on the quarterly dividend payment and the daily price of the stock or index.

The chart below is my own interpretation of WMT if the company pursued a less aggressive policy of increasing the dividend at such a high rate.

In the most recent period from 2007 to 2009, we can see that WMT is forming a similar double bottom. From this indication, we should look out for the stock to rise significantly over the next four years. The expected rise in WMT should be in spite of all the economic forecasts of a continued decline in the economy.

In the first chart, you can see that after 2004 WMT fell to an extreme level of undervaluation. The reason this occur is because WMT continued in increase the dividend at a high rate even though the company didn't have the earnings to support such increases. With diminished earnings, WMT issued more shares to raise capital to fund the dividend payments at the expense of per share earnings.

My model continues to increase the dividend every year but at a rate of 50% less than what WMT did from the period of 2004 to the present. This lowers the number of shares that need to be issued. In fact, my model would not have required the issuance of new shares to cover the dividend.

At the moment, we could consider WMT undervalued. However, keep in mind the fact that the continued issuance of shares in order to keep the dividend history intact undermines future earnings growth.

related article:

• Values Biding Time

Based on the above chart, we can see that WMT is traditionally overvalued between 1100 and 1200 level. Additionally, when WMT falls to the 550 level the company is considered undervalued. What should be noticed is the double bottom that took place in the 1995 to 1997 period. After that time, WMT took off like a rocket.

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After Hours Activity

In the table below, the pre-market volume manages to dominate all market volume during the regular market hours. The companies shown are only those with the top percentage change out of the 176 companies that have the same characteristic. The 176 is out of the 500 companies that I follow suggesting that almost 35% of the companies publicly traded are being "managed" in this manner.

In the table below, the after market activity somehow managed to offset all of the market volume during regular market hours. This is the complete list of companies out of the 500 that I follow exhibiting this characteristic today. Touc.

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South African Gold Stocks of the 1970's

If we're on the brink of a breakout to gold at $9,000 an ounce as UBS claims (source, Financial Times, requires registration after 2 free viewings) then let the party begin. By my own calculations, after halving my worst case scenario, gold could go as high as $9,414.16. Yeah, I know, make an outrageous claim and cement your fame. However, I have a logical explanation for my belief that a run up in gold is possible.

Confidence in my math on how gold could plausibly get to $9,000 is actually less important than the wait that we're in for to get to such a level. After all, the rise from $35 an ounce in 1969 to $800 an ounce in 1980 took a lot of twists and turns. I personally believe that we'd see a collapse in the price of gold and other related commodities before we move to the insane levels that I mentioned earlier.

There is one thing that is uniquely absent from this run up in gold that was present in 1969. South African gold stocks offering alluring dividend yields. Could you imagine getting paid 14% to invest in gold stocks that were at the early stages of a commodity bull market. In the table below, published in Richard Russell's Dow Theory Letter, you will see the South African gold stocks and the dividend yield that was paid out at that time (yellow column.)

This being a blog about dividend paying stocks, I wish I could have been around to partake in the South African gold stocks that sported such attractive yields. The downside of course was that the dividends were usually paid on an annual basis. Which was fine since Richard Russell was saying that you should be accumulating the stocks almost from the very beginning of the run up in gold in 1968 and 1969. Some of my friends, I wasn't born at the time, look back fondly to those days and always say that what they remember most about investing in gold stocks at that time was the dividends in the South African golds.

If you compare the yields on gold stocks today to the 1970's you'd think we were on different planets. As an example, Barrick Gold (ABX), a "domestic" producer, has a dividend yield of 1% while AngloGold Ashanti (AU) has a paltry yield of 0.40%. DRDGOLD (DROOY), the old Durban Deep, has the massive yield of 1.4%. In the list of gold stock provided by Richard Russell, only 3 stocks sported no dividend. None of the publicly traded South African gold producers have dividend yields that provide a margin of safety.

In an earlier posting, I scoffed at the notion of gold stocks paying a dividend just to get investors into the market. Despite that concern, it doesn't stop me from believing that if we are really in a long term bull market in commodities (inflationary period) then it would certainly be nice to get compensate for the wait.

Keep your mind open to the prospect that even if some gold stocks are paying a dividend just to get speculators in, there might be a chance that the current run up in gold is a repeat of the early stages of a genuine gold bull market. If you happen to find gold stocks with such outrageous yields then let me know, I'm always interested (only those with earnings please.) Touc.

*See my note on commodities in the comment section of my September 12, 2009 posting.

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Air Products & Chemical (APD): Sell at the Market

It is now time to recommend that Air Products and Chemicals (APD) be sold at the market. The stock has severely underperformed since the research recommendation was issued on September 29, 2008. It is highly recommended that anyone who bought the stock based on my research should re-read the posting. It is hoped that the stock was researched and purchased well below the initiation price.

APD's stock price got crushed right after the research recommendation was issued which is exactly what we want to happen. Despite the massive decline in the stock price, APD continued to raise the dividend. APD is up an astounding 82% from the low in November. In the pursuit of "seeking fair profits" the returns that this stock has provided within the last 345 days say that it is necessary to consider alternative opportunities.

APD was recommended when it was trading at $71.43. As of the September 9, 2009 close, APD was quoted at $75.56. This equals a compounded return of 9% in almost 12 months. Selling this stock now generates a return of 3.75x greater than the amount of the dividend yield. Additionally, the 9% gain exceeds the return on a 30-year treasury purchased on September 29, 2008 by 2.18x.

