Thursday, Rofin-Sinar Technologies Inc. (RSTI) reported a first quarter profit that surged 47% from last year, as strong results in Europe and Asia offset slower activity in North America, sending its shares up more than 20% in Nasdaq.

The Plymouth, Michigan-based company reported net income for the quarter of $16.9 million or $0.53 per share, compared to $11.49 million or $0.36 per share in the year-ago quarter. The diluted earnings per share calculation reflects the stock split of December 5, 2007.

On average, analysts polled by First call/Thomson Financial expected the company to report $0.46 per share for the quarter.

Gross profit totaled $58.7 million, or 44% of net sales, compared to $45.9 million, or 41% of net sales in the same period of fiscal year 2007.

Quarterly net sales rose 21% to $134.69 million from $111.74 million in the prior year quarter. The impact of the weakening US-dollar, mainly against the Euro, resulted in an increase in net sales of $11.1 million in the first quarter. Five analysts had consensus revenue estimate of $128.22 million for the quarter.

Sales of laser products used for macro applications increased by 38% to $61.2 million from $44.19 million last year. Sales of lasers for marking and micro applications was $63.4 million, up 10%, while sales for components improved slightly to $10.1 million from $9.99 million a year ago.

Net sales in North America declined by 10% to $27.4 million, while net sales in Europe/Asia totaled $107.3 million, a 32% rise from the first quarter of fiscal 2007.

Order entry for the quarter of $157.9 million was at a new record high and resulted in an order backlog of $139.8 million on December 31, 2007.

Looking ahead to the second quarter, Rofin-Sinar Technologies expects second-quarter sales volume in range of $135 - $140 million and gross profit to be 42% - 43% of net sales, the company said in a conference call.

For fiscal year 2008, the laser- based solutions maker forecasts revenue between $540 million to $550 million, while seven Wall Street analysts estimate revenue of $540.54 million for fiscal 2008.

Peter Wirth, Executive Chairman of the Board of RSTI, said, " Our objective for the remainder of fiscal 2008 is to further capitalize on the strength of ROFIN's broad product portfolio, as well as its expanding global network that continues to be a key element of our future success."

Stock Chart Of RSTI

ADRs in Focus: Russian Stocks Rise

TSRA--Tessera Tech beats by $0.01, reports revs in-line; guides Q1 revs above consensus; guides Q2 (Jun) revs above consensus Reports Q4 (Dec) earnings of $0.27 per share, $0.01 better than the First Call consensus of $0.26; revenues rose 5.6% year/year to $53 mln vs the $52.7 mln consensus. Co issues upside guidance for Q1, sees Q1 revs of $55-57 mln vs. $52.40 mln consensus. Non-GAAP operating expenses for the first quarter are projected to be approx $25.5 mln, excluding litigation expenses but including expenses the company expects to incur as a result of its FotoNation acquisition. Litigation expenses are projected to range from $10 mln to $15 mln.

The company's book tax rate is projected to be 43 percent of pre-tax profit, but could be higher depending on the magnitude of the charge for in-process research and development. Cash taxes are projected to approximate $3.3 mln in the first quarter. The fully diluted share count is expected to be 50 mln shares. Co issues upside guidance for Q2 (Jun), sees Q2 (Jun) revs of $53.55 mln vs. $52.65 mln consensus.

As mentioned at 16:05 the co announced it has entered into a definitive agreement to acquire FotoNation and expects the transaction to close in February, 2008. The co expects the FotoNation acquisition will be neutral to 1-2 cents dilutive to non-GAAP earnings for the full year 2008 and accretive thereafter.

In the first quarter of 2008, as a result of the acquisition Tessera anticipates recording a non-cash charge to GAAP earnings for in-process research and development. While revenues will not be material to Tessera near term, the co is confident FotoNation will contribute meaningfully to its long-term consumer optics royalties and license fees.

Implication

An Ascending Continuation Triangle is considered a bullish signal. It indicates a possible continuation of the current uptrend.

Description

An Ascending Continuation Triangle shows two converging trendlines. The lower trendline is rising and the upper trendline is horizontal.

This pattern occurs because the lows are moving increasingly higher but the highs are maintaining a constant price level.

Important Characteristics

Following are important characteristics about this pattern.

Occurrence of a Breakout

Technical analysts pay close attention to how long the Triangle takes to develop to its apex. The general rule is that prices should break out - clearly penetrate one of the trendlines - somewhere between three-quarters and two-thirds of the horizontal width of the formation. The break out, in other words, should occur well before the pattern reaches the apex of the Triangle. The closer the breakout occurs to the apex the less reliable the formation.

Duration of the Triangle

The Triangle is a relatively short-term pattern. It may take between one and three months to form.

Shape of Triangle

The horizontal top trendline need not be completely horizontal but it should be close to horizontal.

Volume

Investors should see volume decreasing as the pattern progresses toward the apex of the Triangle. At breakout, however, there should be a noticeable increase in volume.

Duration of the Pattern

Consider the duration of the pattern and its relationship to your trading time horizons. The duration of the pattern is considered to be an indicator of the duration of the influence of this pattern. The longer the pattern the longer it will take for the price to move to the target price. The shorter the pattern the sooner the price move. If you are considering a short-term trading opportunity, look for a pattern with a short duration. If you are considering a longer-term trading opportunity, look for a pattern with a longer duration.

Target Price

The target price provides an important indication about the potential price move that this pattern indicates. Consider whether the target price for this pattern is sufficient to provide adequate returns after your costs (such as commissions) have been taken into account. A good rule of thumb is that the target price must indicate a potential return of greater than 5% before a pattern should be considered useful. However you must consider the current price and the volume of shares you intend to trade. Also, check that the target price has not already been achieved.

Underlying Behavior

This pattern with its increasingly higher lows and constant highs indicates that buyers are more aggressive than sellers. The pattern forms because of a supply of shares is available at a fixed price. When the supply depletes, the shares quickly breakout from the top trendline and move higher.

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09:37:16 (DR SEZ) out NVTL OPTION again this 100%

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Bearish On The Economy? This Is The Song For You!!

Nikkei rises 2.5 percent, Softbank jumps on Yahoo

TOKYO, Feb 4 - The Nikkei share average rose 2.5 percent on Monday, with Softbank Corp jumping 13 percent after Microsoft's $44.6 billion bid for Yahoo Inc.

Yahoo Japan Corp was untraded due to a glut of buy orders. Bank shares, including No. 1 Mitsubishi UFJ Financial Group rose after news of a possible rescue plan for troubled U.S. bond insurers.

The benchmark Nikkei average .N225 ended the morning up 335.24 points at 13,832.40. The broader TOPIX index added 2 percent to 1,364.18.

Click Image For Major World Indices Quotes And Breaking News

Global Chip Sales Hit $255.6 Billion in 2007

Chip Sales Rise for Sixth Consecutive Year

SAN JOSE, Calif. - February 1, 2008- The Semiconductor Industry Association (SIA) today reported that global sales of semiconductors grew for the sixth-consecutive year, reaching a record $255.6 billion in 2007, an increase of 3.2 percent from the $247.7 billion reported in 2006. Worldwide sales in December were $22.3 billion, an increase of 2.5 percent compared to the $21.7 billion reported in December 2006. December 2007 sales declined by 3.6 percent from the immediate-prior month when sales were $23.1 billion. The modest sequential decline in December reflected normal seasonal patterns. Worldwide sales in the fourth quarter of 2007 were $66.8 billion, an increase of 2.5 percent over fourth-quarter 2006 sales of $65.2 billion.

"The major drivers of demand for semiconductors - personal computers, mobile handsets, and consumer electronics - remained strong in 2007," said SIA President George Scalise. Shipments of personal computers, which account for approximately 40 percent all semiconductor consumption, grew by 13.8 percent and will grow by 12.2 percent in 2008, according to JPMorgan. Mobile PC unit sales grew 32.2 percent while desktop unit sales grew by 4.1 percent. According to JPMorgan, cell phone unit shipments grew by 20 percent to nearly 1.2 billion units in 2007. Current forecasts project 10 to 15 percent growth in unit shipments in 2008.

"Traditional consumer electronics are also experiencing healthy growth," Scalise continued. "MP3/PMP player unit sales continue to grow at nearly 20 percent a year. LCD TV units grew by more than 50 percent, and digital camera units grew by 20 percent.

"The memory sector reflected the strong pricing pressures that prevailed throughout 2007," Scalise continued. Average selling prices (ASPs) for both DRAMs and NAND flash declined precipitously through the year. Total industry sales, excluding memory products, were up by 4.5 percent year-on-year. Total bit shipments for DRAMs nearly doubled in 2007, but total revenues declined by 7.4 percent due to a decline of more than 39 percent in ASPs. NAND flash revenues were up 26 percent but unit shipments grew even faster at nearly 46 percent, while ASPs declined by 13.7 percent.

"Industry revenue figures tend to mask the growing pervasiveness and economic contributions of semiconductors," Scalise said. "The most dramatic example of how advances in chip technology are benefiting consumers is the enormous increase in performance of a typical PC system coupled with a steep decline in prices, primarily driven by semiconductors that are faster, smaller, and cheaper every year. The typical desktop system of 2007 was at least 100 times more powerful than the typical system of 1997 but cost only about one-third as much -- $630 in 2007 compared to $1,833 in 1997. Rapidly declining prices coupled with increases in performance and functionality provide consumers with additional computing power at lower prices resulting in higher productivity.

"The past year was another good year for the global semiconductor industry, despite concerns about steep increases in energy costs and the sub-prime mortgage problem. Based on the outlook for key demand drivers, we believe our forecast for 7.7 percent industry growth for 2008 is realistic," Scalise concluded.

About the SIA

The SIA is the leading voice for the semiconductor industry and has represented U.S semiconductor companies since 1977 and SIA member companies comprise more than 85% of the U.S. semiconductor industry. Collectively, the chip industry employs a domestic workforce of 232,000 people. More information about the SIA can be found at www.sia-online.org.

Opportunity can be found in adversity!

In Fact, Adverse economic events are the best time to find and exploit opportunity. This is especially true in the markets (obvious example of getting us into stocks in the week of Tuesday, January 22/08 and the resulting gains quotes a subscriber)

Subscriber Comments

John Lansing

Very good call on the HUM 80's today..Clear concise & easy to understand..I am new to options..it was like the light went off.

I just wanted to say THANK YOU.

I paid for my annual subscription TODAY on that one trade!

John R...aka.....rhodojohn 02/04/08

Less obvious is how to take advantage of growth opportunities arising out of the U.S. subprime mortgage crisis. The crisis has forced banks to enter 2008 in a reactive mode. The FBI is investigating various levels of conspiracy that it believes perpetuated the housing boom and ultimately resulted in millions of Americans losing their homes, investment banks losing billions of dollars and the chief executives of Citigroup, Merrill Lynch, Bear Stearns and UBS resigning.

The Sub-prime meltdown, which began last year, was a result of years of increasingly lax lending practices which finally came to roost when loan defaults started to rocket and has resulted in America's FBI investigating senior banking executives for insider dealing and fraud as part of a criminal inquiry into the sub-prime crisis. Neil Power, the head of the FBI's economic crimes unit, has initiated the most far-reaching criminal investigations ever into the practices of the mortgage industry.

These are, of course, things we know because they are in the news every day. But what are the implications that we can take advantage of?

In 2008, banks will focus IT spending on initiatives that reduce risks. A prime driver will be much more rigorous automated control over consumer lending, since Bank CEO's dislike being investigated simultaneously by the FBI and the SEC. But banks will also focus on those areas of risk control not related to consumer lending. One example is the concerns over fraud arising from disclosure of customers' financial information which has forced bank boards and management to pay more attention to information security and fraud prevention. Another area is risk control in the trading departments of financial institutions, with a view to preventing losses such as the 1/3 of a Billion Dollars lost by the Bank of Montreal traders last year, subsequently dwarfed by the 7 Billion Dollars Plus lost by Societe Generale's Jerome Kerviel, this year.

Such concerns will lead to Risk Management and Security experts being granted greater organizational responsibility, better visibility, and larger budgets. IT departments will be required to provide solutions that minimize the risk of such financial debacles as have occurred in the last 12 months and the fact that CEO's are being subjected to criminal, as well as regulatory investigation, will insure that they are provided with healthy budgets to respond to that task.

Can you see where this is heading?

Combined with the pressures Financial Institutions will feel to increase IT spending, is the other outstanding result of the crisis. Plummetting interest rates.

With interest rates dramatically lower money is now flowing freely into stocks!

Subscriber Comments

John Lansing

Just when i think it can't get any better! This site is amazing....for the self directed...those that need direction.....or even have no clue.....you have everyone covered!

