Stockscom Report for Sunday July 23 2006

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

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

· Powder keg in Middle East exploding

Market Synopsis

With no end in sight to the recent outbreak of hostilities between Israel and its neighbors and the continuing conflicts in Afghanistan and Iraq, there is no shortage of negative global conditions to draw out the pessimism in both investors and consumers. This lethal combination manages to thwart even entirely positive corporate results leading to an even greater compression of stock prices. Certainly the mere fact that it is summer explains some of the negative vibe present but additionally this year, stocks have to deal with an assortment of other factors of no little importance.

· War engenders confusion and a host of unknowns, which act as threats to investors thus encouraging them to seek out safe havens and often this manifests itself in a move to cash.

· Investors must contend with the likelihood of a slowing US economy in the second half of 2006 and the possibility that inflation will not cool off resulting in an environment that isn’t conducive to higher stock prices.

· Loose fiscal policy leading to imbalances that could endanger the economy.

· A slowdown in the housing industry, which until now has had a remarkable effect on jobs and consumer spending habits.

· The second year of the four-year presidential term is often when the stock markets reach a significant low.

We expect continued pressure on stock prices in the coming weeks for even as we’ve witnessed solid quarterly results, the tendency has been to throw the stock into the garbage heap. This could set up some interesting situations once summer has ended and a bottom has been established.

Surprisingly perhaps but even amongst the confusion, gold has not been able to gain any traction after retracing much of its gain from the June bottom. Nevertheless the gold sector is not generally perceived as bearish and with the marriage season in India approaching, the recent short-term downward trend in gold could come to an abrupt end.

Technically Speaking

All stock indexes are in various degrees of bearishness. While the broader large cap indexes – DJ and SP – have managed to remain above their respective June lows, the same cannot be said for the others. The Nasdaq and more specifically, the tech sector, has led this parade to the downside even as quarterly results meet or exceed expectations for a large number of companies. But it is the misses such as Dell that have had an extraordinary effect on the overall index.

At this point, even the DJ and SP appear likely to set new lows below their respective June marks matching the relative performance of the other indexes. The other indexes and especially the ND will continue to see new lows as the newest leg down evolves.

New Buy Recommendations (in order of preference):

None.

New Short Sales

Red Hat Inc (RHAT) – We add this stock to our list of shorts as it combines a weak technical chart with quarterly results, which left investors unimpressed. The most recent attempt to fill the gap on the daily chart left from June 28 was a significant failure and ending the week once more below the 200-day moving average adds emphasis to its weakness.

Stock Positions to Sell/Exit:

Laureate Education (LAUR) – We covered this short on its rebound Friday after surprisingly solid results gave bulls the firepower to post a strong gain.

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
07/03/06	Seabridge Gold	SA	12.11	11.69	10.00	B

Short Sales:

Date of Entry	Name	Symbol	Entry Price	Current Price	Stop	Action Rating
07/10/06	Ebay	EBAY	26.92	24.48	29.00	S
07/10/06	Getty Images Inc	GYI	57.60	53.80	58.50	S
07/10/06	Laureate Education	LAUR	42.34	46.00	46.00	Covered

New stops in BOLD

* Stop on a closing basis

** Buy if above entry price

*** Split-adjusted price