John Mugarian's Dynamic Growth

Today's 362 point sell-off is a reaction to yesterday's Fed Statement, High Energy Prices, a CIBC warning that Citigroup (C) may have to cut its dividend, and the REAL possibility of a recession.

The first thing irritating investors is the Fed's policy statement that said " economic and inflation concerns were equally balanced" which simply means don't expect any more rates cuts in the immediate future.

Wall Street is scared if the Fed does not continue lowering rates, the economy will fall into recession, and the sub-prime/CDO market will remain in turmoil.

In reality, if the Fed continues to lower rates, a recession will happen anyway since a falling dollar and high oil prices will continue to take disposable income from consumers.

I found yesterday's news on MasterCard (MA) quite interesting. The stock soared 32.76 points to $189.91 after profits increased on a boost in cardholder spending. Not to be a skeptic, but this morning we received news that home foreclosures doubled from a year ago. Since consumers home equity has essentially dried up (household ATM machines), one can assume that home equity extractions have been replaced by credit cards.

Dynamic Growth ETF Portfolio

NEW BUYS:

ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .542

NEW SELLS:

To Honorable Mention:

IHI- DJ Medical Devices- .373

Here are our Top 10 ETF's for the week of November 4th:

1) PGJ: PS Golden Dragon China Fund- .803
2) FXI- iShares FTSE/Xinhua China 25- .764
3) EEB: Claymore ETF BNY BRIC- .641
4) ITA- iShares DJ Aerospace & Defense-.618
5) IAH- Internet Architecture HOLDRs Trust-.579
6) PPA- PS Aerospace & Defense- .576
7) IXP: Telecommunications Sector Index Fund- .567
8) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .542
9) EWM: MSCI Malaysia (Free) Index- .492
10) EWS: iShares MSCI Singapore (Free) Index Fund-.460

Charts of our Top 10 ETF's

Honorable Mentions:

OIH: Oil Services HOLDRS- .385
IHI- DJ Medical Devices- .373

Here are our Top 10 Fidelity Sector Funds for November:

1) FSESX- Energy Services
2) FNARX: Natural Resources
3) FWRLX- Wireless
4) FWRLX: Natural Gas
5) FSENX- Energy
6) FSPTX: Technology
7) FDCPX: Computers
8) FSDAX: Defense & Aerospace
9) FSDPX: Materials
10) FSCHX: Chemicals

New Buys:

From HM to top 10:

FSNGX- Natural Gas
FSPTX: Technology

From Top 10 to Honorable Mention (Holds):

FDFAX: Consumer Staples

Honorable Mention (Holds):

FDFAX: Consumer Staples

Top 5 Stocks in our Top 10 Fidelity Sector Funds

FSESX- Energy Services:

SCHLUMBERGER LTD
NATIONAL-OILWELL VARCO INC
HALLIBURTON CO
GLOBALSANTAFE CORP
TRANSOCEAN INC

FNARX: Natural Resources:

EXXON MOBIL CORP
SCHLUMBERGER LTD
NATIONAL-OILWELL VARCO INC
CONOCOPHILLIPS
VALERO ENERGY CORP

FWRLX- Wireless:

RESEARCH IN MOTION LTD
VODAFONE GROUP PLC SPON ADR
NOKIA CORP SPON ADR
QUALCOMM INC
MOTOROLA INC

FWRLX: Natural Gas:

QUICKSILVER RES INC
RANGE RESOURCES CORP
VALERO ENERGY CORP
ULTRA PETROLEUM CORP
PLAINS EXPLORATION & PRODTN CO

FSENX- Energy:

EXXON MOBIL CORP
SCHLUMBERGER LTD
VALERO ENERGY CORP
NATIONAL-OILWELL VARCO INC
CONOCOPHILLIPS

FSPTX: Technology:

CISCO SYSTEMS INC
GOOGLE INC A
APPLE INC
RESEARCH IN MOTION LTD
MARVELL TECHNOLOGY GROUP LTD

FDCPX: Computers:

APPLE INC
DELL INC
HEWLETT-PACKARD CO
EMC CORP
INTL BUS MACH CORP

FSDAX: Defense & Aerospace:

LOCKHEED MARTIN CORP
GENERAL DYNAMICS CORPORATION
RAYTHEON CO
BOEING CO
PRECISION CASTPARTS CORP

FSDPX: Materials:

MONSANTO CO NEW
DUPONT (EI) DE NEMOURS & CO
FREEPORT MCMORAN COPPER & GOLD
DOW CHEMICAL CO
ALCOA INC

FSCHX: Chemicals:

MONSANTO CO NEW
DUPONT (EI) DE NEMOURS & CO
DOW CHEMICAL CO
AIR PRODUCTS & CHEMICALS INC
CELANESE CORP SER A

Notes:

As you can see from the Top 5 stocks in each fund, the markets performance has become increasingly narrow, and the best performing funds hold many of the best performing stocks.