And I love the way we can drill down to the strongest stocks in the strongest sectors. Thanks to Casper also for making such great tools!

steveu 01/04/08

"Banks will focus IT spending on initiatives that reduce risks"

Creating efficiency that can only be found through the use of investing in "Information Technology"........More for subscribers as to which stocks will get that juice!

On January 29/08, "There's no recession INTC, CSCO, CSX" was posted on the Blog, with the big guys in TECH saying no recession in Tech, and the CEO of CSX being confident there was no recession in transportation or elsewhere in the economy (Michael Ward said that he did not expect a downturn, and the U.S. Federal Reserve's 75-basis-point interest rate cut should boost the economy). Do others share the same view?

Former General Electric CEO Welch Tells MSNBC 'No Recession'

No 'technical recession,' Welch says; Economic despair is 'unwarranted,' say experts. By Jeff Poor Business & Media Institute 1/4/2008 3:18:07 PM

Some think it is a foregone conclusion the economy is in or will be going into a recession within the first two quarters of 2008, but not everyone...

"No, I don't think we're going to hit recession, but it's going to feel like it," Welch said "Things are slowing down dramatically, as everyone knows. But I think we'll weather this thing and the global economy will keep us alive. So, we will not have a technical recession, but it will sure as hell feel like one."

The "technical definition" of a recession is a period of general economic decline; specifically, negative growth in gross domestic product (GDP) for two or more consecutive quarters.

For the last two quarters, GDP (as reported by the U.S. Commerce Department) has grown at a rate of 3.8 percent (second quarter of 2007) and 4.9 percent (third quarter) - not a sign of a recessionary trend. Fourth-quarter GDP numbers for 2007 won't be released until March.

Robert Stein and Brian Wesbury, economists for First Trust Advisors, L.P., wrote in their January 14 "Monday Morning Outlook" the dismal view of the economy is unwarranted if one examines the underlying fundamentals.

"We can't change the mood on Wall Street," Stein and Wesbury wrote. "What we can do is look at the fundamental drivers of the economy. And those drivers appear in good shape."

The "drivers" ...included the fact that Federal Reserve interest rates are not "tight," historically speaking - despite the pleas for cuts from some financial media pundits...tax rates remain low and the losses from the subprime mortgage woes are now realized...the dollar amounts from the subprime crisis "pale in comparison to an economy that will produce $14.5 trillion in GDP this year, has 300 million people, 100+ million homes, and more than $100 trillion in total assets."

Dow Chem CEO: I'm No Recession 'Chicken Little'

What is driving all the fearful recession chatter? Andrew Liveris, president, chairman and chief executive at Dow Chemical (DOW) sums it up in one word: "Overreaction."

...."Macro trend-wise, '08 is clearly going to be soifter than '07. And the U.S. economy is still sorting itself out," Liveris conceded. "But I wouldn't do the Chicken Little thing at all."

What is, on average, the single most dominating influence in our lives (whether we are aware of it or not)? Mass Media of course

CBS CEO Moonves To Citigroup:

No Local Ad Recession

Michael Learmonth | January 10, 2008 2:31 PM

... CBS CEO Leslie Moonves adds his voice to others in media saying they haven't seen any evidence of an economic downturn on local advertising. "As we look toward potential downturn in the economy--we haven't seen any evidence of it, including in our local businesses. We have seen nothing that would lead us to believe we are in any kind of trouble," he said.

News Corp. president Peter Chernin said basically the same thing yesterday.

Mass Media advertisers are a barometer of a broad segment of major businesses participating in the economy, and, as well, a barometer of consumer participation that may be expected in the economy. ARE consumers a major driver of the economy? Well, yeah!

On a lighter note, they're not even expecting a recession in Alabama this year!

The University of Alabama's Center for Business and Economic Research gave a lukewarm forecast for Alabama's economy in 2008, with expectations for moderate growth - but no recession.

LONDON (Reuters) - ....last week's news of major company deals eased concerns that the credit crisis might be hurting corporate and economic activity.

Optimism has grown since Friday's news that China teamed up with U.S. aluminum producer Alcoa (NYSE:AA - News) to buy a $14 billion stake in Rio Tinto (LSE:RIO.L - News) and a move by Microsoft (NasdaqGS:MSFT - News) to bid $44.6 billion for Yahoo (NasdaqGS:YHOO - News).

..."The Microsoft news is improving market sentiment as it hasn't seen global M&As of this magnitude for a while. The bid amount is ridiculously huge and the premium is also large," ...

Fri Feb 1, 2008 8:57pm EST - By Philipp Gollner

SAN FRANCISCO (Reuters) - Microsoft Corp's $44.6 billion bid for Yahoo Inc would use up its cash hoard, but the controversial move at a 62 percent premium might pay off if the company makes its savings targets -- and then some.

The software leader's $31-per-share cash and stock offer "is very astute," Sanford C. Bernstein analyst Charles Di Bona wrote in a research note, as Yahoo's assets are worth $39 to $45 per share, much more than the offer price...

...The bid far exceeds the 35 percent to 40 percent premium typical in recent large deals.

Pundits have cited (in error) fears of a recession in the US economy as the cause of the Martin Luther King day plunge in world market. With the US consumer still driving the world economy, the fear would be understandable. The fear of such a recession isn't eveident in Japan, where Takeda Pharmaceutical Co., Japan's largest drugmaker, is spending almost a Billion Dollars to acquire a local unit of AMGEN.

Bloomberg

Takeda to Buy Amgen Japan Unit for Up to $902 Million

Feb. 4 (Bloomberg) -- Takeda Pharmaceutical Co., Japan's largest drugmaker, agreed to buy the local unit of Amgen Inc. for as much as $902 million, gaining about a dozen experimental medicines for diseases including cancer and arthritis.

Takeda President Yasuchika Hasegawa is betting acquisitions in biotechnology, including U.K.-based Paradigm Therapeutics Ltd. last March, will provide new avenues for growth...
`
`They are showing they are aggressive in terms of going for acquisitions and strengthening pipelines,'' said Bruno Ferrant, an equities analyst at Japaninvest KK...Today's announcement ``can be seen very positively,'' he said.

In summary, the major TECH players don't see a recession coming and don't see any effects of an impending recession in their business results.

Consumers and businesses that supply them are not feeling the effects of any recession based on the evidence of very healthy advertising revenues flowing into the coffers of mass media suppliers, such as CBS and NewsCorp.

Transport is major infrastucture, supplying consumer and industrial needs. The CEO of CSX, a railroad, sees no recession, and the transports in general are booming.

Dow Chemical, which can be seen as both a major consumer supply company, and a major supplier of products used by other industries in production (industrial infrastructure) thinks talk of recession is overreaction.

The market is reacting positively to bad news, a sign of being at or near a market bottom. The positive market reaction to Motorola trying to sell off it's cell phone division is an example of this.

Corporate leaders are doing major merger and acquisition deals after taking a break caused by fears of Sub-Prime and its potential effects. The biggest recent M&A bid, Microsoft chasing Yahoo, involves a 62% premium on share price at the time of the offer. Microsoft expects profits to continue to be healthy.

CEO's are not hoarding cash for emergencies, as is typical on entering a recession. They are expending large amounts of excess cash on major share buy-backs, especially in Tech, but also in other sectors of the market. Buy-backs have been going on since prior to Bear Stearns' announouncment of their (sub-prime) Hedge Fund collapse and continues to date. The latest quarterly reports from Tech are showing considerable progress has already been made in these repurchases.

Insider buying, is at record levels, which is a huge indicator that Corporate leaders, at least, think their share prices will increase. Share prices, of course, don't normally increase during a recession.

And finally, what sectors have not been reporting good results this quarter? Financials and Housing, sectors which the market has been rewarding in the last 2 weeks.

Markets and stocks do not go up on bad news heading into a recession. (see MOT) Bank of America's latest quarterly report announced a 5.3 Billion dollar write down on Sub Prime and saw profit plunge 95% from last, year. BAC then punished existing shareholders by diluting existing share values. They issued new share offering subscribed to the tune of 12 Billion Dollars. Result? Stock has been going up ever since, rising about 30% over the last 2 weeks.

Bottom line is that Objective indicators show we are NOT heading into a recession.

Up is Down!

Left is Right!

Buy The News Double Down The Rumor

Close Your Eyes Buy The Highs!

Stocks Will Hit Highs Every Week!

Stop Thinking!

World finance chiefs meet Saturday to discuss faltering economic growth and ways to prevent a repeat of the credit crunch that has rocked global markets.

Finance ministers and central bank chiefs from the Group of Seven industrialised nations are gathering in Tokyo amid one of the gloomiest outlooks for the global economy in years.

The top officials from Britain, Canada, France, Germany, Italy, Japan and the United States are expected to discuss measures to boost global market transparency and surveillance in light of recent financial market turmoil.

But analysts say that coordinated remedial action by the G7 powers to try to bolster their economies or stock markets seems unlikely.

Despite growing fears that the US economy is slipping into recession, they will likely reassure markets that their economies are fundamentally sound despite the fallout from a US housing slump and related credit squeeze.

"I still believe that we are going to continue to grow, although it is a slower pace for a while," US Treasury Secretary Henry Paulson said in an interview with a Japanese broadcaster NHK ahead of the one-day meeting.

"We are doing everything we can to bolster our economy this year," he said, referring to a package worth up to 150 billion dollars to stimulate the sagging US economy as well as interest rate cuts by the Federal Reserve.

Analysts say other G7 members have more limited room for measures to stimulate demand, particularly Japan, the world's second-largest economy, which has huge national debts and interest rates of just 0.5 percent.

"The United States, Europe and Japan face different economic fundamentals," Japanese Finance Minister Fukushiro Nukaga said ahead of the talks, which were due to start with a working lunch followed by the main meeting at 05:45 GMT.

Some frictions have emerged over the weakness of the dollar and the yen against the euro, which acts as a brake on European exports.

The euro is "still probably at a high level", even after the recent drop below 1.45 dollars, said French Finance Minister Christine Lagarde.

But France has "not much hope" that any currencies other than the Chinese yuan will be mentioned in the official G7 statement, she added.

At past meetings G7 members have urged China to allow a faster appreciation of the yuan.

There may be calls behind closed doors from European ministers for action to try to stem the dollar's decline, analysts said.

But publicly the G7 is unlikely to shift from its previous official stance that foreign exchange rates should reflect economic fundamentals and that excess volatility is undesirable, they added.

"The problems and uncertainty in global markets resulting from (the) US subprime crisis and the policy responses will likely be the key issues and although we think foreign exchange is likely to be discussed we expect no major changes in the policy in the communique," said ABN Amro analyst Melinda Smith.

Finance ministers from China, Indonesia, South Korea and Russia have also been invited to join the "outreach" dinner that the G7 now regularly organises on the sidelines of its gatherings.

The role of ratings agencies, which have been criticised for not flagging up the impending global credit woes, is also expected to be discussed by the G7, along with efforts to tackle climate change.

$USD (United States Dollar Bottomed November 2007) This Is Not Bottom Calling Just Observation

$XBP (The British Pound Continues To Get Pounded)

$XEU (The Euro Breaks South Out Of An Ascending Triangle)

Full Report

The much-awaited results of Cognizant Technologies Solutions (CTSH) last week have brought the smiles back. But the good cheer is not conclusive as yet.

Given the uncertain commentary by Indian IT majors after the Q3 numbers, save for Satyam Computers, and the subsequent drubbing to the counters on the bourses, the good numbers from the Nasdaq-listed firm will come as a relief to sector watchers.

For the quarter ending December 31, CTS reported revenues of Rs 2,368 crore, up 4.5% sequentially. Owing to the rupee's rise against the dollar, net profit fell 2.5% to Rs 380 crore.

The much-awaited detail was the company's guidance for the quarter and the year-end. It did not disappoint, declaring higher-than-anticipated revenue expectation at $640 million for the current quarter, up 7% over the previous three months.

It predicted revenue for the year at $2.95 billion, up 38% against the street expectation of 32-34%. The company plans to end the year with 72,000 - 75,000 employees.

Given that Cognizant derives 81% of its clientele from North America and particularly from the BFSI vertical, this implies the company expects IT budgets to remain robust, notwithstanding economic uncertainties in the US market.

"The Cognizant results are in line with what we have been saying all through", said Srinivas Vadlamani, CFO, Satyam Computers. The company had said 85% of its customers had finalised their budgets with increases of 4-5% and that it was hearing bullish talk across all verticals including BFSI.

