THE FINAL MONTHLY OUTLOOK
MAY 2006 

Some 16 years ago, before most people even had dial-up internet access, there was Wall Street In Advance and the Annual, Quarterly and Monthly Outlooks, the latter published in various magazines, including the Palm Beach Times, and later, distributed on start-up internet sites, most of which have long since gone the way of the Pet.com sox. In 2000, I discontinued the Quarterly Outlook, waiting for an equity world gone mad to come down to earth. I suppose the Monthly Outlooks would have been shelved, too, much sooner, if not for 9/11, when suddenly, I needed a reason to keep looking, not just a week ahead, but a month ahead. Somehow, it was easier to believe the world would survive another month if I could map a forecast for it. However, in the ensuing years, writing the Monthly Outlook had not only been a personal sacrifice, usually the same weekend I was previewing Chain Store Sales but, also, perhaps, a throwback I simply didn't know how to stop. In a world in which information can now be accessed with handhelds over broadband, the very idea of a Monthly Outlook seems quaint, especially since clients can call up active events for the next month wherever they are. Furthermore, though I believe I was the first to take the seasonal patterns of the markets and drill them down to a trading plan by month, the number of people writing on the subject has grown. Any investor sitting at home in her/his bathrobe can call up free research from the major brokerage firms, thanks to the analyst fraud settlement. As many can using their $400 PC to call up any number of charting sites, free, and identify seasonal trading patterns that were my contribution years ago--not just published in the Stock Traders' Almanac, years ago, but even today, surviving in the current format.

After sixteen years, I  promise events shift little, mostly when holidays move around, forcing some tweaking to the schedule. A big shift in Easter, as we saw this year, to April from March. Last year, other events were shifted dramatically but the devastation in New Orleans, that left even organizers scrambling to mount their conferences and trade shows in alternate cities, sometimes months after originally planned. But those are the rare events, and even those shifts did little to change the Monthly Seasonal patterns. As I was quoted years ago, in Technical Analysis of Stocks and Commodities, conference shifts have little influence on business patterns: school still starts in most of the country right after Labor Day; Christmas, New Year's Day, and Thanksgiving don't move around. April 15^th remains the day when income taxes are due. And summer still officially starts on Memorial Day weekend, and ends on Labor Day weekend, no matter what the equinol calendar may say.

Why now?  Because I've decided to reclaim some leisure time, and looked to trim what seemed most superfluous. Perhaps, too, there's some irony that listed stocks are so close to challenging their all time highs just as I finally got up the courage to kiss Monthly Outlooks good-bye. Granted, NASDAQ stocks are lagging badly, when they were last to peak, in 2000, but as of this writing, 5/07/06, stocks had just put another leg on, so perhaps, before the current rally is through, NASDAQ will play a little catch up. If it exceeds the old highs in my lifetime, it is more likely to come when I'm stashed behind locked doors in a rocking chair, or because other stocks have finally taken the leadership mantle in fact and perception, from the bubble years' leaders--the Wintel juggernaut.

With the April Unemployment Report already history,  the two dates to focus on this month are the FOMC meeting on the 10^th, and Options Expiration on the 19^th,, which should be the demarcation line for summer volume, the Hamptons and Fire Island officially in full swing by then. Only the publishing industry still adheres to a 4 day week in summer, 3-day weekends one of the perqs for ass't editors still signed on for a mere $21K a year. But, from technology to Detroit, summer week-long furloughs around major holidays, including July 4^th,  long a way to work off excess inventory, and Europe all but closed to business but tourism for August, the summer doldrums have a way of sneaking up with the May Expiry.

Food, including supermarkets and the Cattelmen's Beef Ass'n hold their meetings in May, and often prove good bets, as beer, ice cream, and anything that can be b-b-q'd fit the summer bill.

The upfront season for the fall TV schedule is held in May, with broadcast and cable TV receiving less of the overall pie, as the internet and handhelds chip away.

 The Goldbugs have long met in New York in May but given the strength in commodities, more investment conferences have been formed, concerning mining, basic industries, and global industries. Speaking of old world companies, Berkshire Hathaway held its annual shareholders meeting the first weekend in May, just as it long has, with utilities and other industrial companies a still growing part of Warren Buffett's portfolio.