As I have indicated in the purposes and function of this site, the goal is to:

• maximize the annual yield of each trade.
• reduce time between buying and selling of each stock.
• exceed the annual yield of government guaranteed alternatives in each trade.

Research recommendations are intended to be a starting point for investigating a quality company at a reasonable price. It is hoped that after doing the background research you can buy the stock at a lower price. Ideally the stock should be held in a tax deferred account and should not consist of less than 20% of your holdings. Personally, I prefer holding only 2-3 stocks at a time.

Sell recommendations are intended to deal with the short term reality of the market. The tracking of the Sell recommendations are the worst case scenario if you happen to have bought a stock at the time the research recommendation was made (please avoid making this mistake.) I aim for mediocrity in my returns, therefore I am happy with 9-12% annual gains. However, since codifying my approach to investing in 2005, I have had annual returns of 14% and above every year since.

It is always recommended that when selling a stock, one should not place stop orders, limit orders or orders after hours. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, I would rather leave some money on the table rather than have it taken away from me by the trades that are placed by institutions and market makers. Touc.

Please revisit Dividend Inc. for editing and revisions to this post.

Fannie Mae (FNM) and Freddie Mac (FRE) Fraud

In my article titled "Delisting of GSEs Looms Large" published on February 21, 2009, I discussed the fact that as Fannie Mae (FNM) and Freddie Mac (FRE) remained under $1, the prospects were that we'd either see the companies delisted from the NYSE or that the price would skyrocket. Not long after writing the article, the stock of FNM and FRE fell as low as $0.35 on March 9th. In that February article, I said the following:

"Look for a boosting of the share price to ridiculous levels (anything above $1) or go literally to zero in the next delisting notification process."

Soon after falling t0 $0.35, Fannie Mae and Freddie Mac briefly, on a closing and intraday basis, went above $1 on March 19th and then promptly fell from there. According to the New York Stock Exchange, spend six months under $1 and you get delisted. As strange as it may seem, September is exactly six months away from the month of March.

One reader of this blog, Ron, poignantly remarked, "...it seems to me the exchanges are constantly bending their own rules about delisting, extending grace periods, etc. Especially in this case the govt will probably be leaning on the exchanges not to delist." My response was, "...there is little need to do this (bend the rules.) If you're the government, and you don't know anything about fiscal responsibility, you'll more than likely feel compelled to waste the money and artificially inflate the stock price." Furthermore, I specifically stated that this was going to be "one of the biggest speculations in history."

Well, as promised, the U.S. government proved to be as gullibull as has been the case since the beginning of time. In an article titled "Fannie, Freddie Avoid Delisting as Price Triple" published by Bloomberg.com, you get the sense that there is a collective exhaling about the notification that the companies would not be delisted. Strangely, FBR Capital Market's Paul Miller seemed indignant at the thought that the Fannie and Freddie stock price went up. Miller, a banking analyst, said that the rise was "unjustified" and that there was "no fundamental value remaining" in the two GSEs.

I say to Mr. Miller (with tongue firmly in cheek), the threat of being delisted was a completely justifiable reason for Fannie and Freddie stock to go up in value. The government had already gamed the markets by reverse splitting AIG, so it would be challenging to commit the same fraud twice on the investing public in such a short time.

Also Mr. Miller, if Fannie and Freddie are delisted, the market for all bad mortgages cannot be absorbed by the taxpaying public through the GSE conduit. That means these two companies are incredibly valuable. Mr. Miller, maybe Fannie and Freddie are not valuable to you but they are definitely valuable to the banks that are receiving bailouts in the front door and dumping their trash on the taxpayer through the back door. Silly Mr. Miller, still talking about notions like fundamental values and such.

We have witnessed the all too familiar quality known as predictably irrational behavior of the government and the financial markets. In many respects, Ron was right, the rules were bent to favor those in powerful positions. When the NYSE says "The World Put Its Stock in Us," they should have also added that it is the best exchange that money can buy. After all, the NYSE should be held criminally for allowing such blatant fraud to reign on their exchange. Instead, they looked the other way in the face of clear manipulation and malfeasance.

It is just our luck that history repeats so well and so often in financial markets. This is the reason why the addressing of this matter of the delisting of the GSEs was so predictable. The maneuvers that I've described have happened so many times in the remote and distant past with far more inferior technology that it's laughable. The more things change the more they remain the same...and that ain't no cliche in the financial markets. Touc.

related articles:

• Delisting of GSEs Looms Large
• The Common Refrain, To Our Detriment
• A Scheme By Any Other Name
• Crossing the River Styx
• Our Protectors, Encouraging Malfeasance

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Dow Theory

In reading The Stock Market Barometer by William Peter Hamilton, I find that there is significant contribution to the topic of Dow Theory. It is Hamilton’s book that led to the even better The Dow Theory and Dow’s Theory Applied to Business and Banking by Robert Rhea. One area of contention is my belief that Charles H. Dow was absolutely right about double tops and double bottoms. Hamilton, in reference to double tops and double bottoms, says:

“In the same editorial (Wall Street Journal, 1/4/1902) Dow goes on to give a useful definition from which legitimate inferences may drawn. He says: ...

