Apologies for the larger than usual interval between reports caused by an unexpected family problem.

Market Conditions

Our words from the last report, when the naysayers were scaring the hell out of investors: Watch out for an important market low coming soon. This is not the time to sell great stocks. It is time to look for stocks doing well while others fall for they are the ones most likely to move up fast when the general market stabilizes. There has now been a powerful move in the NASDAQ to new all-time highs, together with an immensely powerful monthly key reversal. Our view is that the breakout is real and that there will be a general extension in share prices upward from here. Having said that, at the time of writing stocks may well have done too much too quickly for their own good. It would not be out of order for them to come back quite a bit, possibly quite a big bit. However, it is very unlikely that the recent lows will be seriously threatened. In the meantime there are many charts that look wonderful, among them most of our recommendations.

It is worth repeating how much it pays to buy stocks that show that they can move up, since they are the ones most likely to continue. So our stocks that have been making new highs are still a buy here, with just a few exceptions where we are happy to hold but we don't like the risk for new money. We love holding JDS Uniphase, Nokia, Nortel and Sony but there are two problems with buying more here. First, their charts are truly quite extended. Therefore, they could set back by perhaps 20 or 30 percent without damaging their up-trends. So, yes, they could be bought here if you have a high tolerance for big swings but we don't like the reward to risk here. You have to ask yourself what might happen if some announcement comes out of the blue in the way of bad news. Then the stocks could halve overnight. The other problem with these stocks is that, much as we love them, they are starting to look a really expensive according to valuation models. So, at the risk of making less money but in the interest of lessening risk, we prefer to put new money into stocks with charts at an earlier stage of development. It is also worth pointing out that this is our preference. When stocks are coming out of what looks like an important low, as they are now, it generally pays to buy stocks that have been performing best for they are the ones to go the farthest. While this is a great principle, in real life you still don't know for certain until after the event whether stocks truly are taking flight again.

Stocks to Sell

Halliburton (HAL), Santa Fe International (SDC), Genzyme (GENZ)
The upside of having a longer than usual interval between Stockscom reports is that we are now better able than we might have been to separate sheep from goats. Throughout 1999 it has been remarkable how some stocks that looked terrible for a time came back strongly if we gave them room to move. Notable among these are EMC and Flextronics. On the other hand, we are happy to be out of IBM, Hewlett Packard and Tyco, banking great profits well before these stocks tanked. Needless to say, we don't want to buy any of them back right here.

We have not been at all impressed with the way our oil stocks have been acting but we believe that patience will pay off and that they warrant holding. We make an exception, however, for our two oil-service stocks which are likely to benefit only some way down the road from higher oil prices. However good the companies, which they are, we are selling our holdings in Halliburton (HAL) and Santa Fe International (SDC).

Novell has been acting poorly. However, it has not acted poorly enough for us to throw in the towel on a company that still could have its stock come home for us. We are also dumping our health care stock Genzyme (GENZ). There are analysts recommending the stock at the lower price but for us its chart suggests that holding this stock could be dead money for some time to come. Why stay in when there are so many wonderful charts?

New and renewed recommendations

Many of our current recommendations are timely to buy now with new money. The list includes Applied Materials (AMAT), Applied Microcircuit (AMCC), (CLS), Chiron (CHIR) - coming out of an assumed low with a
powerful monthly upside reversal, Cisco (CSCO), Corning (GLW), Flextronics (FLEXF), Linear Technology (LLTC), Phillips (PHG), PMC Sierra (PMCS), QLT Therapeutics (QLTIF), Sun Microsystems (SUNW).
Buy: Citigroup (C), Deutsche Telekom (DT), Four Seasons (FS)

Citigroup (C), $54.08
This is for us the world's premier financial stock, and we don't have any of those right now. It looks to be just breaking out of a consolidation. Although this stock may now have the sex appeal of an Internet stock, we love the reward to risk, and set our sights on $7 or so within a reasonable length of time.

Deutsche Telekom (DT), $46.00
This is our favorite telephone company anywhere in the world. Long dogged by obsolete technology and sleepy management, this company may be just starting to reap the benefits of technological innovation that is now standard in the US. This stock could easily double, triple or more over the nest couple of years.

