News
"A Vital Source for the CANSLIM Investor" 

Sunday, November 30th, 2003 | 7:56 PM
DECEMBER 2003
Volume 6, Issue 12
 

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It's Not All Bullish In Wonderland But the Small Caps are Still Triumphant
I expected to see some seasonal strength in the past holiday week. AND...once again, the market showed its remarkable ability to hold support right where it needed to...and the holiday move was much stronger than I would have expected.

The most important happening of last week was the market's ability to hold at, or near, its 50-day moving average...once again. A chart of any of the major indices can show what I am talking about. On several occasions, the market has teased the first real intermediate -term correction...and then turned straight back up.

Rather than waxing eloquent about all the recent strengths in the major indices, let's start with the negatives I have mentioned before, because they are still out there. Breakouts are just not working like they were in recent months.  Either stocks are too extended or are breaking down. I am not seeing as many quality bases as before. Time could certainly take care of that.

Insiders are selling at a clip that has never been experienced - over 50-1 sells vs. buys. Insider action is usually a lagging indicator by about 6 months. Thus, things can get interesting next year. I am amazed by some commentary asking the investing audience to not worry about this action.

This rally is already 8 months long. That in itself is a problem. BUT...notice how the lion's share happened in the first 11 weeks of this rally. In fact, the S&P 500 has hardly moved since mid-June. It has been strictly a small-cap affair.

Sentiment is still horrid. I have always believed that the too-bullish sentiment will eventually come back to haunt the market. Do you know of any bears? I don't.

"Good news" is no longer being bought. In fact, the market sold off on the monster GDP numbers as well as positive reports from companies like Cisco (CSCO) and Home Depot (HD). This is in stark contrast to recent months.

While there are still a good amount of leadership names still leading, there has been enough deterioration in names like ERTS and others that warrant watching.

That leads to the good news.

Most stocks are still in fine technical shape. I would guess 7-8 out of 10. Markets usually don't come undone when so many stocks have good technical patterns.

Major averages are still way above longer-term moving averages.

SEMICONDUCTORS remain strong. If there is one sector that is a leading indicator of the market, it is the SEMIS.

The NEW HIGH list remains quite large while NEW LOWS are non-existent.

The last point I want to make is how much the small-caps continue to outperform large-caps. While the S&P and Dow have been basically marking time since mid-June, the Russell and smaller indices continue to roll.

I will be watching this period closely. In the recent past, the market has been strong coming off of a holiday. In any case, I would rather see stocks do more work consolidating and then breaking out of new bases before getting real excited again.

- Gary Kaltbaum

Gary Kaltbaum is an investment advisor with over $100 million under management. For over 18 years he has specialized in identifying and trading growth stocks in the intermediate-term time frame. He can be heard nightly on his nationally syndicated radio show "Investors Edge" on over 50 radio stations and at the Investors Edge website. Listen to live or archived shows here. He has been featured on the FOX News Channel and is regularly quoted by by CNBC, the Wall Street Journal, Dow Jones News, Reuters, and Bloomberg.

- CANSLIM.net News Staff

Don’t Distract Yourself With ‘Could Have’ or ‘Should Have’ Scenarios

We cannot let all of the ‘could have’ and ‘should have’ scenarios interfere with our use of proper trading disciplines. Successful investing is a job that requires us to react intelligently to the market action and avoid being emotional in our investment decision making.

Last Wednesday’s action in QADI was weak. Its earnings failed to increase by the 20%-25% minimum improvement CANSLIM followers should always look for in the current quarterly comparison. This stock was hit with selling pressure after it reported earnings that failed to measure up with the same quarter one year earlier. Some of my clients at Source Capital Group owned QADI and they were being prompted by me to sell it, even as the price dropped under $12.00

One client remarked how it would have been much better to sell it just a couple of days earlier when the stock was trading above $14.00. True, but at that time the stock was not prompting us to sell based on any of our usual sell rules. So, who was to say at that time that the stock might not run on up to $16, $18, and $20 per share or more? Some investors may wonder why it would be reasonable to hold it at $14, yet when it was breaking under $12 it was time to sell. I’ll do my best to explain that one in a bit, but if we are going to talk about the difference a couple of day’s worth of market action could have meant, I first would like to point out something else I explained to my frustrated client.

