Stockscom Report for Sunday Apr 9 2006

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

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

· Employment for 211K more people

· Pause in rally

Market Synopsis

The markets spent the first part of the week rising on solid bullish sentiment but when faced with bullish news of 211K new jobs in the March employment report on Friday morning, the markets turned and headed south. While media pundits correctly pointed to fears of wage inflation pushing the Federal Reserve’s overnight lending rate to something north of 5%, especially with unemployment of 4.7%, those fears are not borne out by the consumer sentiment surveys.

The latest Conference Board’s measurement of consumer sentiment indicated a high current reading of 133.3 but a much lower measure for future expectations 89.9 (1985=100). In their own words, the Conference Board commented that consumers’ expectations “remain subdued”. This is not the measure of a group expecting a healthy wage increase due to inflation. And to be sure, despite the jobless rate hitting a very low 4.7%, a level which economists consider to be extremely close to full employment, wage inflation for March was measured as only 0.2%.

Evidently something is wrong with this picture: if unemployment is 4.7%, companies must be having a hard time attracting talent but they’re not willing to raise their salary offers? Either the employment survey is faulty or there is pent up wage pressure about to explode. There is a third possibility – perhaps the majority of new positions are found in low levels of service type industries where competition between candidates remains fierce. This possibility could also account for the low futures expectations since job security would be low at this level. As the Bureau of Labor Statistics only offers a summary of job types, it is difficult to draw any firm conclusions but with the increase in retail jobs accounting for only 29K in the total job growth, this possibility seems unlikely.

With the much anticipated employment report out of the way now, analysts will be able to focus their attention on corporate matters that are inherently more important. Starting this week, quarterly reports begin to flow offering a summary of corporate performance for the past three months and a barometer of future performance. Equity indexes will trade based largely on management’s perception of future earnings potential in the current year.

Technically Speaking

Equities passed the better part of the week moving strongly north but as mentioned earlier, on Friday, markets tumbled and finished with some very bearish-looking outside days in the downward direction.

The most notable characteristic of these price bars was that they found support at levels where it was expected. For the Dow Jones, the support at 11160 corresponds to both the late Feb low and the 40-day moving average. There is additional support at 11000 for DJ. Similarly on the SP-500, the support at both the 25-day moving average as well as the late Feb low prevented further losses. Below this level, there is another layer of support at 1290.

For the Nasdaq Composite, which had been on a bullish rally, support at 2325 should be sufficient in order to extend the current rally. However, much depends on the Nasdaq-100, which has been quite the laggard this year. Friday’s price action suggests that the imminent potential for a new 2006 high, pressured weak longs into covering their positions. An extension of the rally is likely but support lies at 1700 should there be a need.

New Buy Recommendations (in order of preference):

Silver Wheaton (SLW) – With the coming silver ETF in a matter of days or weeks, it makes abundant sense to buy silver shares in advance of this occasion. Though there is a certain risk to buying while the price of silver is reaching new heights, the likelihood of the price falling in the near future appears to be a low risk. Notwithstanding the fears of another terrorist attack or destabilizing military action, there is also a general sense that no currency functions as a solid hedge to global inflation anymore. SLW is a pure play on silver production and with 40+% of world production going to industrial uses, there is an interesting demand factor that is not shared by gold. Technically, the stock has consolidated lately but the price of silver is heading higher and will bring SLW along.

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.

N.B. There are no longer restrictions on foreign stocks held in Canadian retirement savings accounts.

Date of Entry	Name	Symbol	Entry Price	Current Price	Stop	Action Rating
11/21/05	Amer Sci & Eng	ASEI	71.08	83.73		B
03/27/06	Anadigics	ANAD	6.85	8.04		B
11/14/05	Birch Mtn Resour.	BMD	6.65	8.30		B
02/21/06	Cdn Natural Res	CNQ	58.00	59.24		B
03/20/06	LSI Logic	LSI	11.25	11.39		B
01/30/06	Nasdaq Stock Mkt	NDAQ	45.98	41.15		H
01/09/06	Nuvelo Inc.	NUVO	12.95	16.93		B
01/09/06	Progenics Pharma	PGNX	29.70	24.66	23.00	H
11/07/05	Redback Networks	RBAK	11.78	22.81	18.00	B
03/20/06	RTI Int’l Metals	RTI	47.70	57.80		B
01/09/06	Seabridge Gold	SA	9.49	9.02	8.00	H**
01/09/06	Sierra Wireless	SWIR	13.60	12.38		H
02/27/06	Stereotaxis	STXS	13.57	11.47		H
03/27/06	Texas Industries	TXI	64.55	59.60	57.00	H
11/14/05	Tom Online	TOMO	20.66	27.44		B
03/08/04	Transcanada Corp	TRP	21.34	29.27	28.00	B

New stops in BOLD

* Stop on a closing basis

** Buy if above entry price

*** Split-adjusted price