Market Outlook Promising

We are starting to see some very solid bullish activity taking place. Yes indices are extended but since we are not trading the indices it is the performance of the underlying stocks that is most important to us. Last August market indices took a strong ride up that lasted into late December. During that market rally the performance of underlying stocks generally did not reflect a strong correlation to the activity of the indices themselves. Breadth was weak and the rally had a much greater effect on blue chips than it did on small caps. During the late 2004 rally our performance was moderate at best and we stopped out of our fair share of failed breakouts. Flash back to 2003 during which the market trended solidly higher throughout the year. During this rally breadth of underlying activity was strongly correlated to the strength of the indices themselves and small caps led the way as blue chips lagged. In 2003 we were enjoying months of 20% and more gains consistently. Now, step forward again to this current rally. It is beginning to “feel” a lot like early 2003. We are not seeing breakouts fail. In fact, we are seeing stocks take off without pullback. And, while indices themselves become extended, we are seeing profits skimmed off the top being redistributed into lagging stocks. Stocks like CHTR, which have been in long drawn out tail spins are now getting squeezed. We are not completely there yet, but the outlook for a projected repeat of 2003 is shaping up rather nicely; and hope for this repeat is not without foundation.