Though not to frustrate him more, I suggested that if we were going to play around with the concept of what we could have done, we might also want to take a look back at our purchase. Had we indeed bought the stock just two days earlier, we could have been on board at $8.75 instead of $10.00. In mid-September QADI was hovering quietly above its 50-day moving average, but we weren’t buyers until it spiked higher on September 18^th and 19^th and clearly broke out on high volume.

With the benefit of knowing the ultimate outcome, it is normal to look back at a situation and say things would have been better had we acted differently. Hindsight stirs the emotions. Smart investors don’t let their emotions get in the way of taking proper action. We may have seen things we liked about QADI as it was setting up, but we waited for the high volume breakout as our buy signal. Proof of institutional buying is one of the most essential characteristics in a stock if it is to be a buy candidate.

Now addressing our sell signals, it is hard to forgive any company when its earnings are slumping. So when QADI’s latest earnings were announced at 18% less than the year prior, the fundamental decline alone may have been a great reason to sell it and free up the cash for another stock showing stronger earnings. But soon after the news, there were other technical sell signals made apparent.

QADI had formed another decent base and broken out of it with high volume on November 12^th and 13^th. However, it was rolling back into its prior base and technically deteriorating as it sank back under $12.50. Soon thereafter, it violated its 50-day moving average near $12.00. Note also that the volume total on Wednesday’s decline exceeds that of any other day on the chart. Even after it managed to improve and close above its 50 DMA, it is difficult to make a case for anyone toughing it out and holding.  Even though its Relative Strength is still pretty good, Investor’s Business Daily has already adjusted its Earnings Per Share rating on the stock down to a below average 31.

-  Kenneth J. Gruneisen, Registered Investment Advisor, Source Capital Group, Inc. Members NASD/SIPC

Kenneth J. Gruneisen - A Registered Investment Advisor & Registered Principal, Ken manages a Source Capital Group (Member NASD,SIPC) branch office and offers personalized assistance. Investors with a significant financial interest in equities may inquire about opening an account by calling 1-888-237-8399 or emailing to kgruneisen@sourcegrp.com Comments contained in the body of this report are technical opinions only and are not necessarily those of Source Capital Group, Inc. The material herein has been obtained from sources believed to be reliable and accurate, however, its accuracy and completeness cannot be guaranteed. Our firm, employees, and customers may effect transactions, including transactions contrary to any recommendation herein, or have positions in the securities mentioned herein or options with respect thereto. Any recommendation contained in this report may not be suitable for all investors and it is not to be deemed an offer or solicitation on our part with respect to the purchase or sale of any securities. Source Capital Group, Inc. is a NASD/SIPC member firm. Further information is always available upon request. If you know anyone that may have an interest in receiving this or any of our other reports, please call our office locally at (954) 785-1990 or (888) 237-8399 or email kgruneisen@sourcegrp.com

Recent Testing Near 50-day Lines Offers a Look at Support for Indices and Individual Issues
November's action took the major indices through another important testing period near their 50-day moving average lines. Nasdaq traded under that important short-term moving average for several days, during which time volume was rather tame. Then the final week brought about a marked improvement.  Since three out of every four stocks tend to follow the action in the major averages, there was similar testing among many leading stocks at their 50-day lines.  No one knows whether December will bring a Santa Claus rally, or weakness like was seen last year.  Let the recent lows serve as an important stop out point and you should be fine even in the ugliest of possible scenarios.  As always, we strongly suggest a strict selling discipline to protect yourself from losses greater than 7-8%.  Smart CANSLIM-oriented investors know that the general market direction will always weigh heavily on the outcome of your trading decisions.

Financials, Stock Talk, News, Chart , SEC, Zacks Reports

Profile: Chico's FAS, Inc. is a specialty retailer of exclusively designed, private label, sophisticated, casual-to-dressy clothing, complementary accessories and other non-clothing gift items under the Chico's brand name. The Chico's brand focuses on women who are 35 years old and up with moderate- and higher-income levels. Its offerings are more diverse, including casual, active wear, intimate apparel and casual career. As of April 18, 2003, the Company operated 401 retail stores in 41 states and the District of Columbia, with a significant concentration in California, Florida, Texas and the northeast United States. Its industry group is in the top 12% of IBD's 197 Industry Groups and has been moving between a ranking of 23 and 17 over the past three months (from 51 six months ago).