The NASDAQ 100 is up over 400 points since the beginning of the year, and 230 points of those points can be attributed to three stocks listed above; Google (GOOG), Apple (AAPL), and Research In Motion (RIMM).

The Energy sector continues to be strong as does Defense & Aerospace, Chemicals, and Wireless telecommunications.

The Week in Review:

The stock market continues to be extremely volatile as financial shares continue to come under pressure from worries over of further asset write-downs related to sub-prime mortgages.

Merrill Lynch had its biggest one-day decline in six years, falling 4.91 to 57.28. And Citigroup Chief Executive Charles Prince is expected to resign at any time. On Friday, shares of C closed down 78 cents at 37.73 following rumors that an emergency board meeting will force Price out this weekend.

Last week, Merrill Lynch CEO Stanley O'Neal got the boot after the company took an $8.4 billion write-down from losses incurred in collateralized debt obligations (CDOs).

Here's the way I see it, either many of our nation's best banks are screaming buys, or things are so bad that we may go into a depression.

Since I don't believe we are headed for a depression, 5.8-8.0% dividend yields look pretty attractive to me. Check out the dividends on these bank stocks. Oddly, many of these shares also look attractive to company insiders.

Bank of America (BAC 43.31, -2.25) dividend yield= 5.91%

Insider Buying:

BARNET WILLIAM III, 2007-11-06, 11,000 shs @ $45.5
RYAN THOMAS M, 2007-11-06, 3,000 shs @ $45.13

Wachovia Bank (WB 40.43, -2.77) dividend yield= 6.31%

Insider Buying:

BAKER JOHN D II, 2007-11-02, 5,000 shs @ $42.70
BAKER JOHN D II, 2007-10-24, 10,000 shs @ $44.80
SMITH LANTY L, 2007-08-29, 50,000 shs @ $48.15
RADY ERNEST S, 2007-08-28, 40,000 shs @ $49.12

Mr. Rady is on the Forbes billionaire list and Beneficially Owns or controls 27,950,269 WB shares.

Regions Financial (RF 23.93, -1.56) dividend yield= 6.35%

Insider Buying:

MAUPIN JOHN E JR, 2007-09-05, 500 shs @ $30.83
PEREZ JORGE M, 2007-08-10, 33,058 shs @ $30.34

Fifth Third Bancorp (FITB 27.78, -1.95) dividend yield= 6.04%

Insider Buying:

Sankaran Mahesh, 2007-10-25, 1,250 shs @ $29
Drucker Charles, 2007-10-22, 3,000 shs @ $29.84

***Cincinnati Financial Corp sold 5,500,000 shs @ $29.5, but they are a 10% owner in FITB and still own 67,280,560 shares.

Huntington Bancshares Inc. (HBAN) dividend yield= 6.71%

Insider Buying:

LAUER DAVID P, 2007-10-23, 1,000 shs @ $17.09
LAUER DAVID P, 2007-08-07, 450 shs @ $18.45
LEVY JONATHAN A, 2007-08-16, 2,000 shs @ $16.73
BIGGS RAYMOND J, 2007-08-15, 10,000 shs @ $16.69
Nelson James W, 2007-08-13, 1,176 shs @ $17.1

More Banks With Insider Buying:

SUNTRUST BANKS (STI)
FIRST HORIZON NATIONAL (FHN)
WABASH NATIONAL (WNC)
CAPITOL BANK (CBC)

I am not recommending one particular bank, but I think it is important that you do your homework and begin making a list. Here is today's insider report. Watch it daily, and pick a stock(s) that looks suitable for you.

At the BancAnalyst Association of Boston's annual conference, the CEO of BB&T bank said that "this is the best buying opportunity you will ever have for bank stocks in years".

I don't only agree, I am convinced that recent broker downgrades of some of the nation's best banks make a strong case for why the stocks are buys.