"The results are good and a sentiment-booster for the sector. The guidance is more than what the Street expected and this proves that the company foresees a demand to remain strong," said an analyst with a foreign asset management company.

Despite geographical de-risking by Tier-I Indian IT companies over the past few years, the US still accounts for almost 70% of the Indian IT sector's revenues while the sub-prime crisis and an impending recession have put in doubt prospects from the market.

Encouraging while the Cognizant numbers may be, it may not take much to put the mood back. Extrapolating the good numbers to the future is risky and we should wait for one or two months more before declaring the industry out of the woods, said Satyam's Srinivas.

"Some time back, everybody was even denying the possibility of a slowdown in the US. Now, we all agree there is a recession. The next question to answer is how deep it will be and whether there will be a soft-landing or a crash-landing," he cautioned.

Having said that, the industry is banking on the "contrarian theory" that a US recession is good for Indian offshoring. But the caveat here is that while a crash-landing would be detrimental to the industry across the board, it is a soft-landing that the industry is perhaps looking forward to.

How they stack up

Compared to its Indian peers, Cognizant had been the fastest-growing IT services players in past two years.

At over 9%, its compounded sequential revenue growth rate is higher than Infosys (6.7%), Satyam (7.1%), TCS (7.7%), and Wipro (8.5%).

However, owing to factors like higher SG&A (sales, general and administrative) expenses and onsite presence, Cognizant's profit growth (4.7% CQGR) has trailed Infosys (8.3%), Satyam (6.9%), TCS (7.3%) and Wipro (5.9%).

For the December quarter, Infosys and TCS derived 62% and 54% of their revenues from the US, respectively.

For the quarter ending December 2007, Infosys and TCS derived 62% and 54% of their revenues from the US, respectively.

Over the last eight quarters, CTS has also managed to improve its earnings per share, where its Indian peers have reported negative CQGR. Cognizant's sequential EPS growth has been 3.9%, against Infosy's - 1.2%, Satyam's - 8.6%, and TCS' - 1.8%.

Full Report

SunPower Stock Surges More Than 12 Pct. After Barron's Becomes Latest to Tout Potential Growth

NEW YORK (AP) -- Shares of SunPower Corp. surged Monday after a Barron's article became the latest in a string of reports to tout the company's growth potential and say its shares have been undervalued.

The solar-panel maker's stock rose $7.21, or 10.9 percent, to $73.58. Its shares have traded in a range of $38.82 to $164.49 over the past 52 weeks, reaching the high in November.

Solar stocks have come under pressure recently amid a broader sell-off because of recessionary fears and because of a solar-tax credit that is set to expire at the end of this year.

However, the Barron's article noted that analysts are forecasting earnings growth of 40 percent to 50 percent for SunPower through 2010 and that the company is working to cut costs and lift margins. If its profits expand to that degree and its operating strategy is successful, its shares could rally, Barron's said.

The article also noted that much of SunPower's revenue comes from customers who are spurred to install solar power because of state incentives, rather than the federal one that is set to expire.

Wall Street analysts like Calyon Securities' Kelly Dougherty have been issuing similar statements in recent weeks, saying the company is poised for growth despite a weak share price. Dougherty reiterated a "Buy" rating for SunPower on Jan. 28, but lowered her price target on the shares, saying investors are "not paying up as much for growth now."

Full Report

No economic bailout necessary, says Buffett

Warren Buffett said Wednesday he is confident the U.S. financial sector can get through its troubles without a government bailout and remains bullish about the long-term prospects for the U.S. economy.

"I am a huge bull on the American economy," said Mr. Buffett, in an exclusive interview with the National Post.

The comments from Mr. Buffett, the world's second richest man and regarded as one of its most successful investors, come as the United States sits on the brink of recession, bogged down by a housing market implosion that threatens to derail the consumer and that has left many U.S. banks saddled with defaulting subprime mortgages.

Financial markets around the world have been heaving amid fears that banks will have restrain lending and damage other areas of the economy in order to shore up their capital and rebuild their balance sheets.

But Mr. Buffett says the United States has survived such turmoil before.

"We'll always get through," he said. "I'm a bull on the United States. Just think about how silly it would have been to be anything other than a bull on the United States since 1790. It is not a smart thing to sell the United States short over the years -- or Canada for that matter. The world does get better. People get more productive. More human capacity is unleashed over time."

Mr. Buffett is chairman and chief executive officer of Berkshire Hathaway Inc., a holding company with a market capitalization of almost US$210-billion and investments in such iconic American companies as The Coca-Cola Co., American Express Co. and The Procter & Gamble Co.

He has built his business by buying companies in businesses he understands, that have strong management, consistent earnings power, good return on equity and little or no debt. If he can get them at a cheap price all the better.

He said the banks will be able to work out their troubles without government assistance but may not be the "best investments." Many of the big banks, including Merrill Lynch, Citigroup, Morgan Stanley and Canadian Imperial Bank of Commerce, have taken huge losses against their books on defaulting sub-prime loans and all the complicated derivatives that have been packaged up and sold against them.

"They're going to be around," he said. "The ones that have taken the big write-offs, they're not going out of business but they're selling a lot of new shares in the process so they're diluting future earnings. They're paying a price.

"I think most of the very big ones and I won't name names, I think five or 10 years from now people will have made money on them but I think they'll have made money on other things too. I don't think necessarily they're the best investments, but they have not been permanently crippled."

He sees no need for any government bailouts in the financial sector, similar, to the government rescue of U.S. banks during the savings and loans crisis in the early 1980s. U.S. banks have enough money to handle the extra cost.

"They can handle it and they're paying a price for it," he said. "Somebody has to bear those losses. Is it better that the XYZ bank bears it or is it better to socialize it for the American public. I'd rather have the XYZ bank pay for it."

Mr. Buffett, who was in Toronto to promote the launch of Business Wire in Canada, a corporate news release company, said he sees no problem with foreign countries -- through so-called '"sovereign wealth funds" -- buying up big stakes in U.S. financial stocks.

"It's the inevitable consequence of our trade deficit," he said. "If we're going to consume US$2-billion a day more of foreign goods than we sell to the rest of the world we have to ship them something in exchange. Initially we may ship them American dollars but those get converted into American assets of one sort or another. The United States is fueling the sovereign wealth funds. We're making deposits in their wealth funds in effect."

Mr. Buffett has been a long-term critic of huge U.S. trade and current account deficits, a key reason he believes the U.S. dollar has weakened over the years and why he believes it will continue to weaken particularly against the Canadian dollar.

While Mr. Buffett has certainly seen some weakening of demand in his businesses - Berkshire owns retail jewelry and candy operations - he does not believe the United States is facing a major credit crunch that will cripple the economy.

"We actually went through a rolling credit crunch of sorts and we're still in it to some degree, but what we've really done is seen credit cut off to a lot of things that should have been cut off and we've seen credit that was mispriced get repriced," Mr. Buffett said.

"The money is there ...we do not have an unavailability of credit to people who've got reasonable credit demands and it's not expensive. We're not in a credit crunch for those who have sound deals. I went through 1982 when short-term money cost 21%. This is not a tough period."

Eventually the excess demand in the housing industry will be sopped up by a population that is expanding at about 1% a year.

"Demand does soak up excess supply but it can take a while to do it ... but you do not have the problem that if you have excess supply it just sits there forever."

Full Report

This week, advisors reacted to last Tuesday's large market decline by running for cover, in spite of the talk of further Fed rate cuts.

The bulls moved all the way down to 36.7%, the lowest reading since June 16, 2006 when they were 35.6%. Prior to that single week, you have to go all the way back to October 2002 to find fewer bulls. That occurred at the bear market low, so the current readings are very encouraging and suggesting that there is enough pessimism out there for an important market bottom. Last week the bulls stood at 41.6%.

The bears moved up to 35.6%, from 32.6% a week ago. Just shy of the 37.4% reading shown for three consecutive weeks in August 2007. Those readings proved to be bullish.

The correction group rose to 27.7%, from the prior 25.8%. These advisors are looking for a near term drop in stocks, but they expect it will be a buying opportunity. These are potential bears as opinion shifts often occur in stages and some advisors shift from bullish to correction before turning bearish.

Much of the advisor pessimism was due to the very weak January market action and follow through last week. In addition, they increasingly mention that the economy is probably in a recession, echoing the commentators from the financial press. They also note the continuing sub prime mess.

In additional to the bullish advisory sentiment we have also been seeing excellent insider activity, with the best buying since 1982. Interest rates are in a definite 'down' cycle and many medium-long term indicators show their initial upmoves after declines to bear market low levels.

The difference between the bulls and bears is now just 1.1%, down from 9.0% a week ago. It shows a clear bullish level that was last achieved in June 2006. It shows a major contraction from the very negative 42.4% spread that occurred with the early October 2007 market high.

A bull-bear difference that narrows to around 15% (or less) and then expands provides a buy signal. That was the late August 2007 signal, the spread was a very bullish 3.2%, and before that on 14-March-2007 [16%], and in June 2006 [0% difference].

Sentiment Chart (By Matt Frailey)

The ratio of the Nasdaq/SPX is in a bull wedge; this implies that the Nasdaq and techs will start to outperform; this would be bullish for the market as well.

Chairman Ben S. Bernanke
The economy and financial markets
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate
February 14, 2008

Chairman Dodd, Senator Shelby, and other members of the Committee, I am pleased to be here to offer my views on financial conditions, the near-term economic outlook, and related issues.

As you know, financial markets in the United States and in a number of other industrialized countries have been under considerable strain since late last summer. Heightened investor concerns about the credit quality of mortgages, especially subprime mortgages with adjustable interest rates, triggered the financial turmoil. However, other factors, including a broader retrenchment in the willingness of investors to bear risk, difficulties in valuing complex or illiquid financial products, uncertainties about the exposures of major financial institutions to credit losses, and concerns about the weaker outlook for the economy, have also roiled the financial markets in recent months.

As the concerns of investors increased, money center banks and other large financial institutions have come under significant pressure to take onto their own balance sheets the assets of some of the off-balance-sheet investment vehicles that they had sponsored. Bank balance sheets have swollen further as a consequence of the sharp reduction in investor willingness to buy securitized credits, which has forced banks to retain a substantially higher share of previously committed and new loans in their own portfolios. Banks have also reported large losses, reflecting marked declines in the market prices of mortgages and other assets that they hold. Recently, deterioration in the financial condition of some bond insurers has led some commercial and investment banks to take further markdowns and has added to strains in the financial markets.

The banking system has been highly profitable in recent years and entered this episode with strong capital positions. Some institutions have responded to their recent losses by raising additional capital. Notwithstanding these positive factors, the unexpected losses and the increased pressure on their balance sheets have prompted banks to become protective of their liquidity and balance sheet capacity and, thus, to become less willing to provide funding to other market participants, including other banks. Banks have also become more restrictive in their lending to firms and households. For example, in the latest Senior Loan Officer Opinion Survey conducted by the Federal Reserve, banks reported having further tightened their lending standards and terms for a broad range of loan types over the past three months. More-expensive and less-available credit seems likely to continue to be a source of restraint on economic growth.

In part as the result of the developments in financial markets, the outlook for the economy has worsened in recent months, and the downside risks to growth have increased. To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so. The virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgage loans have further reduced the demand for housing, while foreclosures are adding to the already-elevated inventory of unsold homes. Further cuts in homebuilding and in related activities are likely.
Conditions in the labor market have also softened. Payroll employment, after increasing about 95,000 per month on average in the fourth quarter, declined by an estimated 17,000 jobs in January. Employment in the construction and manufacturing sectors has continued to fall, while the pace of job gains in the services industries has slowed. The softer labor market, together with factors including higher energy prices, lower equity prices, and declining home values, seem likely to weigh on consumer spending in the near term. On the other hand, growth in U.S. exports should continue to provide some offset to the softening in domestic demand, and the recently approved fiscal package should help to support household and business spending during the second half of this year and into the first part of next year.

On the inflation front, a key development over the past year has been the steep run-up in the price of oil. Last year, food prices also increased exceptionally rapidly by recent standards, and the foreign exchange value of the dollar weakened. All told, over the four quarters of 2007, the price index for personal consumption expenditures (PCE) increased 3.4 percent, up from 1.9 percent during 2006. Excluding the prices of food and energy, PCE price inflation ran at a 2.1 percent rate in 2007, down a bit from 2006. To date, inflation expectations appear to have remained reasonably well anchored, but any tendency of inflation expectations to become unmoored or for the Fed's inflation-fighting credibility to be eroded could greatly complicate the task of sustaining price stability and reduce the central bank's policy flexibility to counter shortfalls in growth in the future. Accordingly, in the months ahead we will be closely monitoring inflation expectations and the inflation situation more generally.