What to Look For and Look Out For: The risk/reward looks favorable here, and the next two year PEG ratios at 1.01 (’04) and 1.22 (’05) indicate the stock’s price has room to grow.  Funds hold 42% of the stock; quality fund ownership has slightly increased to 265 from 261 over the past four quarters; and inventory turnover at 14.4x is better than most retailers in their industry group (9.0x for ARO, 9.4x for URBN, 5.0x for FINL).  While both earnings and revenues are increasing, growth rates are slowing as the size of the company increases (earnings growth: 36% this year versus 56%, 43%, and 84% for the last three years). Near term, price increasing beyond its pivot point is likely to be followed quickly by clearing its November high ($39.20). Breaking out from the current month-long congestion on a volume surge (as happened four previous times indicated by "BO" on the above chart ) validates the play for further price movement into the $40+ range.  Of course, CHS should benefit with other retailers from a good December season.  Meanwhile, a critical break and close below its five-month trend line (green line) on increased volume would be a cause for concern.  Further, price closing below its 50-day moving average, especially on greater than average volume, would be a good exit point as price could fall to the low $30s as the next support level. Of some further concern is the absence of accumulation during this month-long period and the generally low volume (boxed region), but this behavior is similar to the volume action in other regions between breakouts as well.  CHS has an earning report due 12/2 after hours ($0.27 consensus estimate).

Technical Analysis: Price has been well supported by its 20-day moving average and the trend line shown (green).  Nine times since July its price has pulled back then bounced up from the vicinity of its 20 DMA (not shown) where it has been for the last week.  Notice too, the pullback to the trend line has been quickly followed each time by a break out on large volume. 

Financials, Stock Talk, News, Chart, SEC, Zacks Reports

Profile: Lexar Media, Inc. designs, develops and markets high-performance flash cards and connectivity products marketed as "digital film" to the digital photography market, as well as to other markets utilizing portable digital storage media for the capture and retrieval of digital content. The Company's digital film products enable customers to capture digital images and download them to a personal computer (PC) for editing, distributing and printing. Its industry group is in the top 2% of IBD's 197 Industry Groups and has moved between 6 and 12 over the past six months.

What to Look For and Look Out For: The risk/reward looks good here, and the next two year PEG ratios at 0.04 and 0.61 indicate excellent value remains in the stock’s price.  Funds hold 30% of the shares, and quality fund ownership has been increasing dramatically from 46 to 126 over the past four quarters. Earnings growth rates have ranged between 175% and 199% over the past four quarters (sales between 90% and 199%) versus the prior year.  Price closing below its 50-day moving average would be cause for concern while a close below its 11/24 low ($19.10)—especially on higher volume—is a cause for exiting as LEXR could then drop into the low-to-mid teens before finding support.  This price trace presently looks like a typical left side of a “cup-and-handle” formation.  Watch for accumulation to show up in volume.

Technical Analysis:  LEXR’s price has been well supported by its 50-day moving average since it began its recent run up in April ’03 from under $4.00.  Several points support a bullish move from here: (1) price has just bounced from its 50-day moving average; (2) the “hammer” candle made 11/24 is indicative of a change in control (buyers now in control); (3)  the weekly pattern is in a classic 4-week  pullback with last week’s candle marking a bullish reversal; and (4) the recent hammer thrust bounced from the 38.2% Fibonacci level (defined by the major low and high marked (circled in green).

