Stockscom Report for Sunday Oct 15 2006

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

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

· Stocks extend autumn rally

Technically Speaking

As the Dow Jones steers toward the key 12,000 mark, in itself a noteworthy achievement, we recognize that all of these large cap stock indexes have actually exceeded their channel boundaries with surges in prices driving chart bars to levels above their channels. Thus both the S&P 500 and the tech sector represented by the Nasdaq have charts that over the past couple of weeks have taken a steeper turn higher.

For all of 2006, the S&P 500 and the Dow Jones Industrials have reached respective new highs as a result of a strong rally begun in the summer. The Nasdaq for its part has failed to attain a new peak but remains close nonetheless and we could see that new 2006 high potentially within a few days. For followers of Dow Theory however, this market has not provided a signal to confirm the move established by the DJ-30 and without this signal, market analysts consider the move to be a false breakout subject to possible failure.

While we respect that position, we consider the move in equities to be significant and worthy of our participation. Furthermore, we consider it absolutely necessary and essential for preservation of capital to incorporate protective stops on all of our trades. Unfortunately as we’ve seen in recent weeks, some of these price moves have begun in the right direction only to reverse and slide through our stops triggering exits, which can be premature. We accept that this can happen but believe that this shedding of weak performers only serves to weed out the majority of bad performers leaving the strongest stocks overall.

New Buy Recommendations (in order of preference):

Tessera Technologies (TSRA) – This provider of technologies used to miniaturize semiconductor chip components recently won a civil lawsuit protecting much of its intellectual property and consequently forced chip manufacturers to pay for licensing of these proprietary technologies. In late September, price gapped higher and on Friday, price surged to a new high for 2006. On the weekly chart, this week’s price bar is important as it appears now that TSRA is breaking out of its range that has contained prices since early 2005.

Bitstream Inc. (BITS) – Bitstream is a software company, which has more than doubled in price since early August. Despite that performance, there is likely to be more of that as Friday’s price bar gapped higher and signaled that this stock would be stepping up to a new level and with it, the likelihood of a new 2006 high.

Bovie Medical Systems (BVX) – Friday’s jump in price reaffirmed the move from Wednesday on heavy volume and indicated that a new 2006 high is arriving fast.

Anadigics Inc. (ANAD) – This semiconductor manufacturer concentrates on radio frequency modules for wireless and broadband communications. The big jump in price on Friday represents a bit of a challenge in getting a good entry price on this stock however the gap left in late August and the successful test of the gap at the beginning of October suggests that a new 2006 high is forthcoming very soon. Interestingly with ANAD, a new high would also represent the breakout in price since the start of 2003.

Miramar Mining Corp (MNG) – This gold miner with a still-developing deposit in the Canadian north has seen its share price resist falling whilst the price of gold dropped from $700 to its current $590 per ounce. This time of year is often good for gold’s performance due in no small part to the demand for jewelry from India where this is considered to be the marriage season. Of all the gold mining companies, this one now appears to have the strongest chart and is the one that we prefer.

New Short Sales

None.

Stock Positions to Sell/Exit:

Hi-Shear Technology (HSR) – This recommendation from last week aborted late in the week on unexpectedly weak quarterly earnings. We moved immediately to the sidelines for safety.

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
09/25/06	Cognos Inc	COGN	35.20	37.34	33.00	B
10/09/06	DuPont	DD	44.95	45.08	43.50	B
10/02/06	Global Payments	GPN	43.80	41.54	40.00	H
10/09/06	Hi-Shear Tech.	HSR	10.80	9.00		SOLD
10/02/06	NII Holdings	NIHD	62.27	65.01	60.00	B
10/09/06	Rediff.com India	REDF	16.50	17.14	15.25	B

New stops in BOLD

* Stop on a closing basis

** Buy if above entry price

*** Split-adjusted price