‘It is a bull period as long as the average of one high point exceeds that of previous high points. It is a bear period when the low point becomes lower than the previous low points. It is often difficult to judge whether the end of an advance has come because the movement of prices is that which would occur if the main tendency had changed. Yet, it may only be an unusually pronounced secondary movement.’

This passage contains, by implication, both the idea of ‘double tops’ and ‘double bottoms’ (which I frankly confess I have not found essential or greatly useful) and the idea of a ‘line,’ as shown in the narrow fluctuation of the averages over a recognized period, necessarily one either of accumulation or distribution.”

Hamilton, William Peter. Stock Market Barometer. Harper and Brothers. 1922. page 32.

In my May 15, 2009 article, I pointed out how important double tops and double bottoms have played a role in defining the direction of the Industrials and Transports. So important is the role of double tops and double bottoms that they have accounted for 72% of the major bull and bear moves in the stock market. The current market action, since May 1st, has been in favor of double tops and bottoms in the Transports index portending the change in the market direction in the intermediate term.

As you can see from the chart below, there have been two double tops and two double bottoms. So far, both double bottoms (B and C) and one double top (A) have been followed by sizable moves in the Transportation and Industrial index. Currently, we're faced with the double top indicated as D1 and D2. From what I can tell, if the decline from D2 goes any further below the August 17th low then we may retrace up to 75% of the gains from C2 to D1. This assessment is based on the prior correction of A2 to C1 from the rise of B2 to A2. On the way down to C2 there are smaller support levels however their significance is not as pronounced as the percentage change from A2 to C1. We should assume the worst case scenario and expect that the Transports will go to 3239.36. Falling to points C1 and B1 would be the next order of operation.

Interestingly, Charles H. Dow says that the action of double tops and double bottoms is most commonly associated with market manipulation. In Hamilton's Stock Market Barometer there is a July 20, 1901 Wall Street Journal excerpt where Dow says:

"Another method [for detecting manipulation] is what is called the theory of double tops. Records of trading show that in many cases when a stock reaches top it will have a moderate decline and then go back again to near the highest figures. If after such a move, the price again recedes, it is liable to decline some distance."

Hamilton, William Peter. Stock Market Barometer. Harper and Brothers. 1922. page 36.

The method described by Dow is commonly executed by institutions and other large money interests. The term that is most often used today is called a trial balloon. If successful, the money interests can gauge small investors willingness to sell or buy stocks and then execute a bull or bear raid. Today, it would seem unheard of for the editor of the Wall Street Journal to suggest there is manipulation and then go so far as tell how to detect it. And yet, the words of Charles H. Dow ring true today as they did in early 1900.

Note: On August 25th I said that the great Dow Theorist Richard Russell was wrong about his call of a new or renewed bull market. Well, after placing a call to Russell and talking to his staff the bull market indication was taken away the very next day and a non-confirmation was iterated. I'm sure that Mr. Russell got many calls on that error so I don't think that I swayed him personally (though I'd love to think that I did.)

My goal wasn't to have the bull market indication taken away, instead it was to demonstrate that a non-confirmation needed to be worked through. For this reason I still stand by my belief that the bullish move (within the context of secular bear market) from the March 9th low isn't over unless we resolutely pierce the 8146 level on the Dow Industrials. Touc.

Dow Theory Updates

Walgreen Co. (WAG): Sell at the Market

It is now time to recommend that Walgreen Co. (WAG) be sold at the market. The stock has severely underperformed since the research recommendation was issued on September 24, 2008. It is highly recommended that anyone who bought the stock based on my research should re-read the posting. It is hoped that the stock was researched and purchased well below the initiation price.

WAG has been on a steady rise since hitting a technical double bottom on March 9th 2009. At the current rate, WAG could easily breach the $39 level in the next few weeks. WAG is up an astounding 59% from the low in March. In the pursuit of "seeking fair profits" the returns that this stock has provided within the last 338 days say that it is necessary to consider alternative opportunities.

WAG was recommended when it was trading at $31. As of August 27, 2009, WAG was quoted at $33.83. This equals a compounded return of 11.03% in 11 months. Conservatively, this would equal approximately 11.91% return. Selling this stock now also generates a return of 6.23x greater than the amount of the dividend yield if the stock was held for that extra month.

As I have indicated in the purposes and function of this site, the goal is to:

• maximize the annual yield of each trade.
• reduce time between buying and selling of each stock.
• exceed the annual yield of government guaranteed alternatives in each trade.

Sell recommendations are intended to deal with the short term reality of the market. The tracking of the Sell recommendations are the worst case scenario if you happen to have bought a stock at the time the research recommendation was made (please avoid making this mistake.) I aim for mediocrity in my returns, therefore I am happy with 9-12% annual gains. However, since codifying my approach to investing in 2005, I have had annual returns of 14% and above every year since.

It is always recommended that when selling a stock, one should not place stop orders, limit orders or orders after hours. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, I would rather leave some money on the table rather than have it taken away from me by the trades that are placed by institutions and market makers. Touc.

Please revisit Dividend Inc. for editing and revisions to this post.

Sell Bard Corp. (BCR) at the Market

It is now time to recommend that Bard Corp (BCR) be sold at the market. The stock has performed moderately since the research recommendation was issued on April 23, 2009. It is highly recommended that anyone who bought the stock based on my research should re-read the posting. It is hoped that the stock was researched and purchased well below the initiation price.

