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[Weekend Summary]

Dear Member:

If this week told us anything, it is that the markets are waiting to see what the Fed is going to do about interest rates next week. I made the mistake of turning on the TV this morning and heard three talking head experts tell me what the Fed is going to do. One said definitely a quarter point rate hike; another said no hike, a pause; the third, believe it or not, assured me that there would be a rate reduction. I remember why I watch the stock shows with the volume turned off.

I see nothing but indecision in the markets for now. The Nasdaq was down a little (-9), the Dow Industrials were barely up (+20) and the SP-500 was essentially flat. Both the Dow and the SP-500 closed again at resistance.

So far, the downtrend is in place. If the Fed reduces the rate (very low probability) the markets will probably jump. If the rate is left alone the market movement will probably be dependent on the accompanying Fed commentary and there will be a slight bias up. If rates are raised again, the accompanying commentary will be very important, but the market bias will probably be down.

There you have it. I've taken 3 full paragraphs to tell you I don't know either. My current bias is still to the downside, but it is a very weak bias and absent some wild news event the Fed is in control of market direction. They haven't called to tell me what they are going to do.

Certainly, in spite of the indecisive markets, my $10 and Under stocks behaved better. Stemcells (STEM) is continuing up the uptrend line and EuroZinc (EZM) is now up almost 14% since my entry. Even Denny's (DENN) which has been a real disappointment may be breaking up out of its' base.

Commontouch Software (CTCH) popped back up this week and Emcore (EMKR) keeps going sideways. I'm looking for the breakout on EMKR this week and could get lucky with some benign news from the Fed. Mindspeed (MSPD) has little apparent redeeming value.

I did enter a new position this week when I bought a little Home Solutions (HSOA). The chart looks good and the stock has climbed a little since I bought it. I believe earnings are scheduled to be announced the 14th and I may jump ship on any decent spike before the announcement. Have you ever noticed how stocks often seem to drop when earnings (even pretty good earnings) are announced?

I'm hoping the Fed will give us reason to turn really positive about the market, but, until then, I have to say my tendency is still bearish.

Have a great one.

Bill

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