Stockscom Report for Sunday Apr 10 2005

Publisher: Colin Alexander Editor: Ken Wilson (450-691-4617)

Subscriptions and Administration: Pierre Fichaud (toll-free: 866-487-9711)

• Early signals of global weakness
• March unemployment data misses expectations

Market Synopsis

While the past week may have been short on economic details, the week just beginning is chock full of indications of the economic health of the nation. On Tuesday, the trade figures will be released for the month of February and our guess is that with the lower prices for oil that month, there is a strong likelihood that the trade gap will be reduced marginally from January. Conceivably, March results due to be released in May should witness a sharp jump in the trade gap as the oil price spike greatly affected the total imports.

Notwithstanding a marginal decrease in the trade gap, there will still be a loud outcry from our politicians of both stripes when the figures on US/China trade are announced. There is an expectation that the 26% of the trade gap (2004) that belongs to China will increase significantly based on the theory that imported textiles arriving tariff-free will continue their exponential growth seen since the beginning of the year when tariffs and quotas on textiles worldwide were dropped as part of a general WTO agreement on textiles and clothing.

The increasing proportion of the gap belonging to China has already set off alarm bells in Congress where debate raged this week on amendment S. 295, the China Currency Bill, which was an amendment attached to the Foreign Affairs Authorization Act (S. 600). Though finally withdrawn, the amendment’s sponsors succeeded in subjecting the Chinese currency situation to a complete Senate Finance Committee hearing in the near future and a vote on the bill before the end of summer. Provisions in the bill would permit tariffs of 27.5% on all Chinese products sold in the US if the Chinese yuan is not allowed to appreciate 27.5% in the 180 days following enactment of the bill. Indeed protectionism is a growing concern and mere lip service is paid to the ideals of free trade espoused by the Bush Administration.

Later in the week, data on industrial production, capacity utilization and import prices for March are scheduled to be released. Both IP and capacity utilization have grown in the past four months even while manufacturing employment was declining according to the Bureau of Labor Statistics. We would expect these trends to continue as companies strive to improve their manufacturing efficiency.

Technically Speaking

Daily charts on the principle stock indexes were considerably more negative on Friday than any other day this week. After the sharp drop on April 1, the indexes had spent much of the interim recapturing those losses until Friday when once again, as if to emphasize the initial drop, resistance built around the highs from April 1 proved infallible and precipitated a significant decline.

Volume and breadth in the markets were extremely bearish for this last trading day of the week however at this point we are concerned more with the previous lows and whether they can or will provide any modicum of support. Failure at these levels represents the beginning of another leg down in the on-going bear market but with earnings season upon us we would expect share prices to maintain current levels presuming that earnings improvements surpass their expectations. Simply reaching expectations will probably not suffice given the current bearish environment and it is precisely this situation that could trigger the aforementioned next leg down.

Moving forward we retain fewer of our long positions as stops are triggered or price action dictates employing an exit strategy. Our short positions fared well this week and with Friday’s action, the two stocks that had held up the strongest, AMGN and CSCO, failed at heavily built up resistance.

New Buy Recommendations:

None.

New Short Sales

None.

Stock Positions to Sell/Exit:

None.

Portfolio Comments:

New stops have been added to the list while others have been modified. Those that have blanks, are being carried unstopped for now. Please see our complete list of stops in the table below.

List of Current Stock Recommendations:

Action Ratings. The following is the legend for designating immediate action
for our stock recommendations. The first is B, meaning the stock is timely
to buy but the case for doing so right here is not overwhelming. Either the
stock may have gotten ahead of itself and may be vulnerable to a retracement or
else the stock has been performing disappointingly but may simply be
regrouping. B+ and B++ indicate stocks for which there is a technical case
to buy now, with plusses adding weight according to how many there are, up
to a maximum of two. Stocks rated H are ones to hold, awaiting confirmation
to buy more or to sell. SELL, of course, means what it says. It seldom pays
to override this designation. In the case of stocks held short, the rating is S where positions should be retained. S+ and S++ indicate stocks for which there is a technical case to add to the positions with plusses adding weight similar to long positions. The maximum number of plus signs is 2.

Please take note that the following clause is being removed under the assumption that the aforementioned federal budget in Canada will be accepted into law. From the budget date forward, there are no longer restrictions on foreign stocks held in Canadian retirement accounts. Furthermore we will no longer mark stocks with # to indicate such.
[Stocks marked # are eligible as Canadian content in Canadian RSP funds. Otherwise there is a 30 percent restriction on foreign stocks held in these accounts.]

Date of Entry	Name	Symbol	Entry Price	Current Price	Stop	Action Rating
01/31/05	Air T Inc	AIRT	17.63	17.63		H
02/08/05	Applix	APLX	7.01	5.54		H
01/24/05	Checkfree Corp	CKFR	38.43	40.08		SOLD
01/10/05	Immucor	BLUD	26.59	28.00	28.00	SOLD
03/28/05	Intellisync	SYNC	3.37	3.02	2.89	H
03/28/05	Paincare Holdings	PRZ	4.69	4.94		B
03/08/04	Transcanada Corp	TRP	21.34	24.38	23.25	B

Short Sales

Date of Entry	Name	Symbol	Entry Price	Current Price	Stop	Action Rating
04/04/05	Amgen	AMGN	57.14	58.68		H
04/04/05	Cisco	CSCO	17.66	17.90		H
04/04/05	Ebay	EBAY	36.85	35.16		S
04/04/05	General Motors	GM	29.95	29.50		S

New stops in BOLD

* Stop on a closing basis

** Buy if above entry price