BCR has formed a powerful accumulation base which could indicate that the stock is headed much higher. BCR is among many of the medical device manufacturers that are being underpriced due to the debate about healthcare reform. In the pursuit of "seeking fair profits" the returns that this stock has provided within the last 126 days say that it is necessary to consider alternative opportunities.

BCR was recommended when it was trading at $71.28. As of August 26, 2009, BCR was quoted at $78.31. This equals a compounded return of 10.11% in a little over 4 months. Conservatively, this would equal approximately 29% return. Selling this stock now also generates a return of 10.64x greater than the amount of the dividend yield if the stock was held for a whole year.

As I have indicated in the purposes and function of this site, the goal is to:

• maximize the annual yield of each trade.
• reduce time between buying and selling of each stock.
• exceed the annual yield of government guaranteed alternatives in each trade.

Research recommendations are intended to be a starting point for investigating a quality company at a reasonable price. It is hoped that after doing the background research you can buy the stock at a lower price. Ideally the stock should be held in a tax deferred account and should not consist of less than 20% of your holdings. Personally, I prefer holding only 2-3 stocks at a time.

Sell recommendations are intended to deal with the short term reality of the market. The tracking of the Sell recommendations are the worst case scenario if you happen to have bought a stock at the time the research recommendation was made (please avoid making this mistake.) I aim for mediocrity in my returns, therefore I am happy with 9-12% annual gains. However, since codifying my approach to investing in 2005, I have had annual returns of 14% and above every year since.

It is always recommended that when selling a stock, one should not place an order after hours or when the market is closed. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, I would rather leave some money on the table rather than have it taken away from me by the trades that are placed by institutions and market makers. Touc.

Please revisit Dividend Inc. for editing and revisions to this post.

Sell Sysco (SYY) at the Market

It is now time to recommend that Sysco (SYY) be sold at the market. The stock has underperformed since the research recommendation was issued on December 17, 2008. It is highly recommended that anyone who bought the stock based on my research should re-read the posting. It is hoped that the stock was researched and purchased well below the initiation price.

SYY has formed an upside down head and shoulders pattern which could indicate that the stock is headed much higher. SYY is the ultimate hedge against inflation and it may go as high as my first target price of $27.58. In the pursuit of "seeking fair profits" the returns that this stock has provided within the last 253 days say that it is necessary to consider alternative opportunities.

SYY was recommended when it was trading at $23.60. As of August 26, 2009, SYY was quoted at $25.34. This equals a compounded return of 10.85% in a little over 8 months. Conservatively, on an annualized basis this would equal approximately 15.65% return. Selling this stock now also generates a return 2.59x greater than the amount of the dividend yield if the stock was held for a whole year.

As I have indicated in the purposes and function of this site, the goal is to:

• maximize the annual yield of each trade.
• reduce time between buying and selling of each stock.
• exceed the annual yield of government guaranteed alternatives in each trade.

Research recommendations are intended to be a starting point for investigating a quality company at a reasonable price. It is hoped that after doing the background research you can buy the stock at a lower price. Ideally the stock should be held in a tax deferred account and should not consist of less than 20% of your holdings. Personally, I prefer holding only 2-3 stocks at a time.

Sell recommendations are intended to deal with the short term reality of the market. The tracking of the Sell recommendations are the worst case scenario if you happen to have bought a stock at the time the research recommendation was made (please avoid making this mistake.) I aim for mediocrity in my returns, therefore I am happy with 9-12% annual gains. However, since codifying my approach to investing in 2005, I have had annual returns of 14% and above every year since.

It is always recommended that when selling a stock, one should not place an order after hours or when the market is closed. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, I would rather leave some money on the table rather than have it taken away from me by the trades that are placed by institutions and market makers. Touc.

Please revisit Dividend Inc. for editing and revisions to this post.

Industrial Production Index

In my previous discussion of the Industrial Production Index (IPI), I clearly made a mistake in my interpretation of the “price” action of the index. On March 16, 2009, I said that if the IPI fell below 97.8399 then we would face the equivalent of economic “dark ages.”

In looking at the movement of the index, I dismissed the peak of 95.3271 on May 1998 and the trough of July 1998 as a significant technical support/resistance level for the index. This appears to be a critical oversight since the June 2009 low in the IPI at 95.4571 appears to have created a temporary support level. Even though the difference between 97.8399 and 95.4571 is only 2.32%, I feel it is necessary to identify this issue in my analysis as a potential learning opportunity.


Now for the shameless self-promotion, in my January 27, 2009 analysis of the IPI index, I said, "Based on this most recent move the IPI is expected to decline at least to the December 2001 level of 97.8399." This observation was about as accurate as you could get. Additionally, I said, “…we're in for at least another six months of declines in the IPI.” This assessment was off by 1 month which isn't bad. As mentioned before, the IPI hit a temporary bottom in June 2009. Some folks who snicker at the thought of technical analysis being applied to an economic indicator that isn’t even a critical component of the U.S. economy have every right to question the method. However, the fruitless effort, in this instance, “seems” to have been useful.