Here how analysts operate;

Since their largest paying clients are hedge funds and mutual funds whose performance results are scrutinized monthly, analysts only issue buy recommendations on stock they think will perform immediately, or over the next month or two.

Putting it another way, analysts are not value investors, they are traders.

Buy recommendations with price targets out 12 months are a joke. In order to be ranked highly by institutional clients in "Institutional Investor" analysts must come up with hot picks that will perform now.

Why?

Sell-Side analyst’s compensation is often tied to rankings in "Institutional Investor", and the financial rewards are greater if an analyst is placed on the magazines "All-American Research Team".

According to a survey by Institutional Investor, analysts who earned top spots on the "All-American Research Team", “made $1.4 million in 2006, which is 2.4 times higher than the average pay for all senior analysts".

In the June 30, 2007 reporting period, Warren Buffet purchased 8,700,000 shares of Bank of America (BAC). I am willing to bet the next report we receive will reveal that Buffett added to his bank holdings during this recent pullback.

I believe investors with a 2-3 year time horizon will be amply rewarded once the bad news in the banking industry ends. When banks begin to announce good news, and the stocks are up 20-30% from current levels, analysts with 2-3 month time horizons will jump back on the band-wagon.

Dynamic Growth ETF Portfolio

To Honorable Mention:

IAH- Internet Architecture HOLDRs Trust- .283

Back to Top 10:

OIH: Oil Services HOLDRS- .383

Here are our Top 10 ETF's for the week of November 12th:

1) FXI- iShares FTSE/Xinhua China 25- .604
2) PGJ: PS Golden Dragon China Fund- .595
3) EEB: Claymore ETF BNY BRIC- .590
4) ITA- iShares DJ Aerospace & Defense-.588
5) IXP: Telecommunications Sector Index Fund- .516
6) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .514
7) EWM: MSCI Malaysia (Free) Index- .513
8) PPA- PS Aerospace & Defense- .504
9) EWS: iShares MSCI Singapore (Free) Index Fund-.421
10) OIH: Oil Services HOLDRS- .383

Charts of our Top 10 ETF's

Honorable Mentions:

IHI- DJ Medical Devices- .368
IAH- Internet Architecture HOLDRs Trust- .283

Notes:

The DJ Medical Device fund (IHI) is still hanging tough, but the Internet Architecture HOLDRs Trust (IAH) came under pressure last week.

IAH has a strong portfolio of stocks which includes Apple, Cisco, Dell, and IBM. I don't think the party is over just yet. In fact I wouldn't be surprised to see a tech rebound in the days ahead. And yes, included in this tech rebound we may even see resurgence in Google (GOOG), Research in Motion (RIMM), and Garmin (GRMN).

Sometimes I have to sit back, shake my head and chuckle when I hear momentum players tell value investors that its too early to buy value stocks.

For example, as I was watching many of the bank stocks out pace the Dow, S&P, and NASDAQ by a margin of 2 to 1, I read where Jim Cramer's- The Street.com- downgraded shares of Wachovia Bank (WB) from buy to hold.

The first point here is very simple. When someone recommends a buy, sell, or hold on any stock, you better know if that person is a momentum investor, or a value investor. If you are a value investor, do yourself a favor and ignore momentum players. The opposite is also true.

Jim Cramer, who I happen to like, is a momentum player. You have to be a momentum player to muster up the courage to buy RIMM, AAPL, GOOG, FWLT, and GRMN at these P/E's and prices.

While the Street.com was downgrading Wachovia (WB $46.27 +$3.11, or 7.65%) from buy to hold, Wachovia insider and director Lanty Smith ignored "the order" by purchasing an additional 100,000 shares at $38.70 last friday.

Lanty Smith and other Wachovia insiders have been actively buying large blocks of stock since August.

At 2:59 pm ET,a Reuters article said that the Associated Press reported a rumor from an "unnamed official" that Delta Air Lines and United wre in merger discussions. Who is this "unnamed official"?

The stock open at $18.70, down 5 cents from yesterday's close, and shot up to a high of $21.10 by 3:06 ET. At 3:47 ET, a Reuters article announced "Delta denies merger talks with UAL".

Either someone is lying, or someone successfully manipulated the stock.

Oh, by the way, I am still waiting to hear who had those large put options on the airline stocks on September 11th.

I don't even want to hear anything about the Toronto Exchange being crooked.

