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----- Original Message -----
From: <A
title=mike-burk@xxxxxxxxxxxxxxxxxxxxxx
href="">Mike Burk ; <A
title=mike-burk@xxxxxxxxxxxxxxxxxxxxxx
href="">Mike Burk
To: <A title=mike-burk@xxxxxxxxxxxxxxxxxxxxxx
href="">Mike Burk
Sent: Monday, June 21, 2004 8:08 PM
Subject: Gordon Harms report
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face="Courier New"><SPAN
>
6/18/04 MARKET CLOSE
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face="Courier New"><SPAN
>
TIMING IS EVERYTHING
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size=2>
<FONT face="Courier New"
size=2>MARKET CLIMATE/OUTLOOK-
<FONT face="Courier New"
size=2>Low Interest Rates<SPAN
>
-Bullish
<FONT face="Courier New"
size=2>Gross Domestic Product<SPAN
> -Bullish Up 4.2%
was Up 4.1%
<FONT face="Courier New"
size=2>S&P500 Expected Earnings<SPAN
> -Bullish $67.62 up from
$65.46
<FONT face="Courier New"
size=2>INFLATION: 3 month moving average; Mixed, 2 up and 1 down
<FONT face="Courier New"
size=2>CPI, May is 2.36% (Inflation), up from 1.91% in Apr Low 1.20 7/02.
<FONT face="Courier New"
size=2>PPI, May is 3.21% (Inflation), up from 2.24% in Apr Low -2.37
2/02.
<FONT face="Courier New"
size=2>ECRI, Jun is 0.98% (Inflation), down from 0.99% in May.
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size=2>
<FONT face="Courier New"
size=2>MARKET TREND: Favorable
<FONT face="Courier New"
size=2>SP-CP is 3.60% above 1096 the 200sma which is rising. Was
3.99%.
<FONT face="Courier New"
size=2>SP-CP is 1.34% above 1120 the 50sma which is rising. Was
1.44%.
<FONT face="Courier New"
size=2>S&P500 is 46.97% UNDERVALUED below an estimated 2140 fair
value,
<FONT
face="Courier New"> based on
historical S&P 500 earnings, P/E and US30 bond yield.
<FONT face="Courier New"
size=2>S&P500 annual earnings growth is 71.7%/year. Low -51.41% on
4/19/02.
<FONT
face="Courier New"> Long term
S&P earnings growth rate average is near 6%.
<FONT face="Courier New"
size=2>S&P500 Inflation adjusted real dividend yield is -0.64%.
<FONT
face="Courier New"> Prior week was
-0.64%. BUY at greater than approx.-1.50%.
<FONT face="Courier New"
size=2>Dollar index is up 5.39% from 2/17/04. Was up 4.98%.
<FONT face="Courier New"
size=2>Long Term Index Cycles<SPAN
> -Bullish 5 of 8
are moving up.
<FONT face="Courier New"
size=2>NYSE AD Sum Index<SPAN
>
–Bullish turned up 5/19/04.
<FONT face="Courier New"
size=2>NASDAQ AD Sum Index<SPAN
>
–Bullish turned up 5/21/04.
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size=2>
<FONT face="Courier New"
size=2>MARKET TREND: Unfavorable
<FONT face="Courier New"
size=2>Long Term Index Cycles <SPAN
> -Bullish 6 of 8
are moving up.
<FONT face="Courier New"
size=2>Trailing S&P earnings<SPAN
> -Bearish
$52.03 up from $48.74.
<FONT face="Courier New"
size=2>May through Oct is seasonally unfavorable on average.
<FONT face="Courier New"
size=2>All six trading systems are holding money funds from 6/4/04.
<FONT face="Courier New"
size=2>Short Term Index Cycles<SPAN
> -Bearish 4 of 8 are
moving up.
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size=2>
<FONT face="Courier New"
size=2>MARKET VALUATION: Unfavorable
<FONT face="Courier New"
size=2>Estimated S&P500 P/E for the coming year is 17.34.
<FONT face="Courier New"
size=2>The S&P500 P/E ratio is 21.81(4 to 20 is range: 1870 to
1997)
<FONT
face="Courier New"> based on
trailing earnings. Trailing P/E was 45 in April 2002.
<FONT face="Courier New"
size=2>S&P500 market value is 3.50 times book value. Was 3.51 last
week.
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size=2>
<FONT face="Courier New"
size=2>MONETARY LIQUIDITY: Favorable
<FONT face="Courier New"
size=2>Three month ROC of M3 money is 2.90%, last week was 2.74%.