To address these developments, the Federal Reserve has moved in two main areas. To help relieve the pressures in the interbank markets, the Federal Reserve--among other actions--recently introduced a term auction facility (TAF), through which prespecified amounts of discount window credit can be auctioned to eligible borrowers, and we have been working closely and cooperatively with other central banks to address market strains that could hamper the achievement of our broader economic objectives.

In the area of monetary policy, the Federal Open Market Committee (FOMC) has moved aggressively, cutting its target for the federal funds rate by a total of 225 basis points since September, including 125 basis points during January alone. As the FOMC noted in its most recent post-meeting statement, the intent of these actions is to help promote moderate growth over time and to mitigate the risks to economic activity.

A critical task for the Federal Reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives of maximum employment and price stability and, in particular, whether the policy actions taken thus far are having their intended effects. Monetary policy works with a lag. Therefore, our policy stance must be determined in light of the medium-term forecast for real activity and inflation, as well as the risks to that forecast. At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt. At the same time, overall consumer price inflation should moderate from its recent rates, and the public's longer-term inflation expectations should remain reasonably well anchored.

Although the baseline outlook envisions an improving picture, it is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further. The FOMC will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.

Full Report

Chairman Ben S. Bernanke
The economy and financial markets
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate
February 14, 2008

Chairman Dodd, Senator Shelby, and other members of the Committee, I am pleased to be here to offer my views on financial conditions, the near-term economic outlook, and related issues.

As you know, financial markets in the United States and in a number of other industrialized countries have been under considerable strain since late last summer. Heightened investor concerns about the credit quality of mortgages, especially subprime mortgages with adjustable interest rates, triggered the financial turmoil. However, other factors, including a broader retrenchment in the willingness of investors to bear risk, difficulties in valuing complex or illiquid financial products, uncertainties about the exposures of major financial institutions to credit losses, and concerns about the weaker outlook for the economy, have also roiled the financial markets in recent months.

As the concerns of investors increased, money center banks and other large financial institutions have come under significant pressure to take onto their own balance sheets the assets of some of the off-balance-sheet investment vehicles that they had sponsored. Bank balance sheets have swollen further as a consequence of the sharp reduction in investor willingness to buy securitized credits, which has forced banks to retain a substantially higher share of previously committed and new loans in their own portfolios. Banks have also reported large losses, reflecting marked declines in the market prices of mortgages and other assets that they hold. Recently, deterioration in the financial condition of some bond insurers has led some commercial and investment banks to take further markdowns and has added to strains in the financial markets.

The banking system has been highly profitable in recent years and entered this episode with strong capital positions. Some institutions have responded to their recent losses by raising additional capital. Notwithstanding these positive factors, the unexpected losses and the increased pressure on their balance sheets have prompted banks to become protective of their liquidity and balance sheet capacity and, thus, to become less willing to provide funding to other market participants, including other banks. Banks have also become more restrictive in their lending to firms and households. For example, in the latest Senior Loan Officer Opinion Survey conducted by the Federal Reserve, banks reported having further tightened their lending standards and terms for a broad range of loan types over the past three months. More-expensive and less-available credit seems likely to continue to be a source of restraint on economic growth.

In part as the result of the developments in financial markets, the outlook for the economy has worsened in recent months, and the downside risks to growth have increased. To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so. The virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgage loans have further reduced the demand for housing, while foreclosures are adding to the already-elevated inventory of unsold homes. Further cuts in homebuilding and in related activities are likely.

Conditions in the labor market have also softened. Payroll employment, after increasing about 95,000 per month on average in the fourth quarter, declined by an estimated 17,000 jobs in January. Employment in the construction and manufacturing sectors has continued to fall, while the pace of job gains in the services industries has slowed. The softer labor market, together with factors including higher energy prices, lower equity prices, and declining home values, seem likely to weigh on consumer spending in the near term. On the other hand, growth in U.S. exports should continue to provide some offset to the softening in domestic demand, and the recently approved fiscal package should help to support household and business spending during the second half of this year and into the first part of next year.

On the inflation front, a key development over the past year has been the steep run-up in the price of oil. Last year, food prices also increased exceptionally rapidly by recent standards, and the foreign exchange value of the dollar weakened. All told, over the four quarters of 2007, the price index for personal consumption expenditures (PCE) increased 3.4 percent, up from 1.9 percent during 2006. Excluding the prices of food and energy, PCE price inflation ran at a 2.1 percent rate in 2007, down a bit from 2006. To date, inflation expectations appear to have remained reasonably well anchored, but any tendency of inflation expectations to become unmoored or for the Fed's inflation-fighting credibility to be eroded could greatly complicate the task of sustaining price stability and reduce the central bank's policy flexibility to counter shortfalls in growth in the future. Accordingly, in the months ahead we will be closely monitoring inflation expectations and the inflation situation more generally.

To address these developments, the Federal Reserve has moved in two main areas. To help relieve the pressures in the interbank markets, the Federal Reserve--among other actions--recently introduced a term auction facility (TAF), through which prespecified amounts of discount window credit can be auctioned to eligible borrowers, and we have been working closely and cooperatively with other central banks to address market strains that could hamper the achievement of our broader economic objectives.

In the area of monetary policy, the Federal Open Market Committee (FOMC) has moved aggressively, cutting its target for the federal funds rate by a total of 225 basis points since September, including 125 basis points during January alone. As the FOMC noted in its most recent post-meeting statement, the intent of these actions is to help promote moderate growth over time and to mitigate the risks to economic activity.

A critical task for the Federal Reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives of maximum employment and price stability and, in particular, whether the policy actions taken thus far are having their intended effects. Monetary policy works with a lag. Therefore, our policy stance must be determined in light of the medium-term forecast for real activity and inflation, as well as the risks to that forecast. At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt. At the same time, overall consumer price inflation should moderate from its recent rates, and the public's longer-term inflation expectations should remain reasonably well anchored.

Although the baseline outlook envisions an improving picture, it is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further. The FOMC will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.

Full Report

The Japanese economy grew at a much faster than expected clip in the fourth quarter, buoyed by brisk capital investment and consumer spending as well as increased exports to emerging markets like China, the Cabinet Office said Thursday.

Japan's gross domestic product rose 0.9 percent in real terms in the fourth quarter, or at an annualized rate of 3.7 percent, the government said. It was the second straight quarter of growth for the world's second-largest economy.

The growth was well ahead of market expectations. Ten economists polled by Thomson Financial News were looking at 0.4 percent expansion for the quarter and an annualized pace of 1.5 percent, on average.

"The October-December quarter registered strikingly strong growth as private demand, as well as net exports and public demand more than offset the slump in housing investments," said Hiroki Owaki, senior economist at the Cabinet Office.

Full Report

Earnings Reports For 02/14/08

(DRYS) George Economou, the Company's Chairman and Chief Executive Officer, commented:

"We are very pleased to report the best quarter in the Company's history so far. Since our IPO in 2005 when we started out with a fleet of 6 vessels with an average age of 19 years we have grown to the biggest drybulk company listed in the US with a fleet comprising of 47 vessels with an average age of 8.8 years. In the meantime, our stock price has risen from $18 per share to $84.25 per share as of today's close, which implies a return to our initial shareholders of 368.1%. Our clear market view and choice of spot employment has been proven correct and has created superior shareholder value.

DryShips beats by $0.43, beats on revs (DRYS) 84.25 +2.05 : Reports Q4 (Dec) earnings of $4.50 per share, excluding non-recurring items, $0.43 better than the First Call consensus of $4.07; revenues rose 195.1% year/year to $233.4 mln vs the $208.8 mln consensus. Co says, "We enter 2008 with a great deal of optimism. The supply and demand balance for this year remains extremely tight. In 2008 we expect to have ~17% more fleet operating days compared to 2007 and as of today ~63% of the fleet operating days remains unfixed."

Online travel agency Priceline.com Inc (PCLN) said on Thursday its profit more than doubled as international bookings surged, sending its shares up nearly 10 percent.

Profit rose to $32.7 million, or 68 cents per share, from $13.2 million, or 33 cents per share, a year earlier.

Priceline's income, excluding special items, was 96 cents per share, beating Wall Street analysts' average forecast on that basis of 84 cents per share, according to Reuters Estimates.

The company said its travel bookings increased 62 percent overall to $1.2 billion. Its bookings for international travel increased by 113 percent.

Priceline forecast a further increase in its bookings of 60 percent to 65 percent for the first quarter of 2008. For full- year 2008, Priceline expects to generate about $7 billion to $7.3 billion in travel bookings.

The jump speaks well of demand, even as U.S. economic data suggest a recession may be coming, said Jeffery Boyd, Priceline's chief executive. Growth in international bookings was especially strong, he told Reuters.

"Internationally, our business continued to grow at very rapid rates," Boyd said.

Revenue rose 22 percent to $334.9 million.

The online travel business has been booming, but as growth in domestic bookings plateaus, companies such as Priceline are looking to Europe and Asia for growth opportunities.

Priceline.com beats by $0.12, beats on revs; guides Q1 EPS in-line; guides FY08 EPS in-line (PCLN) 102.23 -2.73 : Reports Q4 (Dec) earnings of $0.96 per share, $0.12 better than the First Call consensus of $0.84; revenues rose 28.8% year/year to $334.9 mln vs the $329.3 mln consensus.

Market Indicators and Sentiment

Let's Recap the Market Indicators and Sentiment Update

What Is a Market Indicator?

A market indicator, like a technical indicator, is a series of data points derived from a formula. The formula for market indicators, though, is applied to the price data for, not just one security, but for multiple securities within the market,. Price data can come from open, high, low or close points for the securities, their volume, or both. This data is entered into the indicator formula and the data point is produced.

A market indicator, unlike a technical indicator, is not charted above or below the chart. The market indicator itself is charted and, therefore, each has its own ticker symbol. A given market indicator will have a separate ticker symbol for each different market it's applied to, for example, the $BPNYA and $BPCOMPQ track the Bullish Percent Index for the New York Stock Exchange and the NASDAQ respectively.

The Bullish Percent Index (BPI) is a popular market breadth indicator calculated by dividing the number of stocks in a given group (an exchange, an industry, etc.) that are currently trading with Point and Figure buy signals, by the total number of stocks in that group. Bullish Percent levels that are above 70% are considered overbought, whereas levels below 30% are considered oversold. Strong buy signals occur when the Bullish Percent Index falls below 30% and then reverses up by at least 6%. Conversely, promising sell signals occur when it goes above 70%, and then reverses down by at least 6%. It is also a very effective indicator of major market bottoms.

It is important to note that the Bullish Percent Index is not something that can be applied to a single stock, but rather, an index that is calculated for a group of stocks.

Introduction to Market Indicators and Sentiment Charts

Importance: Market Indicators and Sentiment Charts can tell us where the market is likely go, so understanding them is of prime importance. They are key charts that reveal the answers to why the market has been acting the way that it has.

$BPCOMPQ & $BPNYA (Bullish Percent Index Charts)

The Bullish Percent Index (BPI) is a market breadth indicator calculated by dividing the number of stocks currently trading with Point and Figure buy signals in a given exchange, industry, etc., by the total number of stocks in that group (Market Breadth is defined as the fraction of the overall market that is participating in the market's up or down move at any given time).

Bullish Percent levels above 70% are considered overbought, whereas levels below 30% are considered oversold. Strong buy signals occur when the Bullish Percent Index falls below 30% and then reverses up by at least 6%. Conversely, promising sell signals occur when it goes above 70%, and then reverses down by at least 6%.

It is a very effective indicator of major market bottoms and a less effective indicator of tops.

On January 22, 2008, both the NASDAQ and the NYSE Bullish Percent indicators hit historic lows. Think of a pendulum swinging to the extreme end of its arc, poised to swing back, sweeping shorts and puts from the market! The only other time the pendulum has been so positioned was in 1998, just before it swung back and carried the market into the Dot.com bubble.

We have bounced and rallied more than 6% off the lows. We may retest, as happened in 1998, but will not make new lows. A parabolic rally will then tack on about 800 Nasdaq points in the next 2 to 4 months. The $BPCOMPQ lows are fuel for the rally.

The $NAHL (Nasdaq New Highs-New Lows)

A market breadth indicator measuring exactly what is says. On January 22, 2008 it hit -937. Last time is went lower than this was October 8, 1998. Familiar date? Oh, yeah...just before NASDAQ took off for the stratosphere.

