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Weekly Market Update: Watching those earnings

Weekly Market Call

Oil prices fell again though they made a comeback on Friday amid colder weather and Boone Pickens still looking for $70 a barrel before the year is out. Earnings season continued with disappointments from several tech bellwethers (Intel, IBM, Apple, Motorola). Some of the large caps (GE, Citi) did OK and kept the ongoing rally from flagging too badly. In general, earnings thus far are not setting the world on fire but are not causing investors to rush to the exits. Next week, the pace of reporting picks up and we'll get a better look at what 2007 might hold in store.

On the other hand, the averages did look a bit tired this week. Nevertheless, the Dow and the S&P 500 continue in their respective uptrends. The tech-heavy NASDAQ 100 was weak but not weak enough to have TradeRadar flash the SELL signal. Still, I am uncomfortable. There are a number of warning signs. The TradeRadar chart for QQQQ has been vacillating over the last few weeks. Tech sectors like semiconductors have been selling off and then perking up at the last minute as they did Friday. The tech bellwethers mentioned above displayed various problems (even Apple, who carried the market the week before last). Some delivered great earnings (Apple, of course) and others delivered lackluster earnings or news of job cuts (Motorola). All of them, however, have delivered downbeat forecasts for upcoming quarters. We may need to accept that the QQQQ still has a real potential to go sideways or even correct over the next few months.

ETF Comments

For those of you who are holding XLK, the tech ETF, it is exhibiting the same characteristics as the QQQQ. It is off its high but still no TradeRadar SELL signal. We mentioned oil in the first part of this post. It you are still holding XLE, the energy ETF, be aware that it has made a higher high and a higher low compared to previous peaks and valleys. It has dropped just below its 200-day moving average and crossed above it again with Friday's close. This is behavior that it has repeated twice before and then rallied significantly. TradeRadar's SELL signal at the recent peak back in December was not particlulary strong and there is now a weak BUY signal developing. Don't be surprised to see XLE bounce up from these levels. Then there is IYR, the US Real Estate ETF. In spite of all the handwringing over the current real estate market, this ETF shows no signs of stopping, hitting a new 2-year high this week.

Trade Radar Stock Picks

Taragon (TARR) disclosed this week that it had sold apartments in Connecticut for over $30M. The stock moved up to close the week at $11.67, a few cents above our recommended purchase price.

PacificNet (PACT) delivered still more upbeat news this week. They received an order for slot machines and announced an agreement to provide services to China's State Tax Bureau. The stock is still seeing some profit taking but the trend remains up and we continue to be holders at this point. PACT closed the week at $6.58, showing over a 25% gain thus far.

Generex (GNBT) had been a disappointment but the stock has perked up lately, possibly on bird flu concerns, and despite profit taking, managed to hang on to some gains this week. At least we are back in positive territory, closing at $1.76 with a 4% gain.

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