I'll leave the rest to your imagination.

Today's Market

Trading today has been extremely volatile as the Dow was up as much as 62 points before closing down 83 points on the day.

Yesterday's rally was based on optimism that the worst of the credit crunch is behind us. I wish it were that easy, but I've always believed that things are never as good, or as bad as what we are led to believe.

I hate to say I told you so, but in my November 9, 2007 "Journal" post, I said;

"In the June 30, 2007 reporting period, Warren Buffet purchased 8,700,000 shares of Bank of America (BAC). I am willing to bet the next report we receive will reveal that Buffett added to his bank holdings during this recent pullback."

Well, the cats out of the bag. This is exactly what Warren Buffett did.

While Wall Street, and the momentum gang (hint: "don't buy, don't buy, don't buy") want you to focus on the short term, value players know what to look for.

Please keep in mind Buffett's recent bank additions were purchased from June 30th-September 30th of this year. So, if you feel like you got in too early, don't worry, so did one of the richest men in the world.

If you got in too high, what do you do? Always, and I mean always, dollar cost average in. For example, if you know you want to buy 1000 shares of a company, buy the shares over time in smaller increments.

As of September 30, 2007, Buffett added 28.4 million shares of U.S. Bancorp (USB), 22 million shares of Wells Fargo (now owns 280 million shares), and 400,000 shares of Bank of America (BAC).

I am confident the December 30, 2007 quarterly filing will reveal more additions to this beaten down sector.

Dynamic Growth ETF Portfolio

NEW BUYS:

EWZ: iShares MSCI Brazil Index- .597

NEW SELLS:

To Honorable Mention:

OIH: Oil Services HOLDRS- .368
EWS: iShares MSCI Singapore (Free) Index Fund-.380

Back to Top 10:

IHI- DJ Medical Devices- .381

Here are our Top 10 ETF's for the week of November 19th:

1) FXI- iShares FTSE/Xinhua China 25- .578
2) EWZ: iShares MSCI Brazil Index- .597
3) EEB: Claymore ETF BNY BRIC- .671
4) PGJ: PS Golden Dragon China Fund- .570
5) IXP: Telecommunications Sector Index Fund- .559
6) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .540
7) ITA- iShares DJ Aerospace & Defense-.531
8) EWM: MSCI Malaysia (Free) Index- .507
9) PPA- PS Aerospace & Defense- .504
10) IHI- DJ Medical Devices- .381

Charts of our Top 10 ETF's

Honorable Mention:

IAH- Internet Architecture HOLDRs Trust- .322
EWS: iShares MSCI Singapore (Free) Index Fund-.380
OIH: Oil Services HOLDRS- .368

Notes:

Brazil, along with the rest of the Latin American ETF's are gaining strength. The Internet sector (Internet Architecture HOLDRs Trust- IAH) is beginning to stabilize. With oil prices hovering around $94/bbl, the energy sector ETF's continue to remain weak.

I continue to believe that traders will see a tech rebound which is good news for Google (GOOG), Research in Motion (RIMM), and Apple (AAPL).

Last Monday, we highlighted Garmin (GRMN), and the stock jumped 18 points from a Thursday close of 84 to a high of 102 on Friday.

Hey! What Happened to Goldilocks? She seems to be leaking like a SIV!

I had to look it up, but here are a few definitions of SIV in non-financial terms;

SIV--Webster's Medical Dictionary: a lentivirus that causes a disease in monkeys similar to AIDS and that is closely related to HIV-2 of humans called also simian immunodeficiency virus.

I like this one better;

SIV-- Self-Inflicted Violence

and of course the financial definition is;

SIV-- Structured Investment Vehicle:

I reality, all three SIV definitions are different, but are having the same effect.

Structured Investment Vehicles (SIV) are investments created by Wall Street chimps. These investments have come in contact with humans (Simian immunodeficiency virus -SIV) who invested in the stocks of companies holding SIV's. In turn, (and without intention) these SIV's are harming investor portfolio's, while causing some to unintentionally (SIV-Self-Inflicted Violence) "injure themselves" by "excessive nail biting, pulling out one's own hair, hitting or bruising one's self as a method of coping" for investing in company's holding SIV investments.

This morning, Freddie Mac (FRE) reported a $2 billion quarterly loss on defaults of home mortgages, and continued deterioration of credit.