Just as it is every year, the official summer blockbuster movie schedule kicks off this month, with Mission Impossible III (5^th) and the DaVinci Code (19^th), (CARS 26^th), X-Men: the Last Stand (26^th), just the early entries, to be followed, soon, by Pirates of the Caribbean (July 7^th), Poseiden, Over the Hedge (19^th), a Prairie Home Companion (June 9) and Superman Returns (June 30), and even, another The Fast & The Furious: Tokyo Adrift (June 16th).

May remains a big shareholder annual meeting and analyst meeting month but few companies attract real interest at their meetings, anymore, and those are usually known well in advance, thanks to SEC filings and proxy fights mailed well in advance.

E3 Expo (9^th) won't be quite the event of past years. It's not that video games aren't selling when there's a console cycle just that the cost of producing even the games that bomb, like in television, makes it harder to recoup the investment, especially when top selling games have to be tweaked for so many different methods of distribution, and the biggest upgrade cycle of all is getting off to a slow start: XBOX 360 still not plentiful, and Sony's new game not expected before late in the fall. The group has always done best when the installed base peaks, not when it's ramping. Still, with online games and those selling for handhelds catching the fancy of a core group of gamers, all's not lost. The console upgrade cycle is alive and well in the form of cellphones, even if not many have figured out how to make serious money that way.

Media, Internet and Telecom, or TMT, as they call it across the Atlantic, is still a focus in May. CIBC is just one company hosting an investment conference but curiously, in Boston, during the same days as E3 Expo, which means it will be tough to compete. The EIA and Consumer Electronics Association met for connections, a preview of the digital home products that electronic retailers will sell as soon as back-to-school. Both Merrill Lynch and CSFB hold Tech meetings, the latter devoted to Semiconductors and Semi Cap Equipment. Digital electronics are looking more like apparel, subject to seasonal introductions and dependent on a big Q4 to make the year.  Piper Jaffray promises Hardware & Communications (10^th), Needham a First Annual Internet & Digital media Conference in New York. Again, the overlap with E3 is most curious. Time was, those banks would host dinners or mini-conferences wherever E3 was meeting.  of the DevCon's scheduled this month, SAPphire, from SAP, is the largest, though Google plans a press event the second Wednesday of the month, and some IBM software and storage divisions will host DevCons as well. The official peak for pre-summer Technology talk has often been the JP Morgan Annual Technology Conference (originally the Hambrecht & Quist Technology Conference, 22^nd), and there's little reason to believe that won't be true this year, too. For what's really ahead in computer hardware, it's WinHEC in Seattle, starting the 23^rd, with Microsoft's VISTA operating system once again postponed, and the heralded Origami project more rumor than concrete products, whispered to include Transmeta's low power chips. Goldman Sachs and Merrill Lynch will host end of month Internet Conferences, too, by which time any number of fund managers will be dialing in from the pool decks of their summer homes.

Speaking of clothing, the real Fashion Week, where buyers descend on showrooms and the Javits Center, instead of under tents in Bryant Park, is also a May event. Will retailers carry their good April comps into the showrooms, or gas up on the way into town and reserve some caution? Maybe we should ask Federated, which, back in March, blamed a late Mother's Day for a tepid April outlook.

Healthcare should be focus, with May 15^th the deadline to sign up for the Medicare RX plan without penalty. Bk of America hosts a large Healthcare Conference, Deutsche Bank one of its Healthcare Unpluggeds, and Merrill Lynch biotech & Medical Devices--most of those around the 16^th.  Psychiatrists meet in Toronto (20^th), the same day Digestive Disease Week kicks off in Los Angeles. The American Society of Microbiology hosts its general meeting in Orlando, starting the 21^st, no doubt a place many will raise a glass of bubbly to the billions governments are allocating to the human form of Avian Flu, even though few humans have actually fallen victim, and those that did usually had direct contact with sickened animals.

As night follows day, the Cannes Film Festival will take place starting the 17^th, this year without either a Passions or Michael Moore to make the crème de la celeb crème feel a little rebellious. Mortgages, housing, and REITS will be the subject of other conferences.

