After great difficulty in find an entry, we have issued a buy recommendation for NASDAQ stock index futures for the open of Thursday Feb 4. There is a system buy signal for the Dow 30 and for S&P, the latter recommended for those unable to trade the ND. SP looks to be breaking out of an ascending triangle, a powerful chart pattern. The Dow looks as if it could be shaping up for a run at the highs. The rule is to go with the strongest, not the weakest. That means, so far as one can sensibly afford the risk, going with stocks and indexes making new highs. We do not, however, at this point, see plunging into the Internet stocks like Yahoo and AOL at current levels. We might be wrong but reward to risk suggests buying stocks with some substance rather than none. Amazon.com for example is the kind of stock that in the past has gone back to zero when its bubble burst.

We have been wondering which way the broad market might break. Many individual stocks were immensely powerful during January including most of our selections. However, many other stocks seemed to be shaping up as short sales. The Dow, for example, seemed to be torn between leaders like Walmart and laggards like Boeing, with there being more laggards than leaders. Now it seems the leaders are ready to continue the charge while laggards are stabilizing and even going up. We think it significant that as of the close of business on Feb 3, all the major indexes are now in harmony. Just don't buy the electrical utilities or any other stocks performing really poorly.

There is a long list of individual stocks still worth buying. Among our selections, we could see entries here for the following outstandingly strong stocks: American Power Conversion (APCC), Cognos (COGNF), Compaq (CPQ) Oracle (ORCL), Sun Micro (SUNW), Texas Instruments (TXN) and Novell (NOVL).

We are also adding to our list the following for entry here:

Northern Telecom (NT) $50.52
PMC Sierra (PMCS) $77.69
Scientific Atlantic (SFA) $33.06

NT is a strongly recommended large-cap that will always stay in business though it is not a likely takeover target because of its size. It is one of the few stocks worth buying and legal to buy for Canadian pension money coming in during Feb so it could move well in the immediate future. We already have its affiliate BCE but NT is now a better buy for new money.

Market conditions as well as the US economy continue to be remarkably powerful. It is notable that many Asian closed end stock funds are beginning to shape up well. It now looks as if overseas troubles may be righting enough to keep the US going rather than that they will drag the US down. In that case there may be a way to go for stocks. There may also be a rise in interest rates and that might eventually do in the stock market.

Below is the list of our previously recommended stocks with their initial buy prices. Action has been slightly disappointing in Glaxo, Genentech, Sylvan and Level One and we do not see putting new money into these stocks until they shape up. On the other hand, their action is more likely to be legitimate consolidation from which they can move higher in due course, and not the beginning of a topping out.

Current Recommendations:
(Entry Date, Entry Price, Last Close, Code, Name)

99/01/05 54.55 57.05 AHP American Home Products
99/01/05 106.81 125.93 AMGN Amgen Inc
99/01/05 50.13 49.13 APCC American Power Conversion
99/01/05 37.08 42.90 BCE BCE Inc #
99/01/05 26.06 27.50 COGN Cognos Inc #
99/01/05 42.47 44.91 CPQ Compaq
99/01/05 71.98 64.48 GLX Glaxo Wellcome
99/01/05 79.63 78.88 GNE Genentech
99/01/07 69.86 74.73 HWP Hewlett-Packard
99/01/14 39.50 36.31 LEVL Level One
99/01/05 41.44 45.00 NCR NCR Inc
99/01/07 19.44 18.75 NOVL Novell
99/01/07 45.25 58.31 ORCL Oracle
99/01/05 64.55 82.17 RTRSY Reuters
99/01/05 91.00 78.63 SLR Solectron
99/01/05 89.50 103.38 SUNW Sun Microsystems
99/01/07 32.13 34.00 SLVN Sylvan Learning
99/01/07 90.03 95.73 TXN Texas Instruments

Stockscom