<FONT face="Courier New"
size=2>Money Market yield is 0.50%.
<FONT face="Courier New"
size=2>Money Market funds are 2.004 trillion, was 2.020 trillion.
<FONT face="Courier New"
size=2>5 Yr Note yield is 3.98% up from 3.91%.
<FONT face="Courier New"
size=2>10 Yr Note yield is 4.80% up from 4.74%
<FONT face="Courier New"
size=2>25+ Yr Note yield is 5.52% up from 5.47%.
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size=2>
<FONT face="Courier New"
size=2>PSYCHOLOGY: Mixed; 3 Neutral, 1 Bull
<FONT face="Courier New"
size=2>CBOE Equity Total Vol. Put/Call Ratio: .67, last week was .74.
<FONT
face="Courier New"> Market: Bullish
> 0.60 and Bearish < 0.30
<FONT face="Courier New"
size=2>Market Vane(Commodity/Futures): 65% Bullish, last week was 67%
Bullish.
<FONT
face="Courier New"> Market: Bullish
< 25% and Bearish > 65%
<FONT face="Courier New"
size=2>AAII 41.4% bull and 28.1% bear. 3 wk SMA Ratio = 0.58.
<FONT face="Courier New"
size=2>3 wk SMA Ratio > 1.10 = Bullish, >> Bullish = > 1.50, <
0.35 = Bearish
<FONT face="Courier New"
size=2>USB Index of Consumer Optimism 71 May. was 73 Apr. Estimated
neutral.
<FONT
face="Courier New" size=2>Estimated bullish < 41, bearish > 142.
<FONT face="Courier New"
size=2>
<FONT face="Courier New"
size=2>RELATIVE VALUATION(Stocks to Bonds): Mixed
<FONT face="Courier New"
size=2>Stock Value Index is 2.87, was 3.24. Buy greater than 1.03.
<FONT face="Courier New"
size=2>S&P 500 dividend yield is 1.22 times 13 week T-Bill yield.
<FONT face="Courier New"
size=2>Five year note yield is 2.34 times S&P 500 yield.
<FONT face="Courier New"
size=2>
<FONT face="Courier New"
size=2>BONDS: Favorable
<FONT face="Courier New"
size=2>The 30 year U.S. Govt. bond real yield is 3.02%, last wk was 3.11%.
<FONT
face="Courier New"> The historical
average, real yield is near 3.00%.
<FONT face="Courier New"
size=2>The average 30 year U. S. Govt. historical bond yield expected
<FONT
face="Courier New"> is 5.36%,
current yield is 5.38%. Was 5.47%.
<FONT face="Courier New"
size=2>STBI Bonds are down 7.60% from 3/16/04. Was down 8.07%
<FONT face="Courier New"
size=2>Bd-Junk bonds are down 2.74% from 1/23/04. Was down 3.35%.
<FONT face="Courier New"
size=2>Zero bonds are down 6.74% from 3/24/04. Was down 7.67%.
<SPAN
><FONT face="Courier New"
size=2>
<FONT face="Courier New"
size=2>DOMINANT MARKET INDICATOR(Beasley): Favorable but NYSE score is
OUT.
<FONT
face="Courier New"> <SPAN
> OTC-C DOMINANT
Neg Env, Score 6/15(IN > 4/15), IN 5/25/04.
<FONT
face="Courier New">
NYC-I<SPAN
>
Pos Env, Score 9/13(IN > 3/13), IN 6/9/04.
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face="Courier New">
Total score is 15 of 28,
last weeks score was 15.
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size=2>
<FONT
face="Courier New">CYCLES<SPAN
> 5 WEEK<SPAN
>
10 WEEK<SPAN
>
20 WEEK<SPAN
>
9 Month<SPAN
>
<SPAN
>
<FONT face="Courier New"
size=2>WIL-5 <SPAN
> N-Dn,06/09/04<SPAN
> OB-Up,05/25/04<SPAN
> OS-Up,05/27/04<SPAN
> OS-Dn,02/24/04
<FONT face="Courier New"
size=2>DJ-30 <SPAN
> OB-Dn,06/14/04<SPAN
> OB-Up,05/25/04<SPAN
> OS-Up,05/27/04<SPAN
> OS-Dn,02/24/04
<FONT face="Courier New"
size=2>RUT-I <SPAN
> <SPAN
> N-Dn,06/09/04<SPAN
> OB-Up,05/21/04<SPAN
> N-Up,05/25/04<SPAN
> OS-Dn,06/15/04
<FONT face="Courier New"
size=2>NDX-X <SPAN
> <SPAN
> N-Dn,06/09/04 <SPAN
> OB-Up,05/25/04<SPAN
> N-Up,05/27/04<SPAN
> OS-Up,06/07/04
<FONT face="Courier New"
size=2>N = Stoch >20 <80, OS = Stoch <20 OUT/Buy, <st1:place
w:st="on">OB = Stoch >80 Hold/Sell
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size=2>
<FONT face="Courier New"
size=2>SECTOR Averages ranked by percent gain from 4/15/04:(Last intermed.