FIPP, the global federation of periodicals had already met by the time I wrote this, though BookExpo remains ahead (19^th). The Music and Video Retailer Expo at BookExpo is no longer the subservient cousin to the main show. Publishers can't live without the Amazons of the internet, a company so influential it can now make or break a book.

There are two other groups we shouldn't overlook. The first is defense, finally getting its contracts awarded after a lengthy delay before a budget was passed. There are all kinds of armed forces base meetings, including some with promising names like Future Naval Defense Forecast.

The other gaming group--legalized gambling--hosts Gaming Technology Summit in Vegas, starting the 24^th. With server based games and, even, interactive live real time betting handhelds winning approvals for limited trials, it might be time for the casinos to give way to equipment companies, by then.

Evidently unaware of how many managers want a break around the end of the month, the following conferences start at the end of the month and straddle early June: SG COwen's Annual Global Technology Conference, the Human Genome Meeting 2006, CSFB's European Technology Conference, Citigroup's 7^th Annual Semiconductor Conference, and the Consortium of Multiple Sclerosis Centers.

As a rule, oil has backed off early in the month, before resuming strength around Memorial Day weekend, the official start of the summer driving and air conditioning season. Because oil backs off, and travel picks up, airlines have often benefited, while utilities have often benefited as well from cheaper fuel costs. Retailers are the focus of earnings, and often outperform the general market after underperforming as long as technology rises. Of course, both digital and bio technology have been dreck, so perhaps they have an opening to play some catch-up, which might postpone the acceleration of strength in retailers. You'll hear all kinds of predictions about Mother's Day, Graduation, Father's Day, and even June brides. Ignore all the banking economists and, instead, listen to the International Council of Shopping Centers' own economists, since they usually get it right. Bear in mind, too, many retailers are limiting the amount of intra-month sales data they're willing to release, while the first week in June is when technology mid-quarter updates start.

And so it is, another month under my belt, the notches loosened a bit as I say good-bye to my own Monthly Outlooks.  I wish you all a safe, sunny summer, free of hurricanes, tornados, and Avian Flu.

© Sandi Lynne 2006 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's alone, and should be just one factor in more complete due diligence.

BEST Q1 IN YEARS
April 2006

Perception and reality usually diverge in April. Traders think of it as one of the best 6 months of the year but its strength is usually weighted towards the last 5 trading days. Earnings warnings that dribble out immediately after the quarter ends aren't met with earnings to redemption until the third week of the month, which is why stocks often struggle in April.

Ask anyone which index performs best in April and they'll probably say either NASDAQ or the S&P, In fact, the DOW, the smallest of all indices, usually outperforms all others and that's not what most would say if asked. Oddly, after being criticzed most of the the first quarter for lagging, the DOW Industrials wound up being the champion in March, which makes it hard to see how it can simply continue powering higher.

With the month starting on a Saturday, the big data will be released a little late. Same Store Sales on Thursday, the 6^th, the Unemployment Report on Friday, the 7^th.  The Equity market has been looking forward to a cessation in rate hikes, and the bond market taking rates higher, finally.  The most recent FOMC statement, guided by new Fed Chairman, Ben Bernanke, was nearly a rewrite of the last two from Alan Greenspan's rein. Equities and bonds are pricing in two different economies. Or maybe not: the Bond market could be pricing in much higher inflation even as the stock market is doing the same by running up stocks. Sooner or later, something's gotta give, and I'm thinking it's gonna be stocks, even accounting for the fact that bonds are usually weak in March and snap back in April. One thing for sure, with Bernanke stressing the importance of data, a too strong Unemployment Report could be just the shock stocks need.

There have been a number of years when stocks were strong right up until tax day, then suddenly collapsed, as funds flowing in from procrastinators funding their IRA's and retirement accounts got put to work, the flows drying up come Income Tax day--this year on April 17^th in most of the country, the 18^th in a few New England states. Other than having expectations for some index rebalance selling when the first trading day of April arrives, I'm agnostic on when a correction of any note will arrive. As long as the financials remain strong, it's hard to make a case for a correction. But, as soon as financials start breaking their trend lines, I would expect the floodgates to open. That could happen if oil goes back to $70 a barrel, if the bond market keeps selling off and long rates crest 5% or if earnings warnings start coming fast and furious. What COULD happen, though, it different from what should or will. Just keep your eyes on oil, bonds, and the financials, because all three will be key for stocks.

