Stockscom Report for Sunday Dec 24 2006

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

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

· Santa Claus rally fizzles quickly

Market Synopsis

Any ideas that a Santa Claus rally was just around the corner were quickly dispensed with this past week as all major indexes succumbed to the pressure of sellers. The major averages slid through normally strong support areas and have put into doubt, the probability of further upward moves in the near term.

Technically Speaking

There is a noticeable breakdown in the stock indexes which has culminated in a Lindahl sell signal on the weekly chart of the ND-100 and a near-breakdown of the rise in the S&P 500 since the summer.

Over the past five weeks since the ND-100 topped out on weaker than normal volume, the subsequent losses were largely balanced by the moves higher until this week when the index seemingly threw in the towel in a sharp closing reversal albeit on weak holiday-style volume settling for the week at a support line corresponding to the April highs. Beyond this level, the next support would be found near the round figure of 1700 and further support would be located at the 200-day moving average near 1650 currently.

As for the S&P, it has stayed consistently in an upward moving channel since the July low was reached. Although weakness in November prompted a move toward the lower boundary, it remained steadfast until this week when once more, there was a breakdown setting up a probable test of the upward sloping channel. Similar to the action on the Nasdaq, the volumes of the past few days have been weak by normal trading standards and could potentially cause price movements that might not otherwise occur however a breakdown of this channel would be sufficient to raise large caution flags with us as well as other technicians.

New Buy Recommendations (in order of preference):

Qiao Xing Universal Telephone (XING) – This telephone service provider in China gapped higher on the basis of a solid quarterly report on Friday. This move on higher than normal volume nearly had the effect of completing an outside bar on the weekly chart and reset the direction of the stock price which had been heading for a test of both the 200-day moving average as well as support around $11.

Cheniere Energy Inc. (LNG) – Cheniere is building a complex of LNG terminals offshore in the Gulf of Mexico. There has been a steady degradation in the chart of LNG since late April/early May but the recent double bottom that held in October and November plus the most recent test of that same bottom this week has put LNG in a different light. Friday’s significant gap higher on heavy volume has cemented the direction of LNG and has put the focus on a move above the 200-day moving average. A rise in price this coming week would complete a Lindahl buy signal on the weekly chart.

New Short Sales

None.

Stock Positions to Sell/Exit:

We sold ITG, BRLC and NIHD on their respective stops. Given the performance of the major averages this past week, it certainly pays to be overtly cautious keeping rather tight stops in our portfolio.

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	8.55	8.20	H
11/06/06	Allis-Chalmers	ALY	17.80	22.78	19.50	B
10/23/06	Coca-Cola Co.	KO	46.75	48.38	47.00	B
09/25/06	Cognos Inc	COGN	35.20	40.97	38.00	B
12/11/06	Credence Systems	CMOS	5.02	5.12	4.50	B
10/02/06	Global Payments	GPN	43.80	46.45	41.50	B
11/13/06	Goodyear Tire	GT	18.00	19.72	17.00	B
10/23/06	I-Flow Corp	IFLO	15.02	14.74	13.50	H
12/11/06	Investment Tech.	ITG	43.87	41.80	41.80	SOLD
12/11/06	Isis Pharma.	ISIS	12.53	11.57	10.50	H
10/30/06	Millennium Pharm	MLNM	11.58	11.17	10.50	H
10/02/06	NII Holdings	NIHD	62.27	65.00	65.00	SOLD
11/13/06	NYSE Group	NYX	96.50	97.01	90.00	B
11/06/06	Syntax-Brillian	BRLC	7.98	8.00	8.00	SOLD
11/06/06	Watts Industries	WTS	41.25	40.39	37.75	H

New stops in BOLD

* Stop on a closing basis

** Buy if above entry price

*** Split-adjusted price