Finally, let’s look at where I think the IPI index is possibly going from here. In the 90-year history of the reporting of the IPI, there has been only one declining period in which the index had temporarily gone up and then down more than once (fake out.) We’ve already had one fake out of the index when it sharply rose in October of 2008 and then continued downward. I don’t see (revealing my limitations) this index falling below the current trough of 95.4571 until it does a Dow Theory retrace of at least one, and possibly all three, of the following upside targets:

• 101.1035
• 106.7499
• 112.3963

Implicit in my discussion of the IPI is that we are at a turning point for the economy. Based on the combination of the Dow Theory confirmation of July 23, 2009 and the IPI turning up from the June low, I will have to guess that the National Bureau of Economic Research (NBER) is going to proclaim June 2009 as the official end to the recession. The end to this recession will be lackluster and questioned from all corners. Additionally, the stock market will only follow the pattern of a cyclical bull market (bear market rally) within a secular (long term) bear market. I doubt that the general public will agree that the recession is over since jobs will not be as plentiful as the past. However, from the standpoint of an economist the recession is over provided the IPI June low is sustained over an extended period of time.

Again, the IPI index generally lags the stock market by 6 to 9 months. Therefore, the index could continue to rise while the stock market has reversed to the downside. We’ll have to see just how much the most recent trough remains in place.Touc.

Monday's Article:

Dow Theory

Please revisit Dividend Inc. for editing and revisions to this post.

Freddie Mac (FRE) Trading Notes

When it comes to the cornering of a stock there are two kinds, those that fail and those that succeed. The essential element that causes the failure is the inability to get the public to "buy in" to the market action. The movement of Freddie Mac (FRE) today appears to be on the side of those who are behind the cornering of the stock.

Market activity for Freddie Mac (FRE) was off the charts today, rising $0.49 or 66% in the pre-market session on almost 18 million shares and rising another 37% on 391 million in the regular hours of trading. This equals a combined increase, from Friday's closing price of $0.74, of 128%. (pre-market data below)Chart Source: Nasdaq.com

There is a distinction between the price movement of FRE and AIG. Although both are moving on syndicates' pre-market prompting, the FRE cornering of the stock may have the ability to succeed at keeping the price high for an extended period of time. Notice in the chart below that the accumulation/distribution of the stock had gone from the extremely negative low of -319 million (red arrow at point A) to a positive figure (green arrow at point A) based on the activity of today's trading.

Chart Source: Schwab.com

Contrast the movement of FRE's accumulation/distribution with the that of AIG. While both accumulation lines hit their lowest point on July 24th, the day after the Dow Theory bull market confirmation, AIG has not yet broken above the accumulation line (red circle.) Additionally, as AIG has gone up in price the volume has trended down.

Chart Source: Schwab.com

The AIG run does not look "sustainable" over the long term unless the accumulation/distribution improves along with a rising price and rising volume. For traders, it is expected that FRE will have a pullback, however there may be legs on this speculation as compared to AIG.

Because we're in a cyclical bull market within an even larger bear market I would consider these stocks as pure speculation regardless of the "potential" upside. Let's see which of the syndicates that are running these stocks up in pre/post market activity comes out the winner. From what I can tell, the FRE gang is miles ahead of the AIG crew in this race. This should be interesting to watch. Touc.

related articles:

• February 21, 2009

AIG Trading Notes

Today, AIG traded up a whopping 20.46% on volume of 101,064,355 shares. On the surface of it this seems like a resounding vote of confidence for a company that is 80% owned by U.S. taxpayers. However, beneath the surface lies a murky story waiting to be told.

The story waiting to come out is that on Thurday August 6, 2009, AIG had a closing price of $22.53. During "Pre-market" trading Friday August 7th, AIG went from $22.53 to $27.37, a gain of 21.48%. The volume of shares traded during the "Pre-market" was 5,785,607 (after hour thumbnail.)

Once the regular hours of trading began on Friday August 7, 2009 the price of AIG actually fell from the $27.37 pre-market level to finally close at $27.14. Again, the regular hours of trading volume was 101,064,355.

What does all this mean? Over 5 million shares moved the price from $22.53 to $27.37. Once the regular market opened the public battled it out to come to the conclusion that the $27.37 wasn't the right price. Over 100 million only impacted the price by $0.23 lower than what 5 million was able to do by increasing the price over 20%.

My conclusion is that the public has less confidence in the future prospects for this company, and possibly the stock market, than the pre-market participants would have us believe. I also noticed that in after-hours trading the price rose an additional $0.08 on volume of 244,363 shares. Ain't it funny, 244,363 shares can raise the stock $0.08 while 100 million results in a loss of $0.23. The pre-market and after-market traders are gaming the system.

It appears that if you want to be a "trader" then you need to be entering and exiting the market before or after regular market hours. Otherwise, I would be cautious about dealing in this stock and any other stocks that are so easily managed based on so few participants. Conversely, if you're a "long term" investor then be ready to sell on a moments notice using market orders only. If you use a stop order to sell at the price of $27 then it is likely that you could get stopped out at $24 instead of $26.99 or thereabout if the stock trades down in the pre-market on Monday (wouldn't be surprised if this happens.) Touc.

Source:

• Nasdaq Quotes. (Link to AIG quote on NASDAQ system)

Sell Bank of Hawaii (BOH) at the Market

It is now time to recommend that Bank of Hawaii (BOH) be sold at the market. The stock has performed modestly since the research recommendation was issued on January 12, 2009. It is highly recommended that anyone who bought the stock based on my research should re-read the posting. The stock took a huge dive in early March, it is hoped that shares of BOH were bought somewhere below the recommendation price.