American Cancer Research and Neurology are the two big April meetings. Don't forget, Easter falls mid-month, overlapping with Passover, so a slow schedule to open the month will be matched by some light staff in the middle of the month--thin markets often the least informative. Same Store Sales on the 6^th will be comping Easter a year ago. There's not anyone on the street that isn't aware of that, so the reaction to weak/negative comps will mean more than the comps, themselves.  JCPenney, which has been the comeback kid, meets with analysts on April 18^th. Dell Inc, of course, cancelled its analyst meeting originally scheduled for the 5^th.

SAE World Automotive Congress meets in Detroit, while there are two Fuel Cell Events on opposite coasts, also, the first week. MIP-TV and Milia Interactive Content meet in Cannes, France. Are there any countries left that don't offer their own version of American Idol? Will NBC's nightly show Deal or No Deal get picked up? Don't forget the upfront season is May, so any shows picked up in France may show in the US in September. The BBC has been the most successful exporter. As for interactive content, rumors about potential take over candidates in China should pick up now that Google has pulled up to the pump for a refill--a generous move on the companies part to satsify demand for those funds mimicking the index, its inclusion in the S&P 500 offical come Monday, April 3^rd.

In a snub to President Bush and his moral majority, an equal snub to the FCC with acknowledgment to Bush's low ratings, the Victoria's Secret Fashion Show will return to CBS TV this spring, to be taped during the International Lingerie Show the 3^rd--5^th. Anyone remember the first Victoria's Secret Fashion Show available on the web in real time. The website streaming it crashed. A few short years later, Apple and telcos stream Video to iPods and cellphones, resspectively. Natually, the CTIA meeting in Las Vegas won't be as much about cellphones as content, Research IN Motion's earnings scheduled to be released the final day of CTIA and Blackberry's looking a little like yesterday's technology, now, with cellphones able to do so much more than merely capture e-mail, now. Do ya ever wonder why RIMM didn't take the Blackberry to the next level, other than adding poor cellphone service?

The second week of the move includes the major Pet Industry show in Atlantic City, Anti-Aging Medicine in Orlando,  and a Buying & Selling eContent Executive Conference, in Scottsdale (9^th). Marketing & Optimizing Search meets starting the 10^th but it's part of kiosk.com, so not quite what you might expect.

Petroleum Geologists meet the 9^th, the same day National Operations & Fulfillment meets in Orlando. With package delivery stocks, especially Fedex, soaring despite high priced oil, it's a shame the group is entering into one of its slower seasons. In fact, the oil industry is entering into a slow season, with maintenance and the switch to lighter, summer crude colliding with what's usually a low usage time of year. Of course, those kinds of comparisons will be throw off this year, too, with Easter and Passover falling in the middle of April instead of late in March, as they did in '05.

The cruise industry has been in a funk thanks to a high oil prices, a fire on one Carnival ship, and rotovirus plaguing a number of ships. cruise3sixty meets early in the month (8^th). That may be an opportunity for RCL to shince by default Then, there's H5N1 to capture Microbiologists meeting in Europe the first week of the month but, otherwise, its seems governments have been more obsessed with it than the populace--some even accusing Bush of trying to use Avian Flu to divert attention from near anarchy in Iraq. That complacency might change if cases not only start showing up more frequently in April but actually reach our shores. April is a prime month for migratory birds to start their journey.

Also meeting the second week of the month, Paper Week, NCTA for the cable & Telecommunications association, BIO 2006, and SunTrust Robinson Humphrey's 35^th Annual Institutional Investor, a meeting that includes nearly every sector imaginable, from restaurants and retailers to biotech and software, small size companies the glue that holds the conference together, but some bigger names like Walgreen, too. With little else on the calendar that week, and all markets closed Friday, the 14^th, for Good Friday, earnings just a preview of the surge yet to come, Wall Street will be lightly manned, with heads elsewhere all week. Three day weekends are often an excuse to take some profits, when the holiday starts on Friday, and this one may see profit taking in spades, as the sellers offer shares to the funds that are trying to put last minute retirement account funding to work.