Financials, StockTalk, News, Chart , SEC, Zacks Reports

Profile: Research In Motion Limited (RIM) is a designer, manufacturer and marketer of wide area wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, the Company provides platforms and solutions for seamless access to time-sensitive information including e-mail, phone, short message service (SMS) messaging, Internet and intranet-based corporate data applications. RIM also licenses its technology to handset and software vendors to enable these companies to offer wireless data services using the BlackBerry Enterprise Server. There are in excess of 10,000 companies worldwide with the BlackBerry Enterprise Server installed.  This is a company with four straight quarters of accelerating sales that is again becoming profitable after having turned in a negative performance in its fiscal '02 and '03.  Keep in mind that since this is a company turning it around after several unprofitable quarters, its EPS rank is below the recommended 80 level usually a CANSLIM guideline.   This is a fast-growing company in an industry that should see outstanding growth, and the future outlook is very good as the company will be facing easy to beat earnings comparisons in the quarters ahead.

What to Look For and Look Out For:  After its first stage gap up and breakout above $30, this stock advanced 50% and has since been in a consolidation phase.  This has resulted in a flat base that has been forming over the last eight weeks.  With low volume on days the stock declines and above average volume on several up days, this is a healthy looking base.  A breakout above $48 on large volume would indicate institutional buying and an excellent buying opportunity, while a break below its 50 DMA at around $43, or worse, a violation of the present base's lows, could indicate more serious trouble ahead.

Technical Analysis: The stock recently bounced from just above its 50 DMA, which is a sign of great institutional support.  If it can break above $48 on heavy volume, technically this could run up to challenge the next major resistance level around $70.  Note that this stock traded as high as $175 in 2000 as has rallied back from as low as $8 in 2002.

Financials, StockTalk, News, Chart , SEC, Zacks Reports

Profile: Kyphon Inc. develops medical devices to restore spinal anatomy and instruments for use during spine surgeries.  Surgeons use the company’s tools to help repair fractures caused by osteoporosis.  Minimally invasive procedures utilize the company’s proprietary balloon technology.  The company lacks a great annual earnings history, yet after having turned the corner to profitability five quarters ago the earnings trend looks solid.  Earnings per share in the quarterly financial report of Dec ’02 versus the year earlier were +$0.02 vs -$0.18, while Mar ’03 was +$0.03 vs -$0.06, Jun ’03 was +$0.07 vs -$0.15. In the latest report Sep ’03 earnings were +$0.11 vs +$0.02.  The number of mutual funds with an ownership interest has risen from 42 to 57 from Dec ’02 to present.

What to Look For and Look Out For:  Any new low close under those of the previous week could be a sign of deterioration.  A break under its prior Aug/Sept highs would not be good, and even worse would be a violation of its 50 DMA.  Each would be considered an even greater sign of more serious danger, while for now the stock appears to be an excellent buy candidate that has consolidated back to find firm support at a range near its prior highs.  There is only a little bit of resistance to be expected in the stock now, as a small amount of overhead supply was created as it traded higher in the first week of November.  It may be on course to soon challenge its all-time highs.  A true sign of institutional buying demand would be higher than average volume with a price rise through $29 and $30.  If intense demand appears, one might even consider adding to an existing position. 

There are so many important things that one must think about and do at the coming of December and the start of the new year. I believe it is of most importance that we all take a day or two to gather all the necessary information for our accountant or ourselves so that we don’t have to even think about it once the new year comes.

We all tend to say, “I’ll do it later; there is plenty of time”. But the reality is to take care of those receipts, deductions, and expenses, etc. today so that you can spend more time doing the more important things such as writing up your new year’s goals and then setting up system that will allow you to follow those goals.

Before you start, place all receipts and other documentation that is required to complete your taxes, a pen or marker, and a box of envelopes. The following is what I suggest for you to do in order to get prepared for that dreadful tax deadline:

1.    Go to a place where you have time to be alone and you have some privacy. Interruptions can break your concentration and might lead to costly mistakes.

2.    Put on some comfy clothing and some music you can think to. I recommend Mozart. Don’t forget to get a snack. Oh, and of course, my favorite, a nice warm cappuccino made with heavy whipping cream and brown sugar or green tea with honey.

3.    Gather up all the receipts and other pertinent tax documentation. Remember that you should receive, by law, your W2’s, 1099’s and brokerage account gains and losses reports, before the end of January 2004. Note: If you have a business (or several of them), then you must keep and organize each business expense separately for each Schedule C.

