Stockscom Report for Sunday Dec 10 2006

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

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

· Nov. employment report: 132K new jobs

Market Synopsis

Recent indications of a slowdown in the economy were found to be in a conflict with the Nov employment report, which surprisingly announced the addition of 132K new jobs. Furthermore, the report revised previous employment reports in Sep and Oct to add another 42K new jobs to the announced figures for those particular months. Needless to say this unexpected bit of good economic news generated a modest rally in equities on Friday, as investors were quick to reward the announcement. Some analysts have complained that being a backward-looking document, the employment report is a poor indicator of future trends and certainly they could point to the ISM survey as a far better predictor of future conditions, however the numbers referred to in this month’s report are simply too good to ignore especially when used in conjunction with the prior months’ positive revisions.

While we were concerned with the downturn in the economic indicators over the past few months, we consider that this positive report trumps to a certain degree those other economic reports or even that it possibly represents an abrupt turnaround that requires that we take notice. In order for this news to be credible, there must be some follow-through though, some economic data that support the case for improvement in the employment picture and sustainability in economic development.

The Federal Reserve might supply us with some of this economic information that we desire. On Tuesday, the Dec FOMC meeting takes place and as usual, in the afternoon around 2:15 PM, the Fed will release their decision on interest rates. While rates are expected to remain unchanged, they have used the Dec meeting on occasion to raise interest rates in years past. Nevertheless, the press release that accompanies the decision could shed some light on their general perceptions of the economy. But given the normal habit of modifying very slightly the press release, it may be too naive to believe that a more rigorous examination of the economy will be described in the document this time.

Technically Speaking

Markets ended the week on a high note rising in price in response to the employment report albeit on lower volume on both the Nasdaq and S&P 500 but not the Dow Jones. And trading could be quiet for the first two days of the week until the Fed releases the decision on interest rates around mid-afternoon on Tue.

Our initial assessment of the recent weakness was that the markets would likely correct into the end of year however this employment report could be the catalyst for a bullish rebound in stocks as we close out the year. Certainly, this market is still in “show me” territory as recent data suggested strongly that an economic slowdown was imminent.

New Buy Recommendations (in order of preference):

ISIS Pharmaceuticals (ISIS) – Coming out of a compression, price jumped ahead on Friday and did so on increasing volume. Effectively, the week ended with a Lindahl buy signal and a new opportunity to initiate positions. On the weekly chart, there is also a Lindahl buy signal stretching back over the past five weeks. There are three important gaps higher since the beginning of Nov on the daily chart and this price action adds strong support to the thesis.

Investment Technology (ITG) – A strong rebound over the past five days has changed the technical nature of the price charts for ITG and has put the bulls squarely in the driver’s seat. The news on Friday that Nov trading volumes had increased substantially was sufficient to generate a sizable gap and lent strong support to ideas that the chart could rebound quickly to its previous high above the $58 level. The weekly chart with its near-Lindahl buy signal arriving near the $34 support level, was the deciding factor.

Credence Systems Corp (CMOS) – The large gap from Friday left a large island bottom dating from the beginning of Aug and by closing above the 200-day moving average signaled that CMOS is certainly heading higher. On the weekly chart, Friday’s performance was the icing on a Lindahl buy signal adding further proof of its intentions.

New Short Sales

None.

Stock Positions to Sell/Exit:

We sold Cerner Corp as price action looks very weak and on the verge of a tumble, which naturally would not have served us well.

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
11/27/06	Actions Semi	ACTS	9.28	8.85	8.20	H
11/06/06	Allis-Chalmers	ALY	17.80	24.32	18.00	B
10/23/06	Cerner Corp	CERN	46.96	47.24	47.00	SOLD
10/23/06	Coca-Cola Co.	KO	46.75	48.91	45.25	B
09/25/06	Cognos Inc	COGN	35.20	41.97	38.00	B
11/06/06	Fronteer Dev’t Grp	FRG	7.98	8.72	8.25	B
10/02/06	Global Payments	GPN	43.80	46.60	41.50	B
11/13/06	Goodyear Tire	GT	18.00	17.72	16.00	H
10/23/06	I-Flow Corp	IFLO	15.02	14.19	13.50	H
10/30/06	Millennium Pharm	MLNM	11.58	11.42	10.50	H
10/16/06	Miramar Mng Corp	MNG	4.87	5.03	4.50	B
10/02/06	NII Holdings	NIHD	62.27	67.36	60.00	B
11/13/06	NYSE Group	NYX	96.50	95.71	90.00	H
11/06/06	Syntax-Brillian	BRLC	7.98	9.36	8.00	B
11/06/06	Watts Industries	WTS	41.25	42.72	37.75	B

New stops in BOLD

* Stop on a closing basis

** Buy if above entry price

*** Split-adjusted price