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