4.    Now you are ready to organize all of the receipts and pertinent documentation for this coming tax season. If you do the organizing, you could save some money and avoid paying your accountant to organize all of this. You may also ask your accountant as to how he or she would like you to organize. Depending on how much paperwork you have, this could take you two hours or two days (with a few breaks in between of course).

5.    Take all receipts and other documentation and separate them into the different categories such as gas and car expenses, mortgage interest, utility bills, food, gifts, donations, parking fees and tolls, business expenses such as license fees, income, fees paid to your accountant the previous year, etc.

6.    Once you are done, mark your envelopes accordingly and place all receipts and other pertinent documents into the corresponding envelope. Also, make sure you write the year on each envelope, mark the envelope personal or business (and which business it is, if you have several of them). Make sure you save these envelops in one place so that you may easily place any new receipts into them until the end of December 31, 2003. Note: If you have made credit card purchases, it would be wise to keep all of those receipts so that you may file them into the envelopes according to the appropriate category. It would be more difficult to categorize all of your expenses with the use of a monthly credit card statement that does not offer categorizing features required for the effective completion of your taxes.

7.    Now that you are organized and ready for the tax man, you can have some fun and work on your New Year’s resolutions while practically everyone else around you is procrastinating  (as April 15 gets closer) and rushing at the last minute.  You don't want to be facing possible penalties because you did not take the time to properly prepare for this important day!

Happy New Year!

Do not forget to make your retirement account contributions before April 15 of the coming year!  May you accomplish all your New Years Resolutions!

- Article by Soraya Nasrallah, Registered Representative, Source Capital Group, Inc. Members NASD/SIPC 

Soraya Nasrallah, obtained her Series 7 license in 1992, and has served in the capacity of Sales Assistant, Head of Operations Department, and Stockbroker.  Contact Soraya Nasrallah via email at snasrallah@sourcegrp.com or by phone at (954)785-1990 for assistance you with your portfolio. She will be pleased to offer ideas that suit your investment needs, and she can help you achieve the gains you have been searching for.  Miss Nasrallah has just introduced a new educational program called StockWiz News! specifically created for teenagers and novice investors, incorporating stock market basics with CANSLIM in a colorful and picturesque format. It is the perfect gift for those who just don’t know much about the world of stocks and investing! Comments contained in the body of this report are technical opinions only and are not necessarily those of Source Capital Group, Inc. The material herein has been obtained from sources believed to be reliable and accurate, however, its accuracy and completeness cannot be guaranteed. Our firm, employees, and customers may effect transactions, including transactions contrary to any recommendation herein, or have positions in the securities mentioned herein or options with respect thereto. Any recommendation contained in this report may not be suitable for all investors and it is not to be deemed an offer or solicitation on our part with respect to the purchase or sale of any securities. Source Capital Group, Inc. is a NASD/SIPC member firm.

Buying CANSLIM Stocks in Multi-Day Pullbacks
Frequently, fundamentally sound stocks undergoing accumulation do so through multi-day pullbacks (i.e., by making a series of lower daily highs) before entering longer periods of consolidation where multi-week “cup & handle” or range-bound patterns form. One advantage to buying these pullbacks is their well-defined trade management criteria (see chart - SE): entry points (buying when today’s price exceeds yesterday’s high) and stop-loss points (selling below the low of the pullback). Another is their predictability, both in depth and duration. Examples are evident in SE’s daily chart where a variety of multi-day pullbacks are identified by letters a through p.

The market psychology leading to pullback formation is understood best in terms of alternating buying and selling pressures as price first rises then pulls back. Fundamentally sound companies draw buyers and buying pressure dominates, then the price rises to the point where owners worry about the profits they’ve earned. Short sellers step in. A pullback then results as selling pressure takes over and the price falls for a few days to the point where buyers recognize a bargain and return.

"...a point is reached where greed enters, buyers again rule and price climbs."

To give you an idea of their frequency, I evaluated for 2003 the number and the length of pullbacks for CANSLIM market leaders cross-screened against Zacks 1 & 2 rankings: a sample of 19,960 trading days from 88 stocks. Using the additional criteria of examining only those pullbacks occurring in an environment where their 50-day moving average was rising, 28.7% of those days were in pullback: 13.2% (1 day), 7.6% (2 days), 4.1% (3 days), 2.1% (4 days), 1.0% (5 days), 0.4% (6 days), and 0.3% (>6 days). Several are evident on the SE chart. For stocks of this quality, pullbacks greater than three days are rare and usually buyable.