Congress can shoulder most of the blame for many of these bad loans since they were insistent that credit issuers loan money to those who did not have the propensity to make the monthly payment. In addition, Donald Trump wannabes are finding they weren't as smart as they thought. Some people speculated on 10 properties when their finances could only handle one.

I think they call this "Champaign taste, Coca-cola pocketbook" or "Big hat, No Cattle".

As for Goldilocks, well, she is looking for support from the Government and our nations largest banks to help relieve her emotional distress. I think she'll get all the help she needs.

Like I said this in this week's Newsletter Briefing; "Throughout our history, the track record is clear. Solutions to major problems always appear."

Many senior Wall Street traders and corporate executives left early yesterday to enjoy the long Thanksgiving holiday. As I was combing through the latest insider buying and selling data, I noticed that activity was unusually light.

On Friday, the equity markets will close at 1:00 pm ET, so expect some wild gyrations today and Friday.

Here's what's going on;

-Oil prices are just shy of the $100/bbl mark adding more misery to consumer’s pocketbooks. Don't you find it odd that oil prices jumped over $3 per barrel just before the Thanksgiving holiday?

The excuse for the rise in oil was the dollars drop against the Euro. The Dollars fell as investors felt the Fed would lower interest rates after their December 11th meeting. This information became apparent after Freddie Mac (FRE) warned it may have to cut its dividend because of losses related to home foreclosures.

The Set-Up for the Perfect Storm

Here are three events that are coming together to form the Perfect Storm. The only question now is how are the financial markets going to handle it, and are the pieces in place to keep us from repeating past disasters. In some cases there are; in other cases, I'm not so sure.

1) Inflation: Without a doubt we are experiencing an inflation rate similar to the early 1970's. Milk prices are around $5.00/ gallon, commodity prices are out of control, energy prices are at all-time highs.

One of the pieces in place to avoid a disaster is the flaw in the U.S. governments reporting of the PPI and CPI numbers. If these numbers accurately reflected the real inflation rate, the stock market would be much lower, and interest rates would be much higher.

The good news here is the government data does not accurately reflect the inflation rate, so the Fed can use the current inflation numbers to justify lowering interest rates.

Since Gold prices don't lie, you and I know what the real story is. But, for the time being, let’s be glad the numbers don’t tell the real story.

Dynamic Growth ETF Portfolio

NEW BUYS:

SLX: Market Vectors Steel Index Fund- .557
KXI: Global Staples Sector Index- .560

NEW SELLS:

IAH- Internet Architecture HOLDRs Trust- .286

SWITCHES:

To Honorable Mention:

PPA- PS Aerospace & Defense- .455
IHI- DJ Medical Devices- .372

Here are our Top 10 ETF's for the week of November 26th:

1) KXI: Global Staples Sector Index- .560
2) SLX: Market Vectors Steel Index Fund- .557
3) EEB: Claymore ETF BNY BRIC- .559
4) FXI- iShares FTSE/Xinhua China 25- .544
5) IXP: Telecommunications Sector Index Fund- .534
6) ITA- iShares DJ Aerospace & Defense-.532
7) PGJ: PS Golden Dragon China Fund- .528
8) EWZ: iShares MSCI Brazil Index- .523
9) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .481
10) EWM: MSCI Malaysia (Free) Index- .470

Charts of our Top 10 ETF's

Honorable Mentions:

PPA- PS Aerospace & Defense- .455
IHI- DJ Medical Devices- .372
EWS: iShares MSCI Singapore (Free) Index Fund-.375
OIH: Oil Services HOLDRS- .386

Notes:

We added two new ETF's to the Top 10; KXI: Global Staples Sector Index, and the SLX: Market Vectors Steel Index Fund.

If the Fed continues to lower rates, the dollar will remain weak, and commodity prices will do well.

If all goes according to plan, we will get a nice rally into December, and possibly into January before the news gets bad. What news are we talking about, how about disappointing retail sales, corporate layoffs, and yes, a recession?

Adding to our conviction that a (year-end??) rally is building we highlighted four stocks that we thought traders could jump on as a trade. The four stocks I highlighted two weeks age were; Google (GOOG), Research in Motion (RIMM), Garmin (GRMN) and Apple (AAPL).

All four have rallied sharply from their lows, and Garmin jumped 18 points in one day. I wouldn't be surprised to see all these stocks re-test their 52 week highs.