Four Seasons (FS), $41.63
For us, this is the world's premier hotel chain. Its stock set back sharply when it was announced that its founder was retiring. However, no damage has been done in the big picture. Monthly, weekly and daily charts all confirm a new buy signal with the stock coming out of an assumed major low.

You may care to note that we are staying away from the additions to the Dow. Chart action in Intel and Microsoft, in particular, has been quite poor. It could be that addition of these stocks to the Dow comes just when their best days are behind them

Action Ratings

The following is the legend for designating immediate action for our stock recommendations. The first code is B, meaning that the stock is timely to buy but the case for doing so right here is not overwhelming. Either the stock may have got 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 five. 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.

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.

H 99/05/12 39.75 53.19 ADI Analog Devices
B++ 99/09/07 76.88 89.81 AMAT Applied Material
B++ 99/04/06 49.00 77.81 AMCC Applied Micro Circ (split on 99/09/10 2:1)
H 99/08/06 78.50 79.75 AMGN Amgen Co
H 99/06/14 30.63 30.50 AOG Alberta Energy Corp #
H 99/06/14 38.28 38.92 APA Apache
H 99/09/07 84.94 74.13 BGEN Biogen
H 99/06/14 109.78 57.41 BPA BP Amoco Plc
H 99/09/07 57.69 55.19 BVF Biovail Corp #
B++ 99/08/06 26.38 28.56 CHIR Chiron Co
B++ 99/05/14 40.69 55.63 CLS Celestica #
B++ 99/05/12 117.50 74.00 CSCO Cisco (split on 99/06/21 2:1)
H 99/06/14 14.59 19.36 CXY Canadian Occidental Petroleum #
B 99/10/05 22.94 22.81 DGEN Data General
(acquired by EMC on 99/10/07 .3125 to 1)
B 99/04/06 132.13 73.00 EMC EMC (split on 99/05/28 2:1)
H 99/08/09 86.31 39.81 ENE Enron Corp (split on 9/08/13 2:1)
H 99/06/14 31.13 42.75 ERICY Erickson
B++ 99/04/06 51.50 71.00 FLEX Flextronics
SELL 99/09/07 60.19 38.25 GENZ Genzyme
B++ 99/06/14 60.14 78.44 GLW Corning
SELL 99/08/09 48.75 37.56 HAL Halliburton Co
B 99/09/07 113.75 166.88 JDSU JDS Uniphase Cp #
B++ 99/04/06 60.83 69.89 LLTC Linear Tech Corp
B 99/04/06 32.75 53.19 LSI LSI Logic
H 99/05/12 25.06 20.06 NOVL Novell
B 99/04/06 163.19 115.56 NOK Nokia (split on 99/04/09 2:1)
B 99/04/06 65.66 61.89 NT Nortel Networks # (split on 99/08/19 2:1)
B++ 99/10/05 46.69 47.56 ORCL Oracle System
B++ 99/06/14 93.56 103.94 PHG Phillips Electronics
B++ 99/05/12 106.06 94.25 PMCS PMC Sierra (split on 99/05/14 2:1)
B++ 99/05/12 49.88 42.38 QLTI QTLI Phototherapeutics #
(split on 99/10/12 2:1)
SELL 99/06/14 21.39 21.03 SDC Santa Fe International
B+ 99/06/14 35.97 57.23 SFA Scientific Atlanta
B+ 99/04/06 53.75 75.25 SLR Solectron
B 99/08/19 129.02 159.75 SNE Sony
B++ 99/04/06 130.94 105.81 SUNW Sun Microsystems (split on 99/04/06 2:1)
H 99/08/06 31.00 26.00 TLM Talisman Energy Inc #
H 99/04/06 109.48 89.70 TXN Texas Instruments (split on 99/08/16 2:1)
B+ 99/10/05 50.27 56.27 WMT Wal-Mart Stores
B 99/09/27 186.00 179.06 YHOO Yahoo!

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

B 99/04/06 8.88 12.88 IFN India Fund
B+ 99/04/06 8.05 13.17 JOF Japan OTC Equity Fund

Stockscom