The SE chart demonstrates typical pullback structures. Once the pullback begins, price frequently falls to an area of prior support:

(1)    An area where price has reversed earlier, e.g, the depth of valley c reaches mid July’s peak

(2)    The vicinity of a major moving average - SE often reversed at its 20-day moving average

(3)    The depth near common Fibonacci ratios (38.2%, 50%, or 61.8%). For example, b to c reverses 39.3% of the a to b rise. The d to e pullback reverses 33.2% of the c to d rise. The f to g pullback reverses 65.4% of the e to f rise. The m to n pullback reverses 55.3% of the i to m rise. Finally, the o to p pullback reverses 64.7% of the n to o rise.

Other features that mark the coming pullback’s reversal include narrowing daily bars, a reversal of the open high-close low pattern, increased volume, and a long-tailed candle formation (called a “hammer”).

Fibonacci ratios (see sidebar below) can be used to measure the balance between human fear and greed: as price falls fear dominates and sellers rule, but a point is reached where greed enters, buyers again rule and price climbs.

I recently polled a group of 121 traders for their preference in initiating a pullback reversal. They were shown a picture of rising daily bars and asked to choose a point at which they thought a pullback would be reversed. The results are telling: 2% of those traders chose a 12% reversal, none selected a 19% reversal, 5% chose a 27% reversal, 77% picked amongst a 38%, 50%, or 62% reversal, 9% of the traders chose a 75% reversal, and 5% chose a 91% reversal. As the results of the poll indicate, it’s natural for us to initiate the reversal over a share price range close to the Fibonacci ratios.

- RIchard Miller

The Tax Act of 2003: Should You Buy More Dividend-Paying Stocks?
When Congress passed the Tax Act of 2003, taxes were lowered on capital gains and dividends. Due to the new changes, stock ownership may be more attractive and there will be increased focus on dividend-paying stocks when making investment decisions. In this article, I will discuss the Tax Act changes and how they may affect your investment strategy.

Long-term capital gains are those resulting from the sale of stocks that have been held for more than one year.  Prior to the Tax Act, long-term capital gains were taxed at a rate of 20%. Now they will be taxed at a rate of 15%. This will save you taxes when you sell a stock you have held for more than a year. If you have been holding some stocks for a long time, now may be a good time to consider selling them at the lower tax rate (assuming you have a profit) and rebalancing your portfolio.  At the same time, it doesn’t make sense to hold a stock more than year if it is headed down and losing in value.

"Dividend-paying stocks may be especially desirable for individuals looking for more income from their investments as opposed to being dependent on growth"

Short-term capital gains resulting from the sale of stocks held less than one year will continue to be taxed as ordinary income.  However, ordinary income tax rates were lowered with the new Tax Act, meaning short-term capital gains will effectively be taxed less.  The previous ordinary income tax rates of 27%, 30%, 35%, and 38.6% were lowered to 25%, 28%, 33%, and 35%, respectively. Again, if you held a stock under a year, you will be paying fewer taxes on any gains.

Prior to the Tax Act of 2003, dividends received from stock ownership were taxed at your ordinary income rate.  Now they will be taxed at a rate of 15%. No matter what income bracket you are in, there will be significant savings.  Dividend-paying stocks may be especially desirable for individuals looking for more income from their investments as opposed to being dependent on growth (a rise in stock price).  For instance, the more stable, dividend-paying stocks are often preferred during retirement, providing regular income with less risk than growth stocks.

If you decide to buy and hold dividend-paying stocks, you will receive regular income, paid quarterly in the form of a dividend check.  If the stock also increases in value, then there is added benefit should you decide to sell the stock at a later date.  But simply looking for dividend stocks carries a downside as well.

I find it useful to convert the dividend percentage into real dollars and compare it to the stock’s price history.  Why?  To see if I am better off holding the stock for the dividend, or looking more to growth stocks.  After all, I believe that it is the absolute return on your investment that really matters.

