Financial Focus SAMPLE Newsletter

Financial Focus Newsletter
Financial Focus Advisory Services, LLC.
www.FinancialFocusAdvisoryServices.com
781-829-8626

September 7, 2005

REMINDER: Let Host America (CAFÉ) be a reminder to us all of what can happen with thinly traded stocks that get manipulated. CAFE began trading again last week and check out the damage to those sucked in late in the run.

Today's Suggestions:

Visteon (VC) buy 9.85, stop loss at 9.39, target 10.54. VC has been going up in steps. They appear to have based on Friday with a hammer under the 20-day moving average. Our first target is a double top, our secondary target is an ABC to 11.58.

Exelon (EXC) buy 55.00, stop 52.80, target 61.00. EXC broke through the "B" point of a mid-term ABC yesterday. We are targeting the ABC to 61.04 and put our stop just below the 20-day moving average.

This Morning:

Yesterday, the markets traded higher at the open and continued through the afternoon thanks to a drop in crude, refineries coming back on line, and positive comment from WalMart.

This morning the futures are flat to slightly negative.

Market Summary (updated each Monday):

We got the bounce we were looking for. This was purely a technical bounce given all of the negatives created by the hurricane. Now the question; is it real or is it just a bounce. We are sticking with our call from the week before, that we were showing signs of a short-term bottom, but too many indicators point toward a double top. If we take out the July highs then we can project further.

One indicator that we use as a contrarian indicator switched direction the prior week:
U.S. consumer sentiment sinks in late August, the first drop since May. The UMich consumer sentiment index falls to 89.1 in late August from 96.5 in July, below expectations. This could bode well for the retails. Our logic, it is not what the consumer is saying that matters, it is what they are doing, and as long as they keep spending as they have been, they can complain all they want. In fact, when they complain it lowers investor sentiment and expectations, and for the short term the retail stock prices. But if the retailer then simply meets their target then they will be rewarded. To the contrary, if the sentiment is high, so is the expectation. In an optimistic environment then you need not only meet but you have to beat to be rewarded. Since back to school is either last week or this week depending on your district, we will soon know.

The Vix and other had shown indications of a retracement coming, as it began to rise. The prior week we got a Doji and even with the fear of damage from the storm we closed this past week right were we closed last. Yet another neutral candle at resistance, see how it is hitting resistance where we would expect short-term lows to come in. (see financialfocusadvisoryservices.com/examples/vix.html).

The prior week we had the Stochastic showing oversold, this tends to indicate what the trader is doing, while the MACD was back down to the zero line, where it tends to rest on short term lows, though the last major low the MACD was down to -9. These along with the Vix tell the same story, we may hold for a short-term low here, but if we break we would drop to form a mid-term low. Last week we bounced while the MACD continued lower showing little investor participation, but the traders came in bringing the Stochastic up to 55.

Gold gained back another 6 points to 448.

The dollar lost about 3 points to the Euro closing the week at 125.54.

The yield on the 10-year note dropped sharply, breaking below 4% on Thursday and closed the week at chopped around but when the week was done it fell slightly to 4.03%.

Oil was the big focus last week as we have interruptions in drilling, piping and refining. What is wild is that the threat of the storm pushed the futures over 70.70 in the pre-market on Monday, yet when the feared damage was sustained, and is still not yet fully measurable, the price of crude closed the week at 67.58, up just a point from last week.

Next week's economic calendar:

Monday: Closed for the holiday.

Tuesday: ISM Services Index.

Wednesday: Store Sales, Purchase Applications and Beige Book Report.

Thursday: Initial Jobless Claims, Petroleum Status Report, and Consumer Credit.

Friday: Import/Export Prices.

The S&P closed at 1218, up 13 points for the week.

See the accompanying chart of the S&P 500 at http://financialfocusadvisoryservices.com/examples/sp500.html

The S&P recovered all but two points of the prior week's losses.

Last week we spoke of a minor low being in place, well it looks like she held and that we are bouncing, but we are not looking to take out the July highs.

The four or five weeks of choppiness with Doji's and Spinning Tops were not happily confirmed as we closed deep in the red the week before last. This is a bearish sign. However, as we discuss last week, there are some indicators showing that we may be at a minor low and that if those lows held we don't expect much more than a double top. Since we have taken out the 38.2% retracement so now we look for the 61.8. If we take out the 61.8% level then Fib's also tell us to expect no better than a double top.

We broke our first support level is around 1220. This is a 38.2% retracement of the recent leg up and it is the pivot that we punched through to get here. We also took out the 61.8% retracement by a couple of points. This came in at 1206.

Our next support level is around 1190.

To the upside we should find resistance at the recent high of 1245.

The next resistance point is 1253. This should be a major level because it is the 61.8% retracement of the drop from 2000 to 2003.

We also drew some longer term trend lines that also come in with resistance in this area. Click on the above link to see the charts.

The Dow closed at 10,447, up 50 points for the week.
See charts at http://financialfocusadvisoryservices.com/examples/dow.html

See our comments about the S&P as the Dow is following similar price action.

