Wow! What a corrupt financial system. Like Warren Buffett says; "You don't know who has been swimming naked until the tide goes out." If there is a positive aspect to corruption, it's that it sets up tremendous buying opportunities.

Seeing all the corruption in one of the most corrupt nations in the world, many investor feel as if they had been raped. Here's a case that was on Judge Judy not long ago;

Judge Judy to prostitute, 'So when did you realize you were raped?'

Prostitute, wiping away tears: 'When the check bounced.’

In bull markets, investors are reluctant to sell. There are many reasons why, but the reasons are absurd. Investors begin to think that the good times will never end, then when an investor asks their accountant what to do, they always discourage selling in fears of potential taxes on capital gains. Obviously accountants don't understand the meaning of buy low, sell high.

Despite all the bad news; weak earnings, a terrible economy, and uncertainty over the stimulus plan, I feel that stocks are in the early stages of a cyclical recovery. If economy bottoms the
middle of 2009, the stock market will anticipate this in advance. Often, the stock market leads the economy out of its doldrums.

The stock market has been nothing short of a horror show. If you are a horror picture freak, you know that they always end the movie with the bloodiest scenes.

The S&P 500 broke below support at 820, closing in on the November 20th lows of 741. Some market pundits are calling for another leg down (the bloodiest scene), which could drive the S&P to long term support in the mid 600's.

For those who follow the markets historically, you know that Bear Markets have five stages of grief:

1) Denial
2) Anger
3) Negotiation
4) Depression
5) Acceptance

The selloff in October and November had all the classic signs of the 4th phase which is depression. Now we have quickly approached the final capitulation phase which isacceptance. I don't know if we are staring at the bottom of the final phase now, or whether it will be later in the mid 600's on the S&P.

What I do know is retests of previous lows do happen. The October 2002 primary low was retested in March 2003, and the October 1974 primary low was retested in December 1974. We will find out soon whether the latest selloff ends up being a retest or another leg down.

While these are scary times, we need to keep in mind that the costs of missing the early stages of a market recovery can be significant. Investors who run to cash during bear markets miss some of the the largest percentage returns o record.

Oddly, new bull markets are often not recognized until the stock market has already increased
20%. The emotions of feeling safe cause many to miss a sizable portion of a bull market’s gain.

For this I must quote Mr. Buffett again; "Be fearful when others are greedy, be greedy when others are fearful."

Here are our Top 10 ETF's for the week of February 23rd:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) GLD: SPDR Gold Shares
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust

Here are our Top 10 Fidelity Sector Funds for February 2009

1) FBIOX: Biotechnology
2) FSPTX: Technology Portfolio
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSCPX: Consumer Discretionary
6) FSCSX: Computers & Software
7) FSCHX: Chemicals
8) FNARX: Natural Resources
9) FSENX: Energy
10) FSRBX: Banking