From the current level, BOH is likely to continue higher as the current deflationary spiral ends and an inflationary environment begins. If you believe that inflation is coming down the road then the Japanese economy has typically performed better during inflation. Growth in the Japanese economy has typically meant growth in the Hawaiian economy. Additionally, BOH has held up very well in the banking crisis that just past and is poised to reach the $45 level, especially because we just got a Dow Theory cyclical bull market signal (within a larger secular bear market.) In the pursuit of "seeking fair profits" the returns that this stock has provided within the last 207 days say that it is worthwhile considering alternative opportunities.

BOH was recommended when it was trading at $37.76. As of August 6, 2009, BOH was quoted at $40.98. This equals a total return (dividends plus appreciation) of 11.36% in a little over 7 months. Conservatively, on an annualized basis this would equal approximately 19.47% return. Selling this stock now also generates a return 4 times greater than the amount of the dividend yield if the stock was held for a whole year.

It is always recommended that when selling a stock, one should not place an order after hours or when the market is closed. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, I would rather leave some money on the table rather than have it taken away from me by the trades that are placed by institutions and market makers. Touc.

Please revisit Dividend Inc. for editing and revisions to this post.

After-Hour Conundrum

The first after-hour profile is Applied Material (AMAT). In the screen shot below we see that AMAT has a market capitalization of $18.3 billion. During market hours on August 5th, we see that the stock traded down by 1.51% or $0.21. Over the last 3 months, AMAT has had average daily volume of 21 million shares.

In the screen shot below, we see that in after-hour trading AMAT traded up by exactly $0.21 bringing the price right back to where it started in the beginning of the day. Notice that during the after-hour trading it took only 160,000 shares to offset 12,303,994 shares traded during regular hours. Also notice that four trades equaled 73% of the total after-hour volume.

What I'd like to know is this, who is holding 48,252 worth of AMAT shares valued at $663,465? Why does anyone who owns so many shares try to sell them at a time when they wouldn't likely get the best price available? Who is matching up these trades?

Next up is Cognizant Technology Solutions (CTSH). Below we see that CTSH traded up by $0.99 on trading volume of 9,503,064. However, during after-hour session we can see that CTSH trades back down by $0.99. It only took 99,202 shares to get the price exactly back to where it started earlier in the day.

Again, notice that someone with 43,700 shares worth $1,468,966 decided that after-hours was the best time to unload the shares. Not to be outdone, someone else with 32,400 shares valued at $1,109,768 feels like getting rid of their shares.

Conclusion

From my experience routing trades to the floor of the NYSE in the mid-90's, these transactions are suspect. After all, who would try to unload so many shares without disrupting the market price. In the case of Cognizant Solutions, the 43,700 shares sold was 44% of all after-hour trading. such a large proportion of trading volume would normally spike the price up or down dramatically. Strangely, there was someone willing to obtain the odd number of shares after-hours. This is a highly unusual transaction for so many shares at a time when the market is so illiquid. In fact, most of the After Hours Activity that I have posted show similar patterns.

My suspicion is that institution(s) are accumulating short/long positions as the price of the stock rises during the regular hours. Once the market closes, the same institution sell/buy the shares to/from themselves or a related party. Additionally, options for the stock could have been purchased, sold or written in anticipation of the expected change in price after-hours. This is definitely something that is worth investigating further to determine how these transactions are being carried out. Not to mention the fact that the shares are rising and falling by exactly the opposite amount that took place during regular market hours.

It is likely that all the data on after-hour trades will be wiped clean for tomorrow's trading. However, I'll be ready with an update of the companies that have an after-hour close that is the exact opposite of the regular hours of trading on my After Hours Activity section. Then you'll be able to verify exactly what I have demonstrated. Touc.

Sources:

• NASDAQ: After Hour Quotes (http://www.nasdaq.com/)
• Yahoo! Finance (http://finance.yahoo.com/)

Please revisit Dividend Inc. for editing and revisions to this post.

Sell Matthews International (MATW) at the Market

It is now time to recommend that Matthews International (MATW) be sold at the market. The stock has performed reasonably since the research recommendation was issued on March 31, 2009. It is highly recommended that anyone who bought the stock based on my research should re-read the posting. The stock took a tiny dip in mid-April, however the recommendation was essentially at the low for the stock price. From the current level, MATW is poised to reach the second upside target of $40.77, especially because we just got a Dow Theory cyclical bull market signal (within a larger secular bear market.) In the pursuit of "seeking fair profits" the returns that this stock has provided within the last 126 days say that it is worthwhile considering alternative opportunities .

MATW was recommended when it was trading at $29.04. As of August 3, 2009, MATW was quoted at $31.95. This equals a return of 10.25% in a little over 4 months. Conservatively, on an annualized basis this would equal approximately 29% return. Selling this stock now also generates a return 11 times greater than the amount of the dividend yield if the stock was held for a whole year.

It is always recommended that when selling a stock, one should not place an order after hours or when the market is closed. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, I would rather leave some money on the table rather than have it taken away from me by the trades that are placed by institutions and market makers. Touc.

Please revisit Dividend Inc. for editing and revisions to this post.

Achiever Alert: Pitney Bowes (PBI)

Yesterday (July 30th) in after-hour trading, Pitney Bowes (PBI) fell by $1.89 or 8.04% to close at $21.61 due to downward revisions of future earnings. This may be the situation where the stock becomes severely underpriced by the markets.