The $NAHLR (Nasdaq New High/Low Ratio)

A market breadth indicator measuring the ratio of New Highs to New Lows rather than the quantity. Okay, on this one, I just want to point out that we have taken out the internals from where we were back in March and the indicator hasn't seen new highs since February of 2007. On January 22, 2008 it touched .01 on the daily chart. And when was the last time it went that low? Correct. On October 8, 1998 it went below .005 and registered 0 on the indicator.

$NALOW (Nasdaq - New Lows)

What I am about to tell you is so important that I want you to write it down! The Nasdaq New Lows on, you guessed it, January 22, made 52-week highs at 946 on the chart. That not only took out 52-week highs...it took out the highs from all the way back to the 1561 registered by $NALOW on October 8, 1998, just prior to the massive NASDAQ reversal to the Bubble highs!!!

$NAMO (Nasdaq McClellan Oscillator)

Once again, a market breadth indicator measured by subtracting a 39 day EMA of advancing issues minus declining issues from a 19 day EMA of advancing issues minus declining issues. Every time $NAMO has hit -80 or lower, we have had massive bull runs. This bottomed in July of last year and, despite all the recent volatility, has moved into positive territory.

$SPXA200

This is an indicator showing S& P 500 stocks above their 200 day moving average. It is at 74, the lowest level since March 12, 2003, the date the S&P bottomed out and started the massive 5 year bull run just interrupted by the recent correction.

$CPC (CBOE Options Total Put/Call Ratio)

The Put/Call ratio, in January, tied the all time record high level of 1.53 made back in August, 2007. There is a huge short interest on the SPY (S&P 500 Spdrs), as well as in the overall market. These enormous short interests in the market will supercharge the rally once it takes off.

Pattern

In 1998 an expanding triangle developed in the NASDAQ cash index, although not in NASDAQ futures. The bottom of that triangle was hit at $BPCOMPQ -40, immediately preceding the explosion of the Dot.com bubble. Now, once again, we have an expanding triangle in the NASDAQ cash index, although not in NASDAQ futures. The bottom of it hit at $BPCOMPQ -60, on January 22, 2008. "Coincidence Batman?" "I think not Robin." The RST, itself a savage, fast moving pattern, will power even more of a pendulum swing, initiating the violent swing up. Pattern completion will take a couple of months. That's why our target is 3126.

Is Ben Our Friend?

The pricing in this market has thrown, not just the baby out with the bath water, it's thrown the baby out with the bathroom, the house foundation, the county, the state, and half the country! Armageddon, tornadoes in the gulf, and the Bird Flu have already been priced in.

The market will have the most wicked snap-back bounce imaginable. The catalyst will be continued lowered interest rates, continued Plunge Protection interventions, and additional government liquidity injections to "save the markets." What is happening is nothing short of the Greenspan manipulations that created the 1998 Dot.com bubble. The same mistakes are being repeated and the eventual outcome will be ugly.

These interventions in the U.S. markets will lead to the most violent rally I have ever seen or am ever likely to see in my lifetime. It will be a market move of unprecedented speed, faster than can possibly be imagined in your worst nightmare or wildest dream(depending on if you're short or long when it explodes). The sky is not the limit. Moon for target is aiming too low.

There is no recession. There will be no recession. Everything I see, from indicators, to market internals, to earnings, to stock set-ups makes me re-iterate every stock I have added to the long side.

Knowing where we're headed, I want to make a ton of money on the way up and then short the market when Ben leaves town and the chickens come home to roost. How about you?

Psychological Preparation & NASDAQ 3126

Has this market whipsawed, confused, frightened or frustrated you? At the end of October, 2007, I warned subscribers of the brutal correction to come. That gave them the opportunity to pare down portfolios and prepare psychologically for the downturn. The importance of that warning cannot be overemphasized, because something far worse than a cash drawdown is a pschological, a mental drawdown. Many investors, lacking such warning, have been driven from the market as the volatility of the last few months revealed their inability to cope, both mentally and financially, with the perceived unpredictability of the market.

Here at Trending123, we were warned of the downturn and now we're jumping in for the upturn. If the coming rally were a party, we're not a ½ can or a ½ sack of beer away from target. We've got cases and cases and cases of beer left to go. But if you're hoping to hang around for awhile and grab a beer later, be careful, because those cases will disappear rapidly as one of the most explosive rallies to ever occur rockets to target. If you're not fully invested, there is lots of room yet to invest. If you are invested, I hope it's in the sectors I've recommended. Confusion, fright, frustration, and the effects of whipsaw will soon be forgotten on the trip to NASDAQ 3126.

$VXN and the $VIX

These are both measures of the implied volitility of a wide range of $NASDAQ options and S&P 500 options respectively. $VIX/$VXN has been called the "investor fear gauge" and has been used as a predictor of near-term market volatility. Unfortunately, the reliability of this indicator has lessened with time and technological impact. From August of 1998 through the end of 2002 the $VXN was range bound above 40, its peaks indicating panic and its valleys showing complacency. The $VXN no longer works like that. Technology, greatly increased hedging and increasing investor awareness have decreased its value as an indicator.

Indicators are most reliable when recording data without the data's (market players) conscious awareness of the process. When market players watch the $VXN and react to the indicator itself, the reliability of $VXN as an indicator of player reaction to the market is decreased. The indicator has become so popular and well known that when the market slides, investors watch the $VNX intently. By basing market decisions on $VXN, which, in turn, effects the indicator's reading, $VXN is rendered an unreliable gauge of fear. On the other hand, when the market goes up, most ignore the $VXN, allowing it to continue functioning reliably as an indicator of complacency. The same considerations apply to the $VIX.

The $VXN is has been range bound below the resistance levels it bottomed at in the late 90's and through 2002. The new range has developed due to new technology speeding up our reaction times so much that going back to the levels of the Dot.com years won't happen anytime soon. Our Neanderthal brain's emotional market misconceptions are priced in with computer assisted speed. The bottom line is that the $VXN has topped.

Subscribers View Entire Update With Charts And Voice (First Reported And Updated On 01/23/08)

European shares extended their gains to more than 2 percent in late trading on Monday, led by strength in financial stocks such as Barclays "It's volatile, one day down, another day up. People are cautious and many are taking a very short-term view," said Giuseppe-Guido Amato, equity market strategist at German brokerage Lang & Schwarz in Duesseldorf.

With U.S. markets were closed for the Presidents Day holiday, trading volumes in Europe were relatively low. Full Update

Long Call Options, A Bullish Strategy

Long Call options are a debit strategy, unlike (Selling) Call Options that are a credit strategy.

Long Call Options offer much more potential for dollar gains then writing (Selling) Call Options where our profits are limited to the premium we received for writing the option.

When we buy a Call Option we buy the right to call out the underline security (Stock) at the strike price value that we chose to buy the call option, however we do not have the obligation, we can simply sell out the call option we bought at any time before expiration date.

When we are planning to buy a Call Option we need to be sure that the Stock (Underline Security) we are looking at is a volatile one and with a Pattern ready to explode up.

Timing is crucial, Call Options can lose value fast if the Stock does not move in a fairly passe, when we write (Sell) Options we do not want volatility, we want then to lose their value with time, because we did receive premium for their TIME, however when we are buying, we do want stocks that are volatile.

An Option calculator is a must when buying Options, we could be buying at Call Option today for 2.50 on XYZ stock trading at 45.00 to only see in a few days the option trading at 2.00 and the XYZ stock trading at 45.50, this means that we bought an over priced Call Option.

1. Make sure the XYZ Stock is volatile.

2. Make sure you have a pattern that is ready to explode up.

3. Make sure the Option you are looking to buy is not over priced

4. Make sure that the correlation of the Delta and the Pattern target will allow you to at least make 100% return.

5. Make sure that you chose an expiration date with more time then the time for the stock pattern to complete.

Long Puts Options is a bearish strategy.

Long Put options are a debit strategy, unlike writing (Selling) Put Options that are a credit strategy.

Long Put Options offer much higher potential for dollar gains compared to writing (Selling) Put Options that we are limited to the premium received.

When we buy a Put Option we buy the right to put or sell the underlying Stock at the strike price to the individual underwriting the opition. However, we do not have to exercise the option, we can choose instead to simply sell the option, provided we do it before expiration date.

When we are planning to buy a Put Option we need to be sure that the Stock (Underline Security) we are looking at is a volatile one and with a Pattern ready to drop like a water fall.

Timing is crucial, Put Options can lose value fast if the Stock does not move in a fairly passe, when we write (Sell) Options we do not want volatility, we want then to lose their value with time, because we did receive premium for their TIME, however when we are buying, we do want stocks that are volatile.

An Option calculator is a must when buying Options, we could be buying at Put Option today for 2.50 with the XYZ stock trading at 45.00 to only see in a few days the option trading at 2.00 and the XYZ stock trading at 44.50, this means that we bought an over priced Put Option.

1. Make sure the XYZ Stock is volatile.

2. Make sure you have a pattern that is ready to go down like a water fall.

3. Make sure the Option you are looking to buy is not over priced.

4. Make sure that the correlation of the Delta and the Pattern target will allow you to at least make 100% return.

5. Make sure that you chose an expiration date with more time then the time for the stock pattern to complete.

What are options?

Options are one of the mysteries of the stock market. Many people have heard of them, but few understand how they work. Through this series of lessons, we would like to provide you with a brief overview of what options are and how they work.

When you buy an option on a particular stock, you haven't purchased the actual stock itself, you have simply bought the right to buy or sell the stock under certain predefined conditions.

Depending on these conditions, the purchase of this stock could result in a significant profit for the buyer of the option. This would cause the buyer of the option to move onto the next phase and exercise their option and purchase the stock under these favorable conditions. This purchase of the stock is a separate transaction from the purchase of the option.

However, there is also a second possibility. Because of the favorable conditions attached to this option, others may be interested in purchasing the option you own.

Let's Illustrate

Let's say, you wanted to buy a particular piece of property. For a variety of reasons, you are not ready to purchase it just yet, but you have a hunch that property values are going to go up very quickly. So you ask the owner if you can have an option on the property that gives you the right, but not the obligation, to purchase the real estate for its current fair market value of $200,000, and you buy that option for 5000.00 three months down the road.

Now the sale of the option, legally obligates the owner to keep his property off the market until you make your decision. The owner is limited in what revenues he can earn off this property.

So in the end, he agrees to sell this option to you for $5,000 to make up for lost revenues on this property during the option period. This option price is non-refundable, you are simply compensating the owner for lost revenues during the option period.

If at the end of the three months, you decide to purchase the property, you will end up paying $205,000 -- $200,000 for the purchase of the property and $5,000 for the option.

If, however, you decide that the conditions are no longer favorable for you to purchase the property you can walk away from the deal and only be out the $5,000 option premium.

Now let's take a look at how this option works under different scenarios:

Message Board Post Of The Last Option Trade

Still four options in play, but today we cashed in our TSL calls, for a 73 percent profit from our entry Thurday-to our sale today. In the money almost from the word go, we bought the bottom and top ticked the exit- We'll take it! Our new entry today was into March 71 XLE puts (XBTOS). So, we remain at 4 options-don't worry, more to come soon.

TheSpookyOne (Options Moderator)

Subscriber Comment

Spooky

What you Failed to mention was that we were in the trade actually 5 days (Yes weekends count) which translates into 14.6% per day which is a WHOPPING 5329% annualized gain on this trade alone. Great Job!!!

Grs

U.S. agency sees fiscal, Fed action helping economy

The U.S. economy is weaker than previously projected, but steps by Congress and the Federal Reserve to boost consumer spending and lower interest rates should improve the economic outlook for this election year, the Congressional Budget Office said on Friday.

"CBO anticipates that the recent monetary and fiscal policy actions will provide significant support to the economy in 2008," the independent congressional agency said in its latest report to lawmakers.

In an update of forecasts issued just last month, the budget office said that labor markets, retail sales and home sales were weaker than it had previously estimated.

But since then Congress enacted had an economic stimulus package that will inject $152 billion into the economy this year mostly through tax rebates to consumers and business investment incentives.

The Fed also has lowered interest rates significantly and taken other actions to ease a credit crunch.

The CBO said the effect of the fiscal stimulus and Fed action outweighs the negatives and that it was revising its overall projection for economic output this year to 1.9 percent this year, compared to its January projection of 1.7 percent.

But it said stimulated growth this year will take away some activity that otherwise would have occurred next year. So it revised the outlook for 2009 to 2.3 percent growth in Gross Domestic Product, down from 2.8 percent projected in January.

Inflation is expected to ease this year and next, the CBO said, largely because a rapid rise in both energy and food prices "temporarily exacerbated" inflation last year.