The World Vaccine Congress meets in Montreal on the 18^th--a lot of government money being thrown at developing a vaccine against Avian flu, while Merck, not known for vaccines, can talk about its vaccine against cervical cancer as well as its recently approved one against rotovirus--maybe something travel agents will start recommending to cruisers, in the future.

The Satellite Expo meets starting the same day, as well as Webmaster World Pubcon, where the speakers are all the companies you'd expect that won't be at the kiosk.com related Marketing event. The same group will, likewise, be at eMarketing, in San Francisco, starting the 25^th. For over kill, there''s also @d:tech starting the 26^th, also in San Francisco, and a marketing workshop sponsored by Shop.org (a division of NRF) starting the same day in Orlando.

AFCEA, the Spring Intellgience Symposium for the Armed Forces starts the 19^th, and that's not something you'll see advertised since it's a "classified" summit but reason for analysts to talk up the group. One thing you can say about our President, for all he was known as an oil man, he turned out to be the best friend the defense industry ever had. Since most defense contracts run ten years or more, the industry will be feasting on his largesse for a long time after he vacates the White House. Future Naval Plans & Requirements is another to keep an eye on starting the 25^th.

Kidneys, teeth, Respiratory Care and Sleep Medicine are all topics you'll hear about starting the 20^th. Of course, by then, earnings will be in full bloom, just in time for Options to Expire, April Options often a down event, rather than the flat expiries we've seen of late.

The National Association fo Broadcasters meets the 22^nd, subtitled the World's Largest Electronic media Show. I suspose that will be true when HDTV's and video downloads are the norm but for now, that's more vision than reality. This is the one for TV Broadcasters, though radio is included.  Hannover Fair claims it’s the largest technological trade show in the world, and it usually earns that claim. It starts on the 24^th.  UBS hosts Global Pharmaceuticals in New York starting the same day but could get usurped by the scientific meetings this month, as well as earnings releases.

By the last week of the month, Earnings will dominate, which is why the Investment Conference schedule dries up until May. One exception is AG Edwards Media/Enetertainment conference but that's related to NAB--and just in time for analysts to start gaming how the upfront will go, even as television shows start building to their Sweeps Week conclusions.  Likewise, Inside Aerospace starts the 24^th, and includes an awards gala. But its about the technical aspect of aerospace, including structures, dynamic Materials, design optimization. So don't think airlines as much as suppliers to Boeing , Bombardier, and EADS. Post-9/11, that group looked on the mat as much as Detroit does now, so bear that in mind when you hear anyone say GM is about to file bankruptcy and become a much smaller company. There's an ebb and flow to every business, and comebacks are the basis of innovation. Lutz may pull off a second save, yet.

If you suddenly see furnishings getting as much space in your local newspaper as earnings, that's become the International Home Furnishings Market starts its market week  in High Point, NC on the 27^th. Just as homebuilders have started talking about slower traffic, added incentives, and higher cancellations, furniture companies have actually been recovering. While the group usually does best in fall, as people prepare for holiday, it might be worth some work in advance of Highpoint.

Intel's Analyst meeting is the 27^th, in New York. As March ended, it was one of the worst performing Dow stocks--the Merck or Pfizer of technology. Yet, it's had nine lives in its short corporate history, and with VISTA, the new OS from Microsoft supposedly on schedule for release in November, the Analyst meeting might just be an excuse for analysts to start talking about April as the trough, post-Intel's earnings release (and widely expected to be putrid quarter to be announced).

Most writers and market followers talk about the "best six months of the year" ending with April. I've always said the market seems to peak February 5^th and August 5^th, and haven't subscribed to the April up month claim since the mid-90's. With technology companies often reporting sequential declines in revenue of 5--8%, financials often past their peak until fall, oil companies booking their top profits in winter, and retailers usually not a focus until May, troughing in April, April's gains usually form book ends early and late. There's too often weakness after Income Tax day that isn't reversed until late in the month, after much damage has been done. April is a trader's month--time to look for opportunities to ride the correction down--picking a bottom before the earmings release bounce, a bounce that often tests but rarely exceeds the Q1 high. With another FOMC meeting May 10^th, and the likelihood of another rate hike then, I see no reason to expect this April to be different from most others.