After a quick read, I found out that PBI normally trades around 7.5 times cash flow according to Valueline Investment Survey. If we use full year 2008 cash flow of $4.66 then we'd arrive at a mean price of $34.95. This suggests that PBI is trading 38% (a nice Fibonacci and Dow Theory number) below the mean price. As a Dividend Achiver, PBI has increased the dividend every year for 25 years in a row at a 10-year CAGR of 5.5%. According to Investment Quality Trends, PBI is undervalued at a price of $29 with a yield of 5%.

PBI has many issues that cannot be ignored. The debt situation is not very favorable to the company, especially since PBI provides the financing for their consumers. PBI could have overextended credit on the upswing of the previous cycle and is now getting hit by the double whammy of companies having difficulty paying back their debt as well as a stalled economy that has reduced the demand for their postal equipment. PBI also has a high dividend payout ratio of 73% based on trailing twelve months earnings.

My expectation is that PBI will fall further when the market opens. As long as the Dow Theory bull market indication isn't reversed and depending on the extent of the decline, I would consider buying PBI. Of course, I'm hoping for a situation where the price goes all the way down to the $14 or $15 level established in 1992. I strongly recommend that you watch this stock and do your research. Touc.

Please revisit Dividend Inc. for editing and revisions to this post.

Sell Cardinal Health (CAH) at the Market

It is now time to recommend that Cardinal Health (CAH) be sold at the market. The stock has performed reasonably since the research recommendation was issued on June 4, 2009. It is highly recommended that anyone who bought the stock based on my research should re-read the posting. The stock took a small dip in the early part of July, but changed direction after July 10th and hasn't looked back. From the current level, CAH is poised to reach the $43 level considering that we just got a Dow Theory cyclical bull market signal (within a larger secular bear market.) In the pursuit of "seeking fair profits" the returns that this stock has provided within the last fifty-four (54) days say that it is worthwhile considering alternative opportunities.

CAH was recommended when it was trading at $29.95. As of July 28, 2009, CAH was quoted at $33.03. This equals a return of 10.28% in less than 2 months. Conservatively, on an annualized basis this would equal approximately 61% return. Selling this stock now also generates a return 228% greater than the amount of the dividend yield if the stock was held for a whole year.

It is always recommended that when selling a stock, one should not place an order after hours or when the market is closed. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, I would rather leave some money on the table rather than have it taken away from me by the trades that are placed by institutions and market makers. Touc.

Please revisit Dividend Inc. for editing and revisions to this post.
This blog is being featured on www.condron.us, I hope you find this useful.

Dow Theory

The Dow Jones Industrials and the Dow Jones Transports both broke above previous highs on July 23rd. As shown below, the previous highs that were exceeded were the June 12th high of 8799.25 for the Industrials (blue line) and the May 6th high of 3404.11 for the Transports (red line.) Based on the fact that both indexes went to new highs on the same day would normally mean that we are in a new bull market. However, because Dow Theory considers trading volume as well as price, the fact that trading volume has been declining throughout the most recent price rise means that there isn't broad participation by either institutional or retail investors. Therefore, I would label this a cyclical bull market which can change direction to the downside without warning.

The following are the upside and downside targets for the Dow Industrials:

Upside:

• 9,626
• 10,302 (fair value)
• 11,588

Downside:

• 8192.89
• 7754.68 (fair value)
• 7316.49

At this point it becomes challenging to suggest buying any stocks that have already run up in price since the March 9th low. Direct exposure to the Dow Industrials or Transports might be the best way to take advantage of further moves upwards. I prefer the individual stocks with the largest weighting in the respective indexes. However, most investors probably would feel more comfortable with the exchange traded funds (ETF) DIA or IYT. ETFs aren't my cup of tea but they are alternatives to picking individual stocks.

If you've followed my blog for any amount of time then you'd know that I'm all for selling stocks that are relatively high (up from the March 9th low) and researching Dividend Achievers that are at or near a new lows. Right now there are only three Dividend Achievers within 10% of their 1 year low. The companies are Wal Mart (WMT), Bard Corp. (BCR), and Abbott Labs (ABT). I'm not comfortable with Wal Mart as explained in my June 18th posting. Additionally, I don't expect to be investing more than 50% of my portfolio during this period unless a company gets extremely underpriced. Good luck with your investing. Touc.

Dow Theory Updates

Our Protectors, Encouraging Malfeasance

Every time I try to do a little investigative work I'm sidetracked by new and more interesting facts. In this case, the new and interesting information that I came across is about the Public Company Accounting Oversight Board (PCAOB). It appears that the PCAOB is the organization or agency that was set up after the Enron and WorldCom fiasco to ensure that someone was watching the accounting and auditing firms. Don't forget that Arthur Andersen (AA) was thrown under the bus as an attempt to assuage an outraged public after Enron.

As part of the Sarbane-Oxley legislation PCAOB was created in 2003 to, "...oversee the auditors of public companies in order to protect the interests of investors..." Now remember, the PCAOB is a private, non-profit organization that requests a bulk of their funding from the SEC. Yeah...I know, the SEC is that other agency that also "...protects investors..." When I take a look at the folks who run this organization I am hopeful that the usual suspects aren't in charge. Ahh, lo and behold, the chairman of the board is none other than a former partner of Ernst & Young LLP (EY), one of the largest accounting and auditing firms in the world. I am irked at the fact that the agency set up to protect me from auditing malfeasance has as their leader a former partner of EY.