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Crocs Q4 Profit Surges On Holiday Orders; Reiterates FY08 Forecast - CROX

Crocs, Inc. (CROX), a manufacturer of consumer products from specialty resins, on Tuesday said fourth quarter profit jumped 84.1% from last year, with revenues increasing significantly from the previous year period. The company also reiterated its previously issued growth targets for 2008.

The Niwot, Colorado-based company said net income for the quarter increased to $38.3 million or $0.45 per share from $20.8 million or $0.26 per share for the same quarter last year. On average, seven analysts polled by First Call/Thomson Financial expected earnings of $0.44 per share.

The company noted that net income per share for the quarters ended December 31 2007 and 2006 are adjusted to reflect the two-for-one stock split that took effect in June 2007. Gross profit for the latest period was $125.8 million or 56.0% of revenues, compared to $65.1 million or 57.7% of revenues for the fourth quarter of 2006.

Revenues jumped to $224.8 million from $112.9 million on the ongoing strong demand for Crocs branded footwear, exceeding Street consensus estimate of $207.66 million. Domestic sales rose about 47% to $115.8 million from $78.8 million a year ago, while international sales increased 221% to $109 million from $34 million a year ago.

Selling, general and administrative expenses rose to $71.93 million from $34.88 million. Cash and cash equivalents at the end of fiscal year 2007 was $36.34 million, while it was $42.66 million last year.

Net income for 2007 increased 161.2% to $168.2 million or $2.00 per share from $64.4 million or $0.81 per share for last year. Full year revenues increased 138.9% to $847.4 million from $354.7 million for the year ended December 31, 2006. Wall Street estimated full year earnings of $1.98 per share on revenues of $831.27 million.

Commenting on the results, Ron Snyder, President and Chief Executive Officer of Crocs, said: "We experienced better than expected sell through of our fall line across men's, women's, and children's in each of our markets. To meet the higher than anticipated orders over the holiday period we delivered a meaningful amount of Mammoths by air-freight, which impacted our gross margin."

For the third quarter, the company reported net income that surged to $56.5 million or $0.66 per share from $21.5 million or $0.27 per share in the same period last year. Quarterly revenues jumped to $256.3 million from $111.3 million reported in the third quarter of last year.

Looking ahead to 2008, Crocs reiterated its previously issued growth targets and net income per share of about $2.70 and expects revenues of about $1.16 billion. Analysts expect earnings of $2.7 per share on $1.18 billion.

For the six-months ending June 30, 2008, the company expects revenues to increase nearly 50% over the six-month period ended June 30, 2007.

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Ugly Shoes Even If It Has A Great Chart And Earnings

5 Reasons To Buy The Stock Under $33.00 A Share

#1 The Chart (Click Image To See Bigger Picture)

#2 Price Target Is Much Higher ($66.00+ Easy)

#3 Triple-Digit Growth International Sales

#4 Revenues Year Over Year 138%

#5 Lastly THE CHART!

High TECH Continue To Report Strong Earnings

HPQ, GRMN, SNPS, SINA, NTES

Hewlett-Packard Rises After Forecasts Top Estimates

(HPQ) Hewlett-Packard beats by $0.05, beats on revs; guides Q2 EPS above consensus, revs above consensus; guides FY08 EPS above consensus, revs above consensus Reports Q1 (Jan) earnings of $0.86 per share, excluding non-recurring items, $0.05 better than the First Call consensus of $0.81; revenues rose 0.6% year/year to $28.47 bln vs the $27.6 bln consensus. Co issues upside guidance for Q2, sees EPS of $0.83-0.84, excluding non-recurring items, vs. $0.82 consensus; sees Q2 revs of $27.7-27.9 bln vs. $27.43 bln consensus. Co issues upside guidance for FY08, sees EPS of $3.50-3.54, excluding non-recurring items, compared to previous guidance of $3.32-3.37, vs. $3.36 consensus; sees FY08 revs of $113.5-114.0 bln, compared to previous guidance of approx $111.5 bln, vs. $111.7 bln consensus.

Garmin (GRMN) Approves A Share Buyback of 5M Shares

(GRMN) Garmin beats by $0.20, beats on revs; guides FY08 EPS above consensus, revs above consensus Reports Q4 (Dec) earnings of $1.31 per share, excluding non-recurring items, $0.20 better than the First Call consensus of $1.11; revenues rose 99.1% year/year to $1.22 bln vs the $1.05 bln consensus. GRMN announces board of directors approved a share repurchase program authorizing the co to purchase up to 5 mln shares. Co issues upside guidance for FY08, sees EPS exceeding $4.40 vs. $4.40 consensus; sees FY08 revs of to exceed $4.5 bln vs. $4.26 bln consensus.

Synopsys Q1 Earnings Rise, Top Estimate

(SNPS) Synopsys beats by $0.06, reports revs in-line; guides Q2 EPS in-line, revs in-line; guides FY08 EPS in-line, revs in-line Reports Q1 (Jan) earnings of $0.44 per share, excluding non-recurring items, $0.06 better than the First Call consensus of $0.38; revenues rose 5.1% year/year to $315.5 mln vs the $312.9 mln consensus. Co issues in-line guidance for Q2, sees EPS of $0.37-0.39, excluding non-recurring items, vs. $0.38 consensus; sees Q2 revs of $317-325 mln vs. $320.86 mln consensus. Co issues in-line guidance for FY08, sees EPS of $1.56-1.61, excluding non-recurring items, vs. $1.59 consensus; sees FY08 revs of $1.30-1.315 bln vs. $1.31 bln consensus.

Sina beats by $0.01, beats on revs; guides Q1 revs above consensus

(SINA) Net revenues increased 25% year-over-year and 10% quarter-over-quarter to $70.7 million, exceeding the Company's previous guidance between $68.0 million and $70.0 million. Advertising revenues grew 40% year-over-year and 9% quarter-over-quarter to $50.1 million, exceeding the Company's previous guidance between $49.0 million and $50.0 million.

Sina beats by $0.01, beats on revs; guides Q1 revs above consensus Reports Q4 (Dec) earnings of $0.34 per share, excluding non-recurring items, $0.01 better than the First Call consensus of $0.33; revenues rose 25.4% year/year to $70.7 mln vs the $69.1 mln consensus. Gross margin for the fourth quarter of 2007 was 62%, flat over the same period last year and last quarter. Co issues upside guidance for Q1, sees Q1 revs of $66-68 mln vs. $65.87 mln consensus. Based on the co's current understanding of the new Chinese Enterprise Income Tax Regulation (E.I.T.), which became effective starting January 1, 2008, the co estimates its effective tax rate for 2008 at this time to be between 14% and 25%.

(NTES) Netease.com beats by $0.11, beats on revs Reports Q4 (Dec) earnings of $0.41 per share, $0.11 better than the First Call consensus of $0.30; revenues rose 15.1% year/year to $85.3 mln vs the $75.9 mln consensus. Chinese online game operator NetEase.com Inc said on Wednesday quarterly profit rose, citing growth in traffic on its Web sites.

In conjunction with the January 2008 FOMC meeting, the members of the Board of Governors and the presidents of the Federal Reserve Banks, all of whom participate in the deliberations of the FOMC, provided projections for economic growth, unemployment, and inflation in 2008, 2009, and 2010. Projections were based on information available through the conclusion of the January meeting, on each participant's assumptions regarding a range of factors likely to affect economic outcomes, and on his or her assessment of appropriate monetary policy. "Appropriate monetary policy" is defined as the future policy that, based on current information, is deemed most likely to foster outcomes for economic activity and inflation that best satisfy the participant's interpretation of the Federal Reserve's dual objectives of maximum employment and price stability.

The Outlook

The central tendency of participants' projections for real GDP growth in 2008, at 1.3 to 2.0 percent, was considerably lower than the central tendency of the projections provided in conjunction with the October FOMC meeting, which was 1.8 to 2.5 percent. These downward revisions to the 2008 outlook stemmed from a number of factors, including a further intensification of the housing market correction, tighter credit conditions amid increased concerns about credit quality and ongoing turmoil in financial markets, and higher oil prices. However, some participants noted that a fiscal stimulus package would likely provide a temporary boost to domestic demand in the second half of this year. Beyond 2008, a number of factors were projected to buoy economic growth, including a gradual turnaround in housing markets, lower interest rates associated with the substantial easing of monetary policy to date and appropriate adjustments to policy going forward, and an anticipated reduction in financial market strains. Real GDP was expected to accelerate somewhat in 2009 and by 2010 to expand at or a little above participants' estimates of the rate of trend growth.

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Minutes of the Federal Open Market Committee

The Committee agreed that the statement to be released after the meeting should indicate that financial markets remained under considerable stress, that credit had tightened further for some businesses and households, and that recent information pointed to a deepening of the housing contraction as well as to some softening in labor markets. The Committee again viewed it as appropriate to indicate that it expected inflation to moderate in coming quarters but also to emphasize that it would be necessary to monitor inflation developments carefully. The action taken at the meeting, combined with the cumulative policy easing already in place, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, members concurred that downside risks to growth remained, and that the Committee would continue to assess the effects of financial and other developments on economic prospects and would act in a timely manner as needed to address those risks.

"The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee in the immediate future seeks conditions in reserve markets consistent with reducing the federal funds rate to an average of around 3 percent."

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Today's Bullish Events

When looking for new LONG trading ideas, consider the following U.S. stocks which have recently formed a bullish classic chart pattern. We have selected stocks with a minimum 3.00 close price and a minimum 500,000 trading volume. Their patterns are at least 35 days long. The instruments listed below are ordered with the most recent patterns first, and within a particular date, the instruments are sorted using (Trending123.com partners with Recognia's) proprietary algorithm and then by trading volume, with the highest volume first.

Classic patterns are recognized by price swings that form distinctive patterns on the stock's price chart. The names of classic patterns often reflect the shape of the formation such as the Double Bottom, Ascending Triangle and so on. Accepted principles of technical analysis indicate that classic patterns may provide insight into the outlook for the equity's price. We have selected patterns that define a target price range. The duration of the pattern signifies the time horizon for the anticipated price move: the longer the pattern, the longer the time horizon to reach the potential target price.

Bullish Events

Today's Bearish Events

When looking for new SHORT trading ideas, consider the following U.S. stocks which have recently formed a bearish classic chart pattern. We have selected stocks with a minimum 5.00 close price and a minimum 500,000 trading volume. Their patterns are at least 35 days long. The instruments listed below are ordered with the most recent patterns first, and within a particular date, the instruments are sorted using (Trending123.com partners with Recognia's) proprietary algorithm and then by trading volume, with the highest volume first.

Classic patterns are recognized by price swings that form distinctive patterns on the stock's price chart. The names of classic patterns often reflect the shape of the formation such as the Double Bottom, Ascending Triangle and so on. Accepted principles of technical analysis indicate that classic patterns may provide insight into the outlook for the equity's price. We have selected patterns that define a target price range. The duration of the pattern signifies the time horizon for the anticipated price move: the longer the pattern, the longer the time horizon to reach the potential target price.

Classic is a term used to refer to a group of patterns that typically have a longer-term horizon (greater than 12 days) and which have distinct price swings such that the price swings form distinctive patterns. The names of classic patterns often reflect the shape of the formation such as the Double Top, Double Bottom, Head and Shoulders Top, Ascending Triangle and so on.

Economists are good at predicting recessions. They've predicted eight of the last three. -- there is no shortage of "professional" cynics all to trigger-happy to forecast doom and gloom.

Since 1940, 81% of Presidential election years have seen gains in the S&P 500 Index.

Also since 1940, only 1 Presidential election year (2000) has seen over a 3% loss in the S&P 500 Index.

Even in 3 of 4 other Presidential election years that saw the start of a bear market (1948, 1956, 1968 and 1980), the S&P 500 Index finished the year with a gain.

In every bull market since 1942, investors gradually gave higher price-to-earnings ratios to stocks as those rallies unfolded. Indeed, the average P/E ratio for the S.& P. 500 has typically grown from 13.5 at the start of new bull markets to 17.3 by their fourth birthdays.

The current bull, which was born on Oct. 10, 2002, started with a P/E ratio of 27.1, according to S.& P. Four years later, the ratio was actually much lower, at 16.3. (All of these figures are based on trailing 12-month earnings, using generally accepted accounting principles, or GAAP.)

Why are investors stingier with their investment dollars this time around?

Part of the explanation may simply be the hangover from the bear market of 2000 to 2002.

Ecominic Outlook For The Week Of Feb.25th-29th

Despite morning advances Treasuries suffered mild losses on the day as traders began positioning for new supply coming to market next week. The stock indices spent most of the day in negative territory but rallied in the last hour of trading and finished up in the green. In late trading, the 10-Year Treasury Note was down by 7/32, raising its yield to 3.80%; the Dow was up by 96.72 points to 12,381.02; and the Nasdaq was up by 3.57 points to 2,303.35.