© Sandi Lynne 2006 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's alone and should be only one factor in more complete due diligence.

DANGEROUS MARKETS
March 2006

 We should probably start at the end of the month, because two factors will hang over the markets all month, and they both close out the month. Tops on the list is the first FOMC meeting over which Ben Bernanke will preside, on March 27--28. Normally, two-day meetings are reserved for the last meeting prior to the Chairman's testimony before Congress, the former Humphrey-Hawkins testimony that continued under Chairman Greenspan, despite the bill lapsing. Bernanke has already testified before Congress so the two-day meeting must be a welcome party. The Street assumes another rate hike is a given, so who am I to argue with it? The post-meeting statement could be open to more refinement, not just because Bernanke will put his stamp on it but because long yields finally started lifting early in March, reversing the inverted curve that had become a pretty contentious outlier. Of course, there's plenty of month left for a return to inversion but I wouldn't count on that happening.

Which brings us to the other event that's often made for nasty endings for March, which often comes in like a lamb, just as it did this year. That would be Japan's year end, which has often seen funds repatriated, to shore up balance sheets prior to closing the books. Of course, Japan and Japan INC are in much better shaped than they've been in ten years, so balance sheets should need less fortifying than in years past, still, I wouldn't bet against a rise in the yen towards the end of the month, or weakness in US equities then, either. As corporations close the first quarter, and retail investors who've procrastinated, pay their taxes and fund their IRA's and other retirement accounts, before they lose their chance for last year, funds have often moved to cash, sapping some liquidity.

So with those two events pulling up the rear, where might as well discuss an event that won't happen this March or, rather, two events: Easter and Passover, which could postpone some purchases, even as retailers will have Easter 05 against which to compare. In review, with March still one of the weaker months for home sales, retailers likely to post weaker comps, another rate hike looming, yen rising--even as the repatriation gig that helped boost the dollar ended--and global rate hikes now on everyone's radar screen, the argument for stocks weakens. Margin rates, as low as 2.5% not long ago, now hover between 7% and 7.5%, arguing against leverage for all but the most successful traders. Worse, US long rates had finally started to rise and look poised to hit 5% this month, after months of "conundrum." About the only ones celebrating are the retired, conservative investors for whom cash was trash, the past 5 years.

The week of the 6^th will bring a slug of mid-quarter updates, even as Intel, last week, said it would discontinue mid-quarter updates, just as Wal-Mart and Target have ended weekly sales updates. IN this age of information, less and less information will be handed up to investors trying to gauge the markets' next move. Which brings back  Trade Shows and Investment Conferences to their once significant position, since Reg FD requires any material information to be disseminated publicly, which can be done by press release summary or live webcast, direct from a presentation, just as Google did last week, despite CNBC's inflammatory and sensational queries to the contrary. The first full week of the month promises the American Societies of Immunology in Miami Beach, where HIV/AIDS, allergies, and H5N1 are likely to be top abstract presentations. The same dates, in San Francisco, the American Academy of Dermatology meets, with two mergers pending, and a new filler, recently approved in Europe, awaiting approval in the US.  Of course, the FDA's decision on Biogen and Elan's Tysbari is what some will watch, though Elan has already announced its shares will be halted starting the 7^th.