Oh, by the way, once we get the newsletter up and running for subscribers, I will be adding a Top 10-15 stock portfolio to go along with our top 10 Fidelity Sector Fund, and ETF portfolios. Sorry it has taken so long, but the behind the scene technicians have been very slow in making the transition.

Week In Review:

The official definition of a recession is two or more successive quarters of negative GDP growth. What we have witnessed thus far is a decline in economic activity in real estate, lending, and now retail sales. After the first of the year, the layoffs will begin, and I think Detroit will begin to announce news of layoffs in the auto industry.

Think about it for a moment. Is there anyway to avoid a recession given all the economic calamities that have taken place over the past 12 months? I don't think so.

My job is not to be diplomatic, put lipstick on a pig, or tell you everything is fine when it isn't. My job is to call'em as I see'em.

This morning the "Black Friday" retail sales spin began. I think I heard something like "foot traffic was up, but sales were slightly lower than last year." I knew something like this was going to happen. All I have to say is I hope the spin is good because the moods of consumers are not.

On Sunday, my wife and I went to a large outlet mall in Foley, Alabama. This is a very popular shopping destination for middle income consumers, and I was shocked that so few people were out shopping.

Maybe it was the hangover depression over the outcome of the Alabama-Auburn game, or is the economy a lot worse than what we are being told.

You'll have to excuse the contrarian in me, but I am beginning to see the pieces fall into place for a nice rally. We need a few things to happen in order for that to happen.

1) The markets normally do not reverse the morning after a weak close. After falling 237 points and closing at the lows for the day, any rally on the open today has to be looked at with a high degree of skepticism.

In order for a market to end its current correction cycle, we need to see a large sell-off intra-day and a large rally on high volume into the close.

2) Most market bottoms occur on days of panic selling, better known as capitulation. A capitulation is a major washout (down 300-500 points) that would set the stage for a major rally into December.

Today, a perfect scenario for a washout would occur if the Dow Jones Industrials sold off to around the 12,500 mark, reversed, and rallied sharply into the close. This would set the stage for a major year-end rally.

Today, the financial channels are touting the famous mantra of "10% and done." This simply means we have had a normal 10% correction, and as in past years we can expect a rally. They are right to an extent, but not before you have a capitulation day, followed by an intra-day reversal.

The big news of the day is Citigroup's (C) 4.9 percent asset sale to the Muslims of Abu Dhabi.

Sorry, to cut this short, but I have to go. If the day unfolds like I described above, there is a lot of money that can be made.

Look at buying a few shares of SSO when the Dow nears 12,500.

Have a great day!

Yesterday, I said;

"In order for a market to end its current correction cycle, we need to see a large sell-off intra-day and a large rally on high volume into the close."

"Today, a perfect scenario for a washout would occur if the Dow Jones Industrials sold off to around the 12,500 mark, reversed, and rallied sharply into the close. This would set the stage for a major year-end rally."

Well, we never got the washout, or capitulation that I was looking for. This tells me that the current rally we are witnessing is being driven by short covering. These rallies could be very violent on the upside, and provide enough buying power to drive the major market averages back near their highs for the year.

Most short covering rallies are mysteriously induced by what is now known as the "Plunge Protection Team”, also known as Executive Order 12631- Working Group on Financial Markets, signed into law by President Reagan after the 1987 market crash. Given all the negativity surrounding write downs for bad loans, and the popping of the credit market and real estate bubble, something had to be done to avoid a major sell-off.

Yesterday, large buy orders hit the market between 3:00-3:30 ET. These orders were big enough to get the attention of short sellers, and drive some cash off the sidelines as well.

This morning we are seeing some follow-through buying which adds to our conviction that this short-covering rally could be good for a 1000 point pop.

Hopefully, we will get enough follow-through into December to drive the Dow back to 14,000, and the S&P back to 1525. At these levels, we will adjust our allocation models down by 5-10%. Since I believe the economy will weaken further in 2008, I don't believe Monday's sell-off was "a market bottom".

Being a contrarian, I read an interesting article this morning. The Food Network said today that the show of Emeril Lagasse's, "Emeril Live" will be taken off the air. A few years ago, my wife an I enjoyed watching Emeril, and were fascinated with his cooking.

While walking through a department store before Christmas, I noticed Emeril cookware, seasonings, and just about anything else you can imagine. When I began to see the Food Network and merchandisers attempt to profit from Emeril's cult following, I told my wife "If Emeril was a stock, I would be shorting him right now". My instincts would have been right.