Monday

Next week, the economic release calendar kicks off on Monday with the report on existing home sales for last month. December's report was weaker than expected but was not too surprising given the battered state of the housing market. The National Association of Realtors said the seasonally adjusted, annualized pace of sales fell by 2.2% from 5.00 million to a ten-year low of 4.89 million. The consensus prediction was for a decline of 1.0% to a 4.95 million pace.

The lack of buyers caused home prices to decline. Average home prices slipped by only $800 to $254,900 but November's originally reported $256,800 was revised down to $255,700. December's price was 4.9% lower than a year earlier. The median home price eased by $300 to $208,400 but November's originally reported $210,200 was revised down to $208,700. December's price was down on a year-over-year basis by 6.0%.

Weak sales levels and falling home prices resulted in fewer homes being put on the market. Inventories of homes for sale fell by 7.4% to 3.905 million. Despite the decline, the low sales pace lowered the turnover rate from 10.1 months to 9.6 months.

January's report is expected to show another decline in the sales rate. Current predictions are for a drop of 1.8% to a 4.80 million pace.

Tuesday

On Tuesday, a key inflation indicator will be released. This is the Producer Price Index (PPI), a gauge of price changes at the wholesale level. The seasonal adjustment factors for the index data were recently recalculated and revised historical data was released today. The following details are based on the new information.

In December, the index declined by 0.3%. But this came after a spike in November of 2.6%, the largest jump in over three decades. A major factor behind November's jump was an 11.4% rise in the price index for energy -- the biggest increase in almost eighteen years. It fell by 3.0% in December.

Another volatile category is food and its price index rose by 0.3% in December, the largest increase since May. Excluding both food and energy, the so-called core index rose by 0.2%.

Prior to today's revised numbers, analysts had predicted a rebound of about 0.4% following the originally reported decline of 0.1% in December. Because of the revision to December's index change, the actual bounce in January may have been even larger than the previous forecast. Though the core reading is still expected to have risen by a tame 0.2%, a higher overall reading would likely get the most attention and would depress both the stock and bond markets.

Later on Tuesday morning, the independent research firm, the Conference Board, will release its index data on consumer confidence for the month. In January, the index came in at 87.9. The reading was down from December's but December's had been revised up from 88.6 to 90.6. With the exception of a slightly lower reading in November of 87.8, January's was the lowest since October of 2003. Consumers' outlook for the future dimmed as the expectations index fell to 69.6 from 75.8. The index of present conditions actually rose in January from 112.9 to 115.3.

In light of recent bearish economic data including January's first decline in the seasonally adjusted level of nonfarm payrolls in over four years, analysts believe that the confidence index declined again this month. Predictions call for an overall reading of about 83.0.

Wednesday

On Wednesday, the situation in the manufacturing sector will be highlighted by the report on durable goods orders for January. Durable goods are defined as items meant to last three years or more. They are usually labor-intensive to produce, expensive, and therefore often financed. Because of this, the trend in orders provides some insight regarding upcoming production activity and the effect interest rates may be having on the process.

The report for December said that the seasonally adjusted level of orders rose by 5.2%. Though this was subsequently revised down by 5.0% in the factory orders report, it was still the largest jump since last July. The following data is from the revised figures.

The large but volatile category of transportation saw in increase of 11.5%. But even excluding the category, orders were up by 2.3% following a 0.5% decline in November. In the category excluding the defense sector, orders were up by 2.7%. This category is considered significant since defense orders are not subject to standard market forces. Defense orders rose by 66.4% in December as orders for defense aircraft and parts spiked up by 139.9%.

Another closely watched category is that of non-defense capital goods orders excluding aircraft -- seen as an indicator of core business demand. Order there rose by 4.5% in December, the largest increase since last March.

Transportation orders for January are expected to have fallen so forecasters are predicting that the overall order level fell by about 4.0%. A slight decline is also anticipated in the ex-transportation category.

The report on new home sales for January will also be released on Wednesday. In the last report, the Commerce Department said that the seasonally adjusted, annualized pace of sales fell by 4.7% in December to 604,000 from November's revised pace of 634,000 (originally reported as 647,000). December's pace was the lowest since March of 1993.

The number of new homes on the market fell by 2.0% to 495,000, the lowest inventory level since October of 2005. Despite the lower supply, the decline in demand pushed the average home price down by $43,900 to $267,300. This was a 14.1% drop from November's level and was down by 11.5% on a year-over-year basis. The median home price fell by $26,700 to $219,200. This was down by 10.9% month-to-month and by 10.4% year-over-year.

For January, forecasters are predicting another but smaller decline in the pace of home sales to about 600,000.

On Wednesday afternoon, the Treasury will be conducting its monthly auction of 2-Year Notes. The demand for last month's issue was generally weak. Bids exceeded the $24 billion offer amount by 2.33 to 1, up from the 2.23 bid-to-cover ratio in December's auction and the 2.21 ratio in November. But it was still well below the 2.86 average for the twelve auctions preceding last month's. Noncompetitive bids, a gauge of individual investor demand, totaled $597 million, up from $525 million in December but far short of the twelve-issue average of $745 million.

Of particular concern: foreign demand was extremely weak. Indirect competitive bids, which include those from foreign central banks, garnered just 18.8% of the issue, down from December's 25.4% award portion and below the twelve month average of 29.7%.

Tuesday's issue is also expected to have a face value of $24 billion. The deadline for competitive bids is 1:00 PM Eastern Time. The deadline for noncompetitive bids is noon.

Thursday

Thursday brings the jobless claims report. In yesterday's report, the Labor Department said that the seasonally adjusted level of initial claims for state unemployment benefits fell last week by 9,000 to 349,000. While the drop is technically a positive economic indicator, the news of the decline was offset somewhat by the fact that the previous week's originally reported level of 348,000 was revised up to 358,000.

In addition, the level was still high by recent historical standards. The four-week moving average, which smoothes out some of the short-term volatility, rose by 10,750 to 360,500, the highest reading since October of 2005. For all of 2007, the average weekly reading of initial claims was 322,135.

The report said that continuing claims in the week of February 9 (continuing claims must be at least a week old) rose by 48,000 to 2.784 million. The four-week average rose by 28,750 to 2,752,500. Both readings were the highest since October of 2005. The weekly average of continuing claims in 2007 was 2,551,231.

Also on Thursday, the Commerce Department will release its first revision to last month's initial estimate of fourth quarter gross domestic product (GDP). GDP is the market value of all final goods and services produced by labor or property in the country in a year?s time. Quarterly data is adjusted and annualized and changes from quarter to quarter indicate the strength and direction of the economy. A final report on the fourth quarter will be released next month.

Last month's advance report said economic growth in the last three months of 2007 increased by 0.6% following a 4.9% increase in the previous three months. But due in part to a smaller than expected trade gap reported for December and a higher than previously expected increase in business inventories, analysts feel that the preliminary GDP report will be stronger than last month's. But the consensus projection is for a reading of only 0.7% or 0.8%.

On Thursday afternoon, the Treasury will sell its monthly issue of 5-Year Notes. The face value is expected to be $14 billion, matching last month's issue. Like the 2-Year offering, last month's 5-Year Note auction was met with weak demand. The bid-to-cover ratio was 2.16, the lowest in six months. Noncompetitive bids totaled just over $81 million, the smallest amount since the auction held in October of 2005. Foreign demand was also on the light side. Indirect competitive bids garnered 21.1% of the issue, down from December's award portion of 28.4% and below the 26.0% average for the twelve auctions preceding January's.

Friday

On Friday, the report on personal income and spending for last month will be released. In the last report, the Commerce Department said that personal income, the fuel for consumer spending, rose in December by 0.5%, up from November's 0.4% increase. Personal consumption expenditures (spending) rose by 0.2%. The spending gain was the smallest in six months and November's originally reported rise of 1.1% was revised down to 1.0% and October's previously reported gain of 0.4% was trimmed to 0.3%.

For January, income is expected to have risen by about 3.0% and spending is expected to have risen by another 0.2%.

Friday also brings a major regional manufacturing indicator, Chicago's Purchasing Managers Index (PMI). In January, it came in at 51.5. Any reading over 50.0 indicates a general expansion of activity in the highly-industrialized region relative to the preceding month. But January's growth indicator was much weaker than December's reading of 56.4 and was the lowest index since October's slight contraction reading of 49.7.

The index is expected to have edged down once again. A reading of 50.0 or slightly lower is predicted. But traders will be closely watching this release since the New York and Philadelphia indices for this month were much lower than expected. On their index scales, a reading below 0.0 indicates a contraction of activity and the New York Index came in at -11.72, the weakest reading since April of 2003, and the Philadelphia index came in at -24.0, the lowest reading since February of 2001.

The national index for January came in at a near-neutral 50.7 following a contraction reading of 48.4 in December. The index for February will not be released until March 3 but forecasters feel that it will reveal another modest contraction indicator of about 49.0. A weaker than expected Chicago reading would lower the prediction for the national index.

The last release of the week is the final read on consumer sentiment from the twice monthly survey conducted by the University of Michigan. According to news sources, the preliminary index, released last Friday, fell sharply from January's final reading of 78.4 to a sixteen year low of 69.6. The final reading for the month is expected to be only slightly better at 70.0.

Economic Calendar

Financial markets place a 92 percent chance of a half-point cut in benchmark rates at the Fed's next meeting on March 18, as implied by short-term interest-rate futures.

In what use to be called the "Humphrey-Hawkins Speech"

Until mid-2000, when it expired, a piece of legislation known as Humphrey-Hawkins required the Federal Open Market Committee to report to Congress on the economy and monetary policy twice a year. While Congress wrangles over new legislation, the practice continues, with reports in February and July. While they're no longer officially Humphrey-Hawkins reports, they're still colloquially called that.

The original legislation, the Full Employment and Balanced Growth Act of 1978, was named for its sponsors, Sen. Hubert Humphrey and Rep. Augustus Hawkins.

Bernanke to tell Congress has eyes on growth risks

Federal Reserve Chairman Ben Bernanke will deploy his most reassuring bedside manner in congressional testimony on Wednesday and Thursday to explain how the U.S. central bank, which has already cut interest rates 2-1/4 percentage points since mid-September, can trim them further to prevent recession without letting inflation get out of hand.

"Near-term, the economy remains extremely vulnerable to further contraction because business sentiment has deteriorated further and the aggressive Fed easing to date has been partially offset by tighter financial conditions," Deutsche Bank economists wrote in a note to clients. "This means the Fed is going to have to cut rates further, which is the message Mr. Bernanke will deliver."

Financial markets place a 92 percent chance of a half-point cut in benchmark rates at the Fed's next meeting on March 18, as implied by short-term interest-rate futures. Bernanke's testimony on the central bank's semiannual report on monetary policy and the economy will be closely scrutinized for clues on whether those bets are on the mark.

INFLATION UNEASE

Worried that financial turmoil would undercut an already weak economy, the Fed chopped rates by three-quarters of a point in an emergency move on January 22, just eight days before a regularly scheduled meeting.

It lowered them by another half point when its January 29-30 meeting wrapped up -- a one-two punch that marked one of the most aggressive easings of monetary policy in the central bank's modern history.

At the same time, policy-makers were taking note of a rise in prices that has taken inflation above the 'comfort zone' of a number of Fed officials. Most, however, believed a period of sluggish growth would draw some inflationary pressure out of the system, minutes of the central bank's last meeting said.

Underscoring the Fed's dilemma, the Consumer Price Index, released on Wednesday, showed a worrisome 4.3 percent rise in prices in the 12 months through January.

While surging energy and foods costs accounted for much of the gain, core prices, which strip out energy and food, were up 2.5 percent, the most since last March.

"Rising prices are pinching consumers at exactly the same time that employment is slowing and the housing market is struggling," economic consultant Carl Tannenbaum said in a research note.

"If growth rebounds quickly after the current soft patch (not altogether unlikely, given the amount of fiscal and monetary stimulus in the pipeline), the Fed may find itself having to raise rates aggressively later on this year to keep prices under control," Tannenbaum said.

GROWTH FORECAST CUT, INFLATION RAISED

In updated economic forecasts released last week, the U.S. central bank lowered its outlook for 2008 growth by a half point to between 1.3 percent and 2 percent, citing the prolonged housing slump and bottlenecks in credit markets.

However, it also raised projections for both core and overall inflation, a recognition of the tough environment officials face. While the central bank lowers rates to spur growth, it would usually raise them to combat inflation.