Optical Fiber started the 5^th, and is reason Corning scheduled its analyst meeting for this week.  A Magazine & Book Retail Conference, near Disney World, will bring out Barnes & Noble, Borders, and Amazon, even as SourceLink, a racker that just acquired its way into magazines, announced it was hiring an investment banker to explore strategic options--code for taking bids.  Of course, SORC seemed likely to be dwarfed by other merger activity, since the Wall Street Journal online claims AT&T's  bid for BellSouth, even as there were rumors the week prior of US Steel preparing a bid for AK Steel. Other meeting of note, the first full week, includes International Restaurant & Food Service, the Federation of American Hospitals, Raymond James Annual Investors Conference ( a hodgepodge of sectors, as is JMP Securities, the 8--10th), Carriers World Asia, the Financial Times' DIgital Media & Broadcast, VoiceCon, and SG Cowen's Annual Health Care Conference. Of course, for some, the only events this week will be an OPEC meeting and one for the International Atomic Energy Agency, at which Iran's nuclear plans will be the topic. For others, the highlight will be Morgan Stanley's Semiconductor & Systems Conference, often a band-aid over Intel's disappointment, with Texas Instruments the leader traders will look to for salvation. Count 'em, 6 communications chips offering mid-quarter updates, including TXN, ALTR, XLNX.  Retailers will have move insight into how march opened, at Bear Stearns Retail, Restaurant & Apparel Conference but the odds for table cloth venues look bad. A blizzard up the East coast in February, right before Valentine's Day disrupted business, even as the Olympics offered good reason to be comfortable at home. So happens, restaurants will provide February Comps this week, even if they're not appearing at BSC.

Given all that's happening the first full week of the month, CeBit & ICT World Forum in Hannover, seems to be too much overlap but that's not entirely true. LCD, PDP's, LCOS TV's along with all the big names n software will join nearly 8K other companies, in what's one of the largest trade shows of its kind. If by the time the second weekend of March arrives you're thinking you need to take something, leave it to AAGP, Geriatric Psychiatry, to remind you of the many anti-depressants available. If you feel our heart sinking, there's ACC, the American College of Cardiology(11--14), which is sure to prompt some analysts to start examining the remaining players (outside BSX/GDT merger) and suggest some partnerships that could happen. Watch iRobot the second week of the month, too, because the International Housewares Show meets in Chicago, and like the first President Bush who hadn't been in a supermarket so long he was stunned to see groceries scanned, CNBC is sure to send a reporter who won't have known about Scooba, the automatic floor washing system that follows up Romba. Meat and Wineries meet in separate cities, which seems a shame, donchya think? But it's ShoWest that will get the most press (13--16), especially following so closely after the Academy Awards (5^th). You probably heard about another cruise ship stricken with rotovirus, so Seatrade, starting the 13^th, might be something you'll hear about more than usual--especially now that Merck won FDA approval for a vaccine against it. ICFA--the Funeral & Cemetery trade meets starting the same day, in Las Vegas. Don't know about you, but I found it impossible to get a flu shot this year, and I managed to escape catching the bug anyway. In the 21^st Century, it seems amazing that flu vaccine supplies aren't available to anyone who wants a dose but that's been the case for two years. JP Morgan is hosting an Internet Conference, while Deutsche Bank will host Technology, UBS Global Software & IT Services (14^th) , CSFB Small Cap Transportation, while the Futures Industry will meet in Boca Raton--which means all the folks controlling trade--through programs--will be sunning themselves at the Boca Resort.

One conundrum I have regards the 17^th, a Quadruple Options Expiration, as well as St. Patrick's Day, one of the THE MOST DEPENDABLY UP days every year. The contrarian in me wants to bet against St. Patrick's Day's nearly infallible record, while the rational adult in me knows expiries have been much ado about nothing for many months. But this one is different: It's the expiry that ends the quarter, and triggers Index reweightings--occurring just as long rates are finally rising, and preceding another FOMC meeting and rate hike. Can the Street print 'em green for the Irish? There are too many trading days ahead to say for sure, though merger activity is continuing unabated, and that's often been bullish for stocks, with brokers/investment banks hitting new highs with regularity, and providing much needed leadership. A $67B deal makes for lots of advisory fees..

There's something else about this March, that's different. Both GDC (20^th), for Game Developers, and EHX (28^th), otherwise known as Electronic House, meet this month. Traditionally, EHX has been a May event, so pulling it in, even as that group is languishing at annual lows, could start talk of Father's Day, Graduation, and Back-To-School, before the Easter bunny has even hatched. Electronic Arts, the biggest of them all, has already said it will price the Godfather at $39.95, putting pressure on smaller competitors, and even despite the fact that this is one of the most eagerly awaited titles of the year. JP Morgan will host Gaming, Lodging & Restaurants (20^th), while CIBC hosted something similar on the 1 & 2 but JPM has the advantage, because the entire group will be done reporting by then. Merrill Lynch presents its Annual Retailing Leaders Conference (21^st).  CSFB will host European Biotechnology & Biopharmaceuticals in London. Oddly, SR Institute hosts Inflammation & Immune Diseases in New Jersey, starting the 20^th, the same day the Innate Immunity World Congress sets up in San Diego, also hosted by SR Institute. Go figure!