I had a good teacher by the way. One day, just after September 11th, I was talking with famed investor Jim Rogers. Jim made an astute observation when he said that "patriotism peaked on September the 12th". How's that for being a contrarian? I thought this was a very keen observation.

Here are a few contrarian thoughts;

1) The Dollar- the news is so bad, it is due for a sharp rally. Longer term, not ok. Look for our politicians to begin telling us that merging our currency with Mexico and Canada to form a new currency called the Amero will solve our currency problems (2-5 years from now). This is all part of the NAFTA con-job on the American people. Tune into Glenn Beck and Lou Dobbs for more info.

Are we at the beginning of a new bull market? No. Is the economy beginning to expand or contract? Contract. Can you make profitable trades during the November-April time-frame? Well of course!

In the poker game, Texas hold 'em, a each player only starts with two cards and the remaining cards are shared. This is a lot like placing your bets on a stock trade. Texas hold 'em involves playing relatively few hands, as does trading which involves playing relatively few stocks. The key is to have someone bet that your stock is going higher after you're in it, and have them raise their bids along the way.

The key of course is not to get greedy, and as Kenny Roger's said," know when to hold'em, and know when to close'em". I really don't care if the stocks go higher. In trading, you're in and out for the buck.

If you follow our stock/fund/ETF picks on Tipstraders.com, you'll see that we sold our three trading stocks (AAPL, RIMM, GOOG) yesterday. My opinion remains that we are not in a buy and hold market. I have very little interest in holding momentum stocks that are in the late stages of their advance.

While most investors hope to gain 10% in their portfolios over a 12 month time horizon, we were able to achieve those gains, and more, in just 12 trading days. Here are the results of our three trades. All trade calculations were compiled by Tipstraders.com.

AAPL: 12 day trade.

Paid $164.30 on 11-16-07
Sold $180.22 on 11-28-07= +15.92 points
Gain +9.69%/ 1,466% annualized

GOOG: 12 day trade.

Paid $629.65 on 11-16-07
Sold $692.65 on 11-28-07= +63 points
Gain +9.94%/ 1,577% annualized

RIMM: 12 day trade

Paid $103.01 on 11-16-07
Sold $121.35 on 11-28-07= +18.34 points
Gain +17.80%/ 12,983% annualized

I guess everyone will jump on the bandwagon now. I have been saying for several weeks that the crisis in the banking sector will eventually be resolved.

This morning, we woke up to news that Treasury Secretary Hank Paulson is in negotiations with banks to freeze the interest rates for some sub-prime ARM's that are due to reset in 2008.

For those who closely follow my comments, you know that I have been "pounding the table, beating the drum, and screaming from the mountain tops" that the " Banks Stocks Look like Incredible Bargains!”

Opportunities Abound!
Bank Stocks Soar!
Warren Buffett adds to Bank Holdings

Maybe my newest slogan will finally get the attention of the financial media;

"Throughout our history, the track record is clear. Solutions to major problems always appear."

In the weeks and months ahead, and as more and more solutions appear, watch how analysts begin jumping on the bandwagon, upgrading their opinions on the banking sector. After a 10-20% rally, you will be hearing buy, buy, buy!

Yesterday, Credit Suisse upgraded UBS from Neutral to Buy. What the heck does "neutral" mean? The dictionary says, "not aligned with or supporting any side or position in a controversy." So, in short, a neutral rating means "I don't have the guts to make a call; if the stock goes up I didn't say sell, if the stock goes down, I didn't say buy". And these people get paid for this kind of advice? Gutless, just gutless!

One of the reasons for the poor advice on Wall Street now days is the number of neophyte analysts who have poor judgement, and lack historical experiences.

In his new book, " Full of Bull", Stephen McClellan, who worked on Wall Street for 32 years says;

" Since 2000 the number of analysts has diminished by 40%, and is expected to fall by another 30% by 2008".

In the book he goes on to say that many of the best, and well seasoned analysts left the investment banks to take jobs with hedge funds and private equity. The people being hired to replace the experienced analysts are "Unseasoned, and Lack Historical Judgment."

Some of the analysts I see on TV were obviously intelligent enough to graduate with MBA's from respected business schools, but were also playing in their sand boxes in the 1980's when the last real estate bubble popped, and last banking crisis occurred.

In short, I don't listen to analysts.