High)
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face="Courier New"><SPAN
>
Energy <SPAN
> 4.0<SPAN
> <SPAN
> <SPAN
> Hi-Tech <SPAN
> <SPAN
> <SPAN
> <SPAN
> <SPAN
> -9.3
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face="Courier New"><SPAN
>
DJ-20 <SPAN
> <SPAN
> 3.8<SPAN
> <SPAN
> <SPAN
> Latin<SPAN
> <SPAN
> <SPAN
> <SPAN
> <SPAN
> -9.5
<FONT
face="Courier New"><SPAN
>
VMFXX <SPAN
> <SPAN
> 0.1<SPAN
>
Emergy <SPAN
> <SPAN
> <SPAN
> <SPAN
> -12.4
<FONT
face="Courier New"><SPAN
>
Europe <SPAN
> <SPAN
> -1.2<SPAN
> <SPAN
> <SPAN
> New-Asia <SPAN
> <SPAN
> <SPAN
> <SPAN
> -13.5
<FONT
face="Courier New"><SPAN
>
Dj-30 <SPAN
> <SPAN
> -1.3<SPAN
>
Precious <SPAN
> <SPAN
> -16.2
<FONT face="Courier New"
size=2>
<FONT face="Courier New"
size=2>FUNDS: SCHUS.Fam(1071) ranked from 4/15/04:(Last intermed.
High)
<FONT
face="Courier New"> <SPAN
> <SPAN
> ATCHX<SPAN
> <SPAN
> 13.0<SPAN
> <SPAN
> <SPAN
> RYPMX<SPAN
> <SPAN
> <SPAN
> -19.0
<FONT
face="Courier New">
ENPIX<SPAN
> <SPAN
> <SPAN
> 9.7<SPAN
> <SPAN
> <SPAN
> SCGDX<SPAN
> <SPAN
> <SPAN
> -19.1
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face="Courier New">
SENGX<SPAN
> 7.8<SPAN
> <SPAN
> <SPAN
> SMPIX<SPAN
> <SPAN
> <SPAN
> -19.4
<FONT
face="Courier New">
RYEIX<SPAN
> <SPAN
> 6.9<SPAN
> <SPAN
> <SPAN
> TIFQX<SPAN
> <SPAN
> -19.8
<FONT
face="Courier New">
FSTEX<SPAN
> <SPAN
> 6.7<SPAN
> <SPAN
> <SPAN
> UNWPX<SPAN
> <SPAN
> -20.3
<FONT
face="Courier New">
<FONT face="Courier New"
size=2>SYSTEM(NCALPHA)...TRADE....C/MDY..HOLD.....G/L.......ANN/MDD....ONE
YEAR
<FONT face="Courier New"
size=2>SHARP(Microc2x)...6/04/04....14...VMFXX....0.03......47.8/12.1......31.1
<FONT face="Courier New"
size=2>LOSDF(Microc2x)...6/04/04....14...VMFXX....0.03......40.0/10.4......28.6
<FONT face="Courier New"
size=2>MDSDF(Microc2x)...6/04/04....14...VMFXX....0.03......42.6/10.4......22.1
<FONT face="Courier New"
size=2>NCALP(Microc2x)...6/04/04....14...VMFXX....0.03......54.2/12.1......26.3
<FONT face="Courier New"
size=2>S&P500(Microc2x)..6/04/04.....9...VMFXX....0.03......15.1/9.3.......13.0
<FONT face="Courier New"
size=2>OTC-C(Microc2x)...6/04/04.....9...VMFXX....0.03......32.2/16.7......19.9
<FONT face="Courier New"
size=2>S&P500
Buy/Hold...6/18/03...252...SP500..............10.0/49.2......12.4
<FONT face="Courier New"
size=2>OTC-C
Buy/Hold....6/18/03...252...OTC-C..............11.5/77.9......18.5
<FONT face="Courier New"
size=2>REF: Data from Barron’s weekly magazine.
<FONT face="Courier New"
size=2>
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src="gif00185.gif">
<IMG
src="gif00186.gif">
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