Stock Market Commentary for 7/7/08

Although the DJIA finished up 73 points on Thursday's half day of trading, it was a devastating day for market-leading stocks. Even high-flying oil service stocks suffered severe corrections in spite of record-high oil prices—a fact that is difficult to interpret. Crude oil futures now stand above 144 dollars a barrel. The only winning oil stock that showed gains Thursday was DBO, an exchange-traded fund whose price movements are tied directly to the price of oil and DBO now stands within 1% of its all-time high. Clearly market conditions are now worse than at any time in the past several years. Our computer algorithm found only one stock in the buy category, and none higher than that. Our Viable Acquisitions Index has fallen to a reading of 25, which is the lowest in my memory, and is far down into the red danger zone. If there was ever a time to avoid stocks altogether, this is it—unless you are extremely contrarian in temperament. It was the worst June for the Dow Jones Industrial Average since 1930, the start of the great depression.

Equity futures are now essentially flat for Monday's open. We could, of course, experience a market rebound, but attempting to buy in this environment is, as has been said, like trying to catch a falling knife. Even top-performing mutual funds like the CGM Focus Fund (CGMFX) gave up 7.5% in June. Among the sleeper stocks we watch closely because of their low or negative betas are LBAS.OB and EMDH.OB. I notice that EMDH.OB actually gained 18.9% on Thursday, while LBAS.OB surprisingly lost 10.4%. It is worthy notice that LBAS.OB has multiplied in share price 6.7 times this past year, and all of our holdings have at least doubled in spite of this evident market downturn.

Best wishes, GH

The HHI Index for Monday, July 7, 2008 is as follows:

+7 (very strong buy) — NONE, /

+6 (strong buy) — NONE, /

+5 (buy) — HIRE, /

+4 (hold) — GMXR, CRK, LBAS.OB, CRMT, DBO, /

Daily Stock Market Commentary is accompanied by a daily Bible Reflection.

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• What is the HHI Index?

_{The HHI Index is a list of stock ratings derived from a proprietary computer model and are being shared as a public service with no guarantee of or responsibility for trading success. Readers are strongly encouraged to do their own research and to exercise caution in all trading activity. Click here for an explanation of the HHI Index.}

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Stock Market Commentary for 7/9/08

HHI

Wed Jul 9

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