Dow Jones Industrial Average   10,623
Value Line Arithmetic Index   1,814
30-Year Treasury Index   4.37%

The Big Picture for Stocks
The 4-year cycle for stocks is negative into 2006.

Technical Trendicator (1-4 month trend):
Stock Prices   Down
Bond Prices   Down

The level of bullishness on the dollar per the weekly Consensus survey rose to 93%. You can't get 93% of Americans to agree on anything. If they do, it is probably going to change. Accordingly, I am putting the Prudent Bear Income Fund (PSAFX, 11.48) on the Special Situations list. This fund is designed to be a hedge against the dollar. In other words, if the dollar goes down, this fund will go up in value. It invests in short term foreign denominated fixed income securities, as well as gold. A PDF file of their latest report is being sent to you separately by email. If you do not receive it, email me at cif@austin.rr.com for a copy.

I remain bearish on the markets and the economy, and continue to recommend shorting the ETF's we have on the Special Situations list.

However, there are small, though speculative companies around that have gotten so beaten up that there are opportunities to invest on the long side. Continue to buy the natural resource and emerging microcap growth stocks on our Special Situations list. The average annualized rate of return on all closed positions on this list is comfortably in excess 100%.