It too broke the first support of 10,500, and was setting right at the 61.8% level of 10,380. We took out the 10,380 on Monday morning.

Our resistance to the upside is the recent high of 10,717.

If we can follow through with some strength then our next target is a retest of the March high of 10,984.

The Nasdaq closed at 2141, up 20 points for the week.
See charts at http://financialfocusadvisoryservices.com/examples/nasdaq.html

The Nasdaq took out its first support level of 2150, 38.2% retracement of the recent leg up, though it bounced at 2112, slightly above the 61.8% level of 2108.

The next support level is 2100, the pivot that was taken out to get up to the recent highs.

To the upside we should now have resistance at the recent high of 2219.

Positions:

WebMethods (WEBM) buy 6.90, stop loss at 6.60, target 7.40. WEBM has been trending up, following the 20-day moving average. What is most attractive is the resistance at 7.50. If we can punch through then there is room to move to 8, then fill the gap at 8.34. Our stop is just below the recent low and the 20-day average. WEBM closed at 6.97.

Dell (DELL) buy 35.00, buy Sept 35 Put for .40, target 37.00. DELL is trying to hold support at 35 and we are grabbing at the bottom, this is why the put is suggested. The intra-day high for the past 5 or 6 sessions has been 35.50 so it would cover the cost of the put. Looking back you can see the support from the April low as well as the lower portion of the trading channel of the second half of last year. (buying the stock and the protective put is call "marrying" because they are at the same strike. This is also called a synthetic call, because it has very similar attributes, but there is a major difference. With a call your investment expires, with a synthetic call your investment lives on, it is your protection that expires.) We missed our entry by .05.

I-Shares Basic Materials (IYM) buy 48.00, stop loss at 46.80, target 50.50. This is a way to play the commodity and construction related materials. IYM has been in an upward sloping channel and put in a low last week at 46.85. The recent high was 50.75. IYM closed at 48.10.

United Health (UNH) buy 51.25, stop loss at 50.00, target 54.50. UNH pulled up off of support nicely yesterday. We are looking for a retest of the high of the recent channel with our stop just below the low of 50.09. UNH closed at 53.19.

Petro Brasileiro (PBR) buy 62.50, stop loss at 59.00, target 66.57. PBR has been on a very strong run and broke to a new high. We are targeting an ABC and put our stop under the pivot. You can tighten the stop but we are looking for a mid-term hold. (Brazil has been doing quite well, check out EWZ) PBR closed at 63.88.

Schering-Plough (SGP) buy 20.75, stop loss at 20.40, target 22.00. SGP pulled back to support at 20.50 and put in a bullish engulfing yesterday. We are looking for a retest of the recent high. Our stop is below the 20.50 pivot and the 50-day moving average. We hit on SGP.

Federal Home Loan (FRE) sell short at 60, stop loss at 61.50, target 56.00. FRE looks to being doing an ABC to the downside. They had a negative candle on Friday that shows no signs of holding the lows of early 2005. We are looking for an ABC down to 55.60. Our stop is near the 20-day moving average, it currently at 61.76 and sloping downward. FRE closed at 58.10.

Rural Metro (RURL) buy 9.60, stop loss at 9.00, target 11.00. RURL is relatively thinly traded so be aware of the added risks. RURL broke out over the past couple of days and has confluence at 11.06 - 11.11. This is a weak (.618) ABC on the mid-term and an extended (1.618) ABC on the daily. RURL closed at 10.03.

Martek Biosciences (MATK) buy 49.50, stop loss at 46.50, target 54.00. MATK broke through resistance at 46.80 on good volume Friday. They held strong yesterday. Mid-term they are trying to fill a gap left open from 4.28.05. They may find resistance just over 54 as we start to get to some investors' break even points. If they can completely fill the gap, that would take them up to 59.72. MATK closed at 50.37.

National Semi (NSM) buy 23.90, stop loss 23.00, target 25.75. NSM has retraced after reaching a high of 25.81 on 8/02/05. They are resting on the 50-day moving average at 23.25. We are targeting a double top. NSM closed at 25.08.

Corning (GLW) buy 18.90, stop loss at 18.25, target 20.38. Corning was on a nice run an u to 20.38 and recently pulled back to 18.30. They put a bottom in on Thursday and traded high on Friday. We are targeting a double top with a stop below Thursday's low. GLW closed at 20.06.

LSI Logic (LSI) buy 9.70, stop loss at 9.30, target 10.75. LSI has pushed back over the 20-day moving average. We are looking for a retest of the recent high of 10.75. A punch through would target an ABC up to 12.67. LSI closed at 9.72.

King Pharmaceuticals (KG) sell short at 14.00, stop loss at 15.05, target 12.00. KG climbed back up to resistance at the bottom of the gap left open from 5.06.04. However on the way up they put in a gap from 11.10 to 12.04. Candle pattern was bearish as they confirmed Wednesday's Doji with a Bearish candle yesterday. We are looking to pull back to the top of the gap. You can use a tighter stop of 14.65, just above the top of the Doji, but we are allowing for the long term resistance at the gap from 5.06.04. KG closed at 14.96.

