This market is continuing to look like 1987. The good news is that the economy is great and profits should come through even stronger than expected for the real leaders like Microsoft and the kind of stocks on our recommended list.

The strong economy could move interest rates higher. When they blip up the stock market is likely to set back as happened last week. These setbacks are likely to present buying opportunities but only for the strongest stocks.

It looks to us as if last week put in a major cyclical low for stocks and that we are now presented with an opportunity for lower risk buys of individual strong stocks, selected call options and index futures. It's generally better to buy stock indexes than to buy calls at current levels. Calls tend to be too expensive relative to potential whereas the index premiums are quite moderate. Whatever you do, trade small if not paying for stocks in full. Despite the sell-off we are not in bargain basement territory.

Curiously, we see no Internet stocks that look attractive at current prices and with current chart action. There seems to be a rotation from them. However, there is strength coming into selected issues including some issues on our buy list such as Compaq, Hewlett Packard and American Home Products in particular. There's a case to buy into comparative but we expect temporary weakness in NCR and Glaxo where the declines have been relatively significant but without doing structural damage.

Hold off from putting new money into American Power Conversion (APCC). This is the one stock on our list acting poorly enough to go on the exit watch list.

We are adding to our recommended list 5 new stocks, as follows:

Sepracor (SEPR) $115.44
It has an immensely strong chart and looks capable of flying if we are right about the cycle low.

India Growth Fund (IGF) $9.06
A closed end fund selling at a discount of about 25 percent to asset value. Many Asian funds are looking very much better. A second choice is India Fund (IFN) at $7.94. These 2 stocks have been building a very good base and an initial entry can be justified now. They are about 75 percent down from their highs and will almost certainly return there eventually, and will go on to do more. Hard to say how much patience will be required but the reward to risk is superb. Also shaping up, but at an earlier stage of development, are Mexican and Korean closed end funds (MEF, MXF and KF).

QLT (QLTI) $58.50
This is a pharmaceutical company that may have discovered some holy grails including products recently approved for sale in UK. The press on the products has been great and chart action is really great too.

Viacom (VIA) $81.88
Something seems to be cooking in cable, probably Internet
expectations. Anyway here too chart action is great.

Agnico Eagle (AEGGF) $63.50
This is the best looking gold mining stock we know of, by far. Current expansion plans are expected to get average production costs down toward $100 per ounce. That's not a misprint: ONE HUNDRED $$ per oz. Even if the metal price does no more than hold steady, which we expect, this stock could go. There's also a convertible debenture 3.5 percent coupon quoted on NASDAQ around $63 with a yield to maturity in 2004 of about 12 percent. The conversion price is way above the current market but it could become worth something. It is a great buy for secure income with some prospect of capital gain if the stock takes off. We think gold stocks have washed out enough. Though we don't want to do more than dip a toe into the gold market, this stock has a great story and strongly developing technical case.

Below is the list of our previously recommended stocks with their initial buy prices. They are all still recommended for new money except APCC.

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

99/01/05 54.55 57.45 AHP American Home Products
99/01/05 106.81 120.25 AMGN Amgen Inc
99/01/05 50.13 38.00 APCC American Power Conversion
99/01/05 37.08 40.52 BCE BCE Inc #
99/01/05 26.06 23.31 COGN Cognos Inc #
99/01/05 42.47 42.91 CPQ Compaq
99/01/05 71.98 62.67 GLX Glaxo Wellcome
99/01/05 79.63 80.75 GNE Genentech
99/01/07 69.86 75.80 HWP Hewlett-Packard
99/01/14 39.50 34.13 LEVL Level One
99/01/05 41.44 43.13 NCR NCR Inc
99/01/07 19.44 18.81 NOVL Novell
99/02/05 50.52 58.14 NT Northern Telecom #
99/01/07 45.25 56.69 ORCL Oracle
99/02/05 78.75 76.44 PMCS PMC Sierra
99/01/05 64.55 79.05 RTRSY Reuters
99/02/05 32.31 31.75 SFA Scientific Atlanta
99/01/05 91.00 86.00 SLR Solectron
99/01/05 89.50 100.44 SUNW Sun Microsystems
99/01/07 32.13 32.13 SLVN Sylvan Learning
99/01/07 90.03 93.11 TXN Texas Instruments

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