Well, maybe these folks are really trying to changes things. So the first thing I do is go to the section on enforcement. I know this has got to be the juiciest section of the website. After all, look at all the drama that has gone on in the last 2 years. As I look down the list of disciplinary proceedings that have taken place since the PCAOB was created I see only one company, Deloitte & Touche LLP, that I recognize out of the 22 cases listed. That doesn't make sense at all.

I decided to take a look at the Deloitte & Touche LLP (D&T) case since I suspect that the other firms were easy prey for the PCAOB. The case against D&T was in regards to the accounting irregularities that were associated with Ligand Pharmaceuticals (LGND). Ligand was forced to restate their financial reports for 2002, 2003 and 2004. In the summary against D&T, it was claimed that D&T knew of the irregularities and failed to comply with PCAOB auditing standards.

The penalty for the offense that D&T committed was a fine of one million dollars ($1,000,000) for not recognizing "...approximately $59 million less in revenue" or a reduction of 52% in revenue for the year 2003. Notice there was no statement of inflating revenue or falsifying the documents. Instead it was simply a matter of recognizing or not recognizing $59 million dollars. Considering that the amount in question is more than half the revenue generated for the year, I think this was more than just a lack of recognition.

Now that you have the quick and dirty of the situation let's craft a little perspective around the enforcement piece. The PCAOB fined D&T $1 million for (not) recognizing $59 million on the balance sheet of LGND. This represents 1.7% of the amount that was "falsified." However, as a result of the restatement of earnings, the market capitalization of LGND fell from $2.6 billion in April of 2004 to $649 million in March of 2005. This equals a loss in market capitalization of $1.9 billion.

The punchline to all of this is that if you add the "falsified" amount to the loss of market capitalization in LGND stock then investors lost a total of $2 billion. This makes the $1 million fine to D&T equal to 0.0005% (5/10,000th) of the amount that was lost by investors. In many respects, this kind of penalty encourages the auditing firms to continue to do what they've been doing all along.

Although I am not surprised by my findings I'm still disgusted at the amount of time and money that is wasted on an agency that draws down $157 million a year to not have any impact on the process of increasing the quality of auditing and the firms that conduct such activities. I find it hard to believe that the PCAOB could only find 22 instances where enforcement action was necessary in the years since its creation. If the wording of the disciplinary action against D&T was about "not recognizing" then the last two years was irrefutable evidence of other auditing firms not recognize problems in companies like Bear Stearns, Fannie Mae, Lehman, etc. Touc.

Please revisit Dividend Inc. for editing and revisions to this post.

Research Recommendation: Weyco Group (WEYS) at $22.26

Today's research recommendation is Weyco Group (WEYS) because the stock price fell within 10% of the 52 week low during intraday trading. According to Standard and Poor's, Weyco Group, "...distributes, wholesale & retail, men's branded footwear in the U.S., Canada, Europe; offers casual footwear, dress shoes and accessories under Florsheim, other brands."

WEYS has increased its dividend for 28 years in a row which gives us ample information about the quality of the company's management. Essentially, WEYS has survived 4 recessions of varying degrees since 1980 (current recession excluded.) As recently as May 28, 2009, WEYS has increased the dividend by a little over 7% from $0.14 per quarter to $0.15. This indicates that management believes that although the current recession could get worse the company will survive.

On the balance sheet we find that WEYS has little or no long-term debt, return on assets were 8.9% in 2008 which seems to be fitting since we've been in a recession since December 2007. Normal return on assets seem to be around 11% on the low end. Return on equity for 2008 was at 10.7%. Prior to 2008, return on equity was around 13% on the low end. A major concern regarding this company is the fact that it has such low trading volume. If there were to be a mass exodus then getting out at a reasonable price would not be possible.

From a technical standpoint, I like to look at WEYS from the worse case scenario. In this regard there is no better vantage point than the decline from the top in 1972 to the bottom in 1974. This is a period when the stock went from a high of $0.75 to a low of $0.20, a decline of 73%. If such a price decline were to take place from the most recent high of $41.99 then the assumed bottom would be at $11.34.

Applying Dow Theory to WEYS gives us the following upside and downside targets:

• Upside
• $23.95 (fair value)
• $29.95
• $41.99

• Downside (focus on the downside risk)
  
• $17.93
• $11.34
• $5.91
  

If we were to invest in stocks the way that Charles H. Dow would then we would buy half of the intended amount now and purchase the second half if the price declines. For example, let's say that you wanted to invest $4452 in this company. What you would do is buy $2226 worth of stock now (approximately 100 shares) and hold the stock if the price goes up. If the stock goes down then you would invest the remaining $2226 at the next level that you felt was ideal. This approach works well regardless of the market that you're in as long as you set aside the amount that you intend to invest before making the first purchase. Also, after making the first investment never invest the second half somewhere else.

The purpose of my research recommendations is to point out quality Dividend Achievers that are near a new 52-week low. From this point begins the research to verify the quality of the stock for both short and long-term investing. It is hoped that the stock price declines further so that the valuation meterics are in favor of the buyer. These recommendations are within the context of the 2nd year of an 18-year bear market. A bear market that I expect to trade in a range between 16,000 and 5,000. Touc.