The performance of our stocks has been amazing even as the market generally has been doing rather little and many stocks have been going sideways or down. Action in the indexes largely reflects the fact that there has been rotation from one stock to another with a barely perceptible upward bias. Sure, we have had some stocks that have set back from their highs, in some cases by quite a long way, like Lucent and Fidelity Adv Korea closed end fund. Still, we have hardly a stock that is under water and many that are up by a huge amount since our last general buy signal on April 4.

It seemed likely to us before the announcement of the Producer Price Index and Consumer Price Index numbers that the squall going through the market might take prices down a bit farther. We now know that the news was not as bad as expected so there has been a fast rebound. It looks therefore as if the bull market is alive and well although, of course, there will always be fluctuations. It is virtually certain that interest rates will rise by at least a quarter point on August 24, and possibly by a half. Good stocks should be able to take that in their stride.
We would very much like to find some stocks to sell in order to expand the list with a couple of new stocks. The trouble is that the worst we can say about any of our stocks is that a few of them are not now immediately timely for new money. Specifically, there is a bit of stress for EDS, Fidelity Adv Korea, Hewlett Packard and Korea Fund, so do not add to these holdings now. As recently as last week IBM appeared to be under some stress and already it is turning around with a new buy signal.

We continue to rate all the oils as particularly timely to buy now and it is almost impossible to pick any favorite ahead of any other. That includes Santa Fe and Halliburton, the oil service companies. We also particularly like Celestica, Erickson, Novell and Solectron.

Market Conditions

There has been a significant shakeout since the indexes made new highs and the overall market appears to be rolling again. It is certain not to be a one-way street but strong stocks look as if they should keep on going. There is a tentative measured for the Dow to go to 12,000 and even the NASDAQ 100 might achieve 2,500 or 3,000 from current 2,337. If our interpretation of the underlying strength of the market is correct, then those stocks that have been doing well should be exactly the ones that continue doing best. Those that make new highs in choppy conditions are likely to surge if the market broadens out, as seems to be happening. There are, of course, many stocks that are severely washed out that will be captivating the value buyers. That doesn't mean to say they will go up, let alone outperform those stocks already in motion. You can have your cake and eat it too, buying both value and technical strength, as with the oils in particular as well as stocks like Erickson and Phillips.

New Stocks to Buy Now

We have identified three stocks that really fall into the must-own category that we simply don't see leaving off our recommended list when stocks generally appear to be starting a new leg up. They are:

Intel (INTC) $78.94
We have owned this stock before. Then we thought the general market was vulnerable so we got out. This is the leading chip-maker and corporate management never seems to miss the beat.

Qualcomm (QCOM) $173.06
Yet another high tech stock, but a really great one that should be on its way to $200 plus, and some time soon a stock split.

Sony (SNE) $131.14
This company files more patents than are filed by all filers in Canada. There is probably no greater powerhouse for research and development. The company recently reported lower profits but that means little when the stock sells for little more than one times sales. This could be a megabagger over the next five years or so as it is coming powerfully out of a long upward inclining base.

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

Stocks marked # are eligible for Canadian RSP funds. Otherwise there is a 20pc restriction on foreign stocks held in these accounts.

99/05/12 39.75 46.75 ADI Analog Devices
99/04/06 49.00 90.56 AMCC Applied Micro Circuits
99/08/06 78.50 81.63 AMGN Amgen Co
99/06/14 30.63 32.38 AOG Alberta Energy Corp #
99/06/14 38.28 44.48 APA Apache
99/04/06 92.13 109.65 ASCND Ascend Communications
(acquired by Lucent 1.65 shares to 1)
99/06/14 109.78 118.25 BPA BP Amoco Plc
99/05/12 94.38 130.00 BRCM Broadcom
99/08/06 26.38 28.38 CHIR Chiron Co
99/05/14 40.69 45.81 CLS Celestica #
99/05/12 117.50 64.25 CSCO Cisco (split on 99/06/21 2:1)
99/06/14 14.59 18.84 CXY Canadian Occidental Petroleum #
99/05/12 54.61 56.08 EDS Electronic Data System
99/04/06 132.13 60.00 EMC EMC (split on 99/05/28 2:1)
99/08/09 86.31 42.13 ENE Enron Corp (split on 99/08/13 2:1)
99/06/14 31.13 31.88 ERICY Erickson
99/04/06 51.50 53.88 FLEX Flextronics
99/06/14 60.14 65.52 GLW Corning
99/05/14 84.52 104.17 HWP Hewlett-Packard
99/05/12 220.77 128.25 IBM IBM (split on 99/05/26 2:1)
99/05/14 58.13 117.00 IDPH Idec Pharma
99/04/06 60.83 63.98 LLTC Linear Tech Corp
99/04/06 32.75 56.50 LSI LSI Logic
99/05/12 25.06 26.50 NOVL Novell
99/04/06 163.19 87.19 NOK Nokia (split on 99/04/09 2:1)
99/04/06 65.66 88.17 NT Nortel Networks #
99/06/14 93.56 101.81 PHG Phillips Electronics
99/05/12 106.06 91.50 PMC PMC Sierra (split on 99/05/14 2:1)
99/05/12 49.88 76.25 QLTI QTLI Phototherapeutics #
99/06/14 21.39 25.42 SDC Santa Fe International
99/06/14 35.97 45.59 SFA Scientific Atlanta
99/04/06 53.75 72.56 SLR Solectron
99/04/06 130.94 74.81 SUNW Sun Microsystems (split on 99/04/08 2:1)
99/08/06 31.00 31.88 TLM Talisman Energy Inc
99/04/06 109.48 75.28 TXN Texas Inst. (split on 99/08/16 2:1)
99/05/12 87.19 105.33 TYC Tyco

In addition we recommend the following Closed End Funds, based on the assumption that Third World economic downturns are not going to last forever and that their stocks are now showing superb technical strength

99/04/06 6.63 8.69 FAK Fidelity Adv Korea
99/04/06 8.88 11.38 IFN India Fund
99/04/06 8.05 10.92 JOF Japan OTC Equity Fund
99/04/06 11.00 13.06 KF Korea Fund