For instance, if you own a $50 stock that pays a 5% annual dividend, the 5% is equal to $2.50 (.05 x $50 = $2.50). The 5% represents a $2.50 move in the price of the stock. If the stock drops from $50 to $47.50, you have effectively wiped out the dividend when you look at total return. As you probably know, a stock can drop $2.50 in one day!  I often hear people say they own a stock because it pays a certain dividend, yet when you look at the price of the stock, it may be dropping in value. Who wants to own stocks for dividends if their net worth is actually declining? You might end up paying less percentage of taxes, but lose even more in terms of your net than the dividends are worth to you.

Therefore, don’t buy a stock based solely on an attractive dividend. Look at the available technical and fundamental information and make your decisions similar to how you would for any other stock.  My approach is to only buy stocks that I believe are headed up; if they pay a dividend that is an extra bonus. Looking at it a different way, the same $50 stock that rises to $52.50 is actually worth $55 ($2.50 rise in stock value + $2.50 dividend).

This is not a complete review of the Tax Act of 2003, but I have attempted to cover the main changes, and provide some insight on the decision to select dividend-paying stocks.   Consult your accountant or tax advisor for further clarification or explanation of how the new Tax Act will affect your specific situation, especially how it relates to tax-deferred distributions from a 401(k) or IRA.

- Charles B. Schaap traderdoc@stockmarketstore.com

Another Year, Another Reason, ‘Tis The Season

    Well here we are!  Another year has just about gone by and we now find ourselves once again in that somewhat familiar and even comforting setting, the Holiday Season - from the tryptophan-induced long November weekend through December’s pop of a champagne cork at the stroke of midnight. No matter your faith, religion, or creed from Thanksgiving through New Years you are bound to be spending quality time with family, friends, and loved ones. As the song goes… “It’s the most wonderful time of the year”. Be merry, rejoice, and renew.

This time of the year is also know as the time for giving, and thanks to the help of all of our new CANSLIM.net StockNews members were are able to donate a substantial amount of money to the American Red Cross. For the entire month of November we collected 5% of our gross subscription revenue and gave it to this non-religious, non-political, nationally-based organization which provides a whole range of charitable services - disaster relief, blood supplies, assistance to the military and military families, to name just a few of its many services. We are grateful for the opportunity to give back, and thankful for your help in making it all possible.

Over the past year, as CANSLIM.net has continued to grow and become more successful, it has been both fun and challenging for us to keep up. Our subscriber base continues to expand and we keep receiving accolades from those subscribers. Thanks to everyone for your kind words. They mean a lot to us, and every positive note is shared with the entire office staff.

Looking forward and navigating into next year, the plan is to generally stay the course.  “We want to keep doing what we are doing” is what I always try to instill in everyone here. We want to continue to keep our fingers on the pulse of what the CANSLIM-oriented investor needs. We want to provide a great and improving service at an affordable price. We want to treat our subscribers with respect and always give top notch customer service. We want to continue to hire individuals who are honest and of superb character.

In addition to that, we have some incredible new features planned for the coming year for our CANSLIM.net StockNews membership. I don't want to give away all the surprises, but be prepared for a multimedia experience as part of your paid subscription. Text and graphs are a good way to communicate, but it is nice to have other options as some folks would prefer.

If you have someone on your gift list who has an interest in investing, you can give them a CANSLIM.net StockNews Membership (just like yours). This is an excellent gift for any investor, novice or professional, who is looking for excellent research and timely information on CANSLIM-based stocks. Giving a gift membership is easy, we have a special form set up on the site or, of course, you can call our subscription department at 1-800-965-8307 or 954-785-1121.

We hope you and your loved ones have a safe and happy holiday season.

As always, best wishes for your financial success.

James F. Taulman
COO, CANSLIM.net, Inc.
Editor-in-Chief, CANSLIM.net News

CAN SLIM (written here as "CANSLIM" or "Canslim:) is a registered trademark of William O'Neil + Co. CANSLIM.net is not owned nor affiliated with William O'Neil + Co. or any of their subsidiaries including The Investor's Business Daily newspaper.