Intermediate-Term Report

July 23, 2004
Tsutae Kamada

As we can see clearly on
the weekly charts, the major indices are trapped in the declining channels.
The NASDAQ Composite is now touching the bottom of the channel, but
the DOW and the S&P 500 are not there yet. Of course, touching the lower
boundary does not promise halting the decline. In fact so often oversold
condition would become even more oversold.

What should we do? Wait for kinder market environments? If you are willing to
risk some of your money, I want you to consider one idea.

As I stated, the major indices are trading in the declining channels. So many
breakouts are failing in this market environments. Instead of looking for strong
stocks, why don’t you pick stocks showing the same behavior as the market
indices. Yes, I’m suggesting to select stocks exhibiting the same weekly chart
pattern as the indices.Â Â

Let me give you one example. Comverse Technology (CMVT) is one of the S&P
500 component stocks. I want you to see the two charts below. They are almost
moving exactly the same way. This similar behavior will help us to time the
entry point. Wait till the S&P hit the bottom of the channel and observe CMVT.
Go over all the S&P 500 component stocks, and experiment!