Bernanke's commentary this week will be scoured for signs of how the Fed plans to respond to risks to growth, financial instability, and rising price pressures.

"We have seen deterioration on all three fronts, so the key to the testimony will be how Bernanke perceives the Fed's next moves in light of ultimately fighting battles on all three fronts," Global Insight economists told clients.

While Bernanke is expected to show the Fed focused primarily on downside risks to growth, as he did in testimony less than two weeks ago, he is also expected to nod to the inflation concerns some officials have begun to highlight.

Dallas Federal Reserve Bank President Richard Fisher, a voter on the Fed's interest-rate setting committee, said on Friday that while growth could be slower than the central bank expects, officials needed to be vigilant on inflation risks.

"We have to be mindful of that fact that we have to create the conditions for employment growth, at the same time be careful that we don't stir the embers of inflation, and that represents the horns of a dilemma recently," he said.

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LDK Solar Reports Financial Results for the Fourth Quarter of Fiscal 2007

LDK Solar Co., Ltd. (LDK), a leading manufacturer of multicrystalline solar wafers, today reported its unaudited financial results for the fourth quarter ended December 31, 2007.

All financial results are reported in US dollars on a U.S. GAAP basis.

Fourth Quarter 2007 Financial Highlights:
-- Revenue of $192.8 million, up 21.4% quarter-over-quarter
-- Gross profit of $58.0 million, up 18.6% quarter-over-quarter
-- Net income of $49.2 million, or $0.44 per diluted ADS, up 18.2%
quarter-over-quarter
-- Signed 9 long-term wafer supply agreements during the fourth quarter
-- Total wafer shipments increased 18.4% sequentially to 93.4MW in the
fourth quarter

Net sales for the fourth quarter of fiscal 2007 were $192.8 million, up 21.4% sequentially from $158.7 million for the third quarter of fiscal 2007, and up 212% year-over-year from $61.9 million for the fourth quarter of fiscal 2006.

Gross profit for the fourth quarter of fiscal 2007 was $58.0 million, up 18.6% sequentially from $48.9 million for the third quarter of fiscal 2007, and up 119% year-over-year from $26.6 million for the fourth quarter of fiscal 2006. Gross profit margin for the fourth quarter of fiscal 2007 was 30.1% compared with 30.8% in the third quarter of fiscal 2007 and 42.9% in the fourth quarter of fiscal 2006.

Net income for the fourth quarter of fiscal 2007 was $49.2 million, or $0.44 per diluted ADS, compared to net income of $41.6 million, or $0.37 per diluted ADS for the third quarter of fiscal 2007.

The Company ended the fourth quarter of fiscal 2007 with $83.5 million in cash and cash equivalents.

"The fourth quarter closed a very strong year for LDK marked by record revenue and continued rapid growth," stated Xiaofeng Peng, Chairman and CEO of LDK Solar. "During the year, we had a number of significant achievements. We exceeded our annual wafer production capacity target for 2007 by 5% to reach 420 MW. We also broadened our customer base by securing 16 long-term wafer supply contracts during the year. Our success is a testament not only to the quality of our wafers, but also to our strong customer relationships and our leading position amongst multicrystalline solar wafer manufacturers.

"As we enter 2008, we continue to experience strong demand for our wafers coupled with a significant backlog of long-term supply contracts. The construction on our new polysilicon plants is progressing as planned and we expect to enjoy further cost reductions and the advancement of our production processes in 2008."

In accordance with its filing requirements, LDK expects to file its 20-F document which includes detailed financials for the full year 2007 in the second quarter of 2008.

Business Outlook

The following statements are based upon management's current expectations. These statements are forward-looking, and actual results may differ materially. The Company undertakes no obligation to update these statements.

For the first quarter of fiscal 2008, LDK estimates its revenue to be in the range of $210 million to $220 million for wafer shipments of 98 MW to 104 MW. The Company also estimates fully diluted earnings per ADS to be in the range of $0.41 to $0.45. The first quarter is typically a seasonally slow period due to Chinese New Year holidays, and this year may have some impact from the severe snow storms.

For the full year 2008, LDK reiterates estimated revenue to be in the range of $960 million to $1.0 billion for wafer shipments of 510 MW to 530 MW. The Company also estimates polysilicon production to be in the range of 100MT to 350MT and gross margins of 26% to 31%.

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Visa's Planned IPO Likely To Be Largest For A U.S. Launch

After spending much of the winter in near-hibernation, the IPO market was jolted awake Monday when Visa announced the biggest offering in U.S. history.

The credit card giant decided to sell 406 million shares at $37 to $42 apiece, raising $15 billion to $17 billion. Underwriters will have the option to buy an additional 40.6 million shares, pushing the total haul as high as $18.8 billion.

Barring a drastic price cut, that will beat AT&T (NYSE:SBT) (NYSE:T) Wireless' t $10.6 billion take in April 2000.

At the high end, Visa's IPO could be the world's second largest ever, behind Industrial & Commercial Bank of China's (OOTC:IDCBF) $21.9 billion launch in 2006.

The exact date for Visa to go public hasn't been set, but Renaissance Capital's IPOhome.com has put it on the calendar for the week of March 17.

It would be an anomaly in the current IPO market. Only half as many IPOs have come out this year as in the first two months of 2007. None raised more than $800 million, and only four of 18 are trading above their offering price.

Tom Taulli, author of "Investing in IPOs," thinks Visa is a special case. "This is one of those cases where we have an exceptional company that could probably come out in any market," he said. "For the IPO investor, there's nothing to read into it in terms of the market coming back."

How exceptional is it? Visa is the last of the big credit card companies to hit the market, now that Discover dfs, American Express (NYSE:AXP) axp and MasterCard ma are all trading.

The last of that bunch piques the most interest. MasterCard priced at 39 in May 2006 and is trading near 200. It's even gone up since the credit crunch last summer. This is partly because MasterCard handles transactions and doesn't actually have to take on consumer debt, Taulli says.

But there are also skeptics.

"Is this another MasterCard?" asks Francis Gaskins, president of IPO Desktop. "The answer is no."

MasterCard went public at a price-to-earnings ratio of 11, while Visa's proposed price puts it at around 30, says Gaskins.

Taulli says the Visa offering's sheer hugeness comes partly from MasterCard's success, which Visa no doubt factored into its terms. That might not leave much room for growth in the aftermarket.

Another problem is apparent in Visa's financials. In its original November prospectus, it recorded a decent profit for the first three quarters of 2007.

Now that it's reported the full year, it's suddenly in the red.

The difference is a legal settlement it reached with AmEx last fall. Visa agreed to an initial payment of $1.13 billion, and will pay up to $70 million per quarter for the next 16 quarters.

Litigation, in fact, fills up a fair chunk of Visa's prospectus. Visa is a defendant in class-action lawsuits over interchange fees, a federal antitrust suit and a variety of state-level cases alleging consumer protection violations, illegal currency conversion and so on.

The company has decided to put $3 billion of the proceeds in escrow for its "retrospective responsibility plan," i.e. future legal payouts. It also says that in the first quarter of this year it expects litigation costs to reach $285 million.

Still, MasterCard has been dealing with many of the same charges, and investors don't seem to care. And Visa's basic business metrics, such as transaction volume, are growing at a fair clip, especially outside the U.S.

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The healing process is certainly going to take time but these 4 stocks are breaking out of basing patterns and should be added to your watch list.

QCOM

Qualcomm is a provider of digital wireless communications products, technologies and services based on its Code Division Multiple Access (CDMA) technology. The company designs, develops, manufactures and markets CDMA chipsets, system software and subscriber products. The company also licenses and receives royalty payments on its CDMA technology from major domestic and international telecommunications equipment suppliers.

FWLT

Foster Wheeler Ltd. operates through two business groups, which also constitute its segments: Global Engineering and Construction Group (E&C Group), and Global Power Group. The Global E&C Group designs, engineers and constructs onshore and offshore upstream oil and gas processing facilities, natural gas liquefaction facilities and receiving terminals, gas-to-liquids facilities, oil refining, and chemical and petrochemical, pharmaceutical, biotechnology and healthcare facilities and related infrastructure, including power generation and distribution facilities. Global Power Group designs, manufactures, and erects steam generating and auxiliary equipment for electric power generating stations and industrial facilities worldwide. On April 7, 2006, the Company completed the purchase of the remaining 51% interest in MF Power S.r.L., a joint venture that was 49% owned by the Company's Global E&C Group prior to the acquisition.

MICC

Millicom International Cellular S.A. (Millicom) is a global mobile telecommunications operator. The Company has interests in 16 mobile operations in 16 countries, focusing on emerging markets in Central America, South America, Africa and Asia. The Company operates in four geographic regions of the world: Central America, South America, Africa and Asia. During the year ended December 31, 2006, the Company completed the acquisition of Millicom Tanzania Limited, Sentel GSM and Telecel Paraguay. On February 1, 2006, Millicom completed the purchase of the 30% ownership interest of its local partner in Millicom (Sierra Leone) Limited. In May 2006, Millicom completed the sale of its United States group of companies. On October 2, 2006, Millicom acquired a 50% plus 1 share controlling stake in Colombia Movil S.A. ESP. On October 18, 2006, Millicom sold Millicom Peru S.A. On February 13, 2007, Millicom completed the sale of its 88.86% shareholding in Paktel Limited.

RIMM

Research In Motion Limited (RIM) is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for access to time-sensitive information, including email, phone, short message service (SMS) messaging, Internet and intranet-based applications. RIM technology also enables an array of third-party developers and manufacturers to enhance their products and services with wireless connectivity to data. The Company's primary revenue stream is generated by the BlackBerry wireless solution. The BlackBerry wireless solution consists of wireless devices, software and services. It can provide users with a wireless extension of their work and personal email accounts, including Microsoft Outlook, IBM Lotus Notes, Novell GroupWise and many Internet service provider (ISP) email services.

News of IBM's big stock buyback and improved profit guidance lifted major indexes Tuesday, trumping a run of negative economic reports.

(IBM) gave the market a big boost with an announcement that its board of directors authorized $15 billion in additional funds for its stock repurchase program, raising the total money available for repurchases to $15.4 billion.

The thing with repurchase programs is that there is no guarantee they will ever be carried out in their entirety. The latter understanding is why many buyback announcements don't really move the dial that much for the broader market or the individual stocks when they are announced. It is a bit different, though, in IBM's case.

IBM's news had a palpable impact because the company said it expects to spend up to $12 billion on stock repurchases in 2008. The market, in turn, found that to be a credible statement because IBM also took the occasion to bump up its 2008 full-year earnings per share guidance by $0.05, saying it now expects EPS of at least $8.25 compared to prior guidance of $8.20 to $8.30.

Companies don't provide updated earnings guidance if they aren't going to carry out the buyback activity in earnest fashion like IBM plans to do.

IBM expects to carry out the repurchases with cash from operations. This is an encouraging consideration for the market, too, since it can be assumed a company wouldn't be inclined to move forward with such an aggressive plan, using cash from operations, if it wasn't feeling good about its prospects.

IBM's news has ignited some renewed buying interest in the technology sector, which has underperformed the broader market badly year-to-date with a 14.4% decline. IBM, on the other hand, has outperformed the market by a healthy margin. Including today's gain, Big Blue is up approximately 5.0% for the year compared to a 6.1% decline in the S&P 500.

IBM's good news trumped the negative economic headlines in the minds of investors. In addition to its repurchase plan, the company improved its 2008 EPS guidance to "at least $8.25" from a range of $8.20 to $8.30. IBM also announced product enhancements for its mainframe software lines.

After starting in negative territory, major indexes finished with solid gains on Tuesday.

The Dow Jones industrial average was up 114.70 points, or 0.91%, to 12,684.92. The broader S&P 500 gained 9.49 points, or 0.69%, to 1,381.29. And the tech-heavy Nasdaq composite index added 17.51 points, or 0.75%, to 2,344.99.

Action in the broader market was positive, with 22 stocks rising in price for every nine that declined on the New York Stock Exchange. NASDAQ breadth was 19-11 positive.

(IBM) International Business Machines Corp said on Wednesday it is more confident about its U.S. business so far this year than in the fourth quarter, countering fears over slowing corporate spending.

"We're at the end of February, so we still have a lot to do in the quarter, but at this point I feel better about our U.S. business in the first quarter than I did in the fourth," Chief Financial Officer Mark Loughridge said in a statement on IBM's Web site.

It also said U.S. financial services clients, thought to be cutting back because of the mortgage and credit crisis, signed 78 percent more short-term services contracts in the fourth quarter.

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