Apple Computer (AAPL) buy 46.00, stop loss at 43.30, target 50.18. AAPL gained 2.30 as the rest of the tech market sold off. Apple punched to a new 52-week high. We are looking for an ABC on the daily and put our stop under Friday's low. You can move it up on intra-day strength or get a better risk/reward ratio if AAPL should slide a bit before your entry. AAPL closed at 48.80.

Zebra Technologies (ZBRA) sell short at 37.00, stop loss at 38.10, target 33.00. ZBRA continues to sell off and took out the low from 7.27.05. We are looking for the next level of support to come in at the bottom of the trading channel from late 2003. ZBRA closed at 36.86.

American Tower (AMT) buy 22.40, stop loss at 21.70, target 24.82. AMT pulled back to the 20-day moving average and held. Also offering support is the break out of the 7.11.05 high of 21.89. We are targeting an ABC to 24.82. AMT closed at 23.90.

Kerr McGee (KMG) buy 85.00, stop loss at 80.00, target 96.00. KMG broke out to what appears to be a head and shoulders on the weekly time frame. We are using A=55.38 B=83.30, C=68.24. the stop may be tight but it allows for the break point of 83.30 and last week's low of 80.24. KMG closed at 88.90.

QLT Inc (QLTI) sell short at 8.15, stop loss at 9.05, target 6.00. QLTI broke support at 8.38 and appears to be headed for an ABC down to 6.00. Our stop is above the "C" point of 9.00. QLTI closed at 8.93.

Comverse Technology (CMVT) buy 26.50, stop loss at 25.00, target 31.00. CMVT broke out over the past couple of days taking out the highs going back to December. We are looking for an ABC on the weekly to 32.18, but that would put us into the gap still open from July 2001. Our target is the high that is now the lower boarder of the gap. For quicker traders there may be some resistance at 28.00. CMVT closed at 25.83.

FedEx (FDX) sell short at 85.00, stop loss at 86.00, target 80.00. FDX gapped down then sold off to a low of 79.55 on 6.24.06, it has since drifted up to the bottom of the gap where it has been finding resistance at what is now the downward sloping 50-day moving average. We are looking for this resistance to hold and for FDX to retest the low of 79.55. FDX closed at 81.35.

Randgold Resources (GOLD) buy 13.70, stop loss at 12.70, target 15.08. This is for those that have been asking for gold stocks. GOLD has been out performing many stocks in the sector and it looks better than the price of gold. We are targeting the first resistance point of a double top at the recent high, but if gold can move off these low levels then GOLD could well break through. Bring the chart back to 2003 on a weekly timeframe to get a good look. GOLD closed at 13.58.

America Movil (AMX) buy 21.30, stop loss at 20,39, target 25.00. We are looking for an ABC on the weekly time frame. Our stop is below the 20-day moving average and the recent low of 20.44. AMX closed at 24.16.

Lions Gate (LGF) buy 9.25, stop loss at 8.75, target 11.00. We are looking to play the trading channel. This is the fifth time this year that LGF has pulled back to the 9's and held. We are looking for a return the upper end of the trading channel. We may look to 10.50 if we are losing momentum. LGF closed at 9.63.

Procter & Gamble (PG) buy 52.50, stop 51.00, target 56.50. PG is
sitting at the bottom of a trading channel that has been in place
since April of 2004. The upper end of the channel is over 56.50.
We are looking for rotation back into stocks like PG. We hit on PG.

Alamosa Holdings (APCS) buy stop at 13.50, stop loss at 12.60, target 18.00. AMSC is testing the January high of 13.48 on strong volume. If we can break through then we should be beginning the next leg up on the weekly time frame. The high was established on 1.20.05. Our target is the next below the next swing high of 18.70. Our stop is below the daily consolidation of the past couple of weeks as well as below the 20 and 50 day moving averages. APCS closed at 17.63.

Boston Scientific (BSX) sell short at 28.50, stop loss at 29.50, target 24.00. BSX has been trending down and is in the process of a light volume retracement. Our stop at 29.50 allows for resistance at the 20-day moving average, the 50 day moving average, the 61.8% retracement of the recent down leg and the top a gap left open from 5.26.05. Our target is an ABC projection of 24.09 a double top from 2003. BSX closed at 26.21.

Auto Nation (AN) buy 20.25, stop loss at 19.37, target 22.81. AN broke out to a new high, taking out daily and mid-term resistance at 20. We are looking for an ABC on the weekly. Our stop is below the low of 5.20.05. AN closed at 20.94.

Disclaimer:

This newsletter is intended for informational purposes only and should not be considered to be a solicitation or an offer to sell securities or investment advisory service. Trading in securities such as stocks and options involves significant risk and should not be done without serious independent study. Subscribers may make trading decisions based on the content of this newsletter but in no case will Leo Leydon or any affiliates be liable for any repercussions. Leo Leydon, affiliated parties and clients of related parties may hold positions or trade in securities included within this letter. The information contained in this newsletter is obtained from sources that we believe are accurate however we can not and do not guarantee or warrant the accuracy of this information. Information and comments within this newsletter should not be interpreted to indicate that past performance is indicative of future results. All rights reserved.

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