If Apollo's recent collapse got your attention, you'll want to market the 20^th on your calendar, because that's when the Education Industry investment Forum will meet. In addition to the schools, text book publishers, and Ed software support companies, more than a few analysts who follow the space will also speak.   If you prepare to drill down on company specific events, and Research in Motion's settlement with NTP left you flat, then maybe Adobe's Photoshop world, starting the 22^nd will do it. Then, again, starting the same day, the AAOS: Orthopaedic Surgeons start their meeting in Chicago, and EVERY name in the space plans an analyst meeting concurrently. There's also Pet Expo, 23^rd, and Hinman's Dental Meeting, the same day, though the American College of Medical Genetics is probably the more intriguing of those starting that day, though Stem Cells, starting the 27^th, won't escape day traders' notice. Of course, the week after expiry is notorious for turns down but, then, we've already covered some of the reasons, including end of quarter and index reweightings.  By the time Alzheimer's Disease in Drug Discovery and Development meets in Boston, the 27^th, You might just wish you could forget the month. Banc of America hopes you'll have enough left for Media, Telecom & Entertainment, by which time, after T's bid for BLS, some are sure to be speculating about VZ's next move. I mean, who would have thought T would make that kind of bid so soon after the merger of SBC and the remainder of Ma Bell--even if the marriage of both owners of Cingular makes sense. Vodaphone agreed to sell some Japanese assets to Softbank, and Verizon would love to own all of Verizon Wireless, can it pry it from VOD by the end of this month?

And while we're at it, let's not forget that April Fool's Day is reknowned for the start of Baseball season, as well as bad sport on the internet, since some virus/worm writers just can't seem to resist. If you have no energy left for anything else, come the end of March, at least make sure you update your anti-virus software. Anecdotally, some of the weakest months of the year are those that don't offer any extra days off--any 3-day weekends. Given that March is one of the longest months of the year, offers no holidays this year, yet is fraught will all kinds of booby traps at the end of the month, it may pay not to get lulled into a sense of security--no matter how well the month starts.

© Sandi Lynne 2006 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence. Paid Subscribers can always check the link to conferences after logging into the Premium Calendar.

WHAT RALLY?
FEBRUARY 2006

February started in typical fashion, with a rise that quickly turned into selling. I won't detail the well-known structural problems facing the U.S. including the Current Account Deficit, a Trade Deficit that hasn't eased even when oil prices have, two wars overseas being funded and largely shouldered by the U.S., a new Medicare Prescription drug plan that will cost billions more and a President who can outspend any democratic in the name of individual ownership, even as he seeks to make capital gains and estate tax reductions permanent while spending money the US doesn’t have. All of this is the background that pressured the yield curve just as the Treasury sets out to sell 30-year bonds for the first time in 5 years.

The thought of the deeply indebted Treasury failing to sell such long-term bonds back when Fed Fund rates were at 1% would be laughable if it wasn't recently retired Alan Greenspan who, in one of his politic moments, praised homeowners for choosing adjustable rate mortgages for, rightly, judging rates would stay down for a long time. Maybe funnier is what a short memory Wall Street has--in its efforts to praise the damned, forgetting calls for Greenspan's retirement two years ago.

Bonds and Greenspan's retirement should be the two, intertwined concepts that will define February, with the 9^th the day the first in five year 30-year comes to market (though already trading when issued), the 15^th and 16^th two days of testimony in Congress for the new Federal Reserve Bank Chief who, so far, hasn't mastered circumspect language typical of his new position. I'll grant, Chinese New Year had a hand in weak bids for Notes issues in early February. I'll even grant a certain necessary demand for longer term bonds from mortgage issuers and pension funds. Positive returns have been hard to come by in the U.S. otherwise. The Federal Open Market Committee is in recess all February, except for Bernanke's swearing in on the 6^th. How many years has it been since you've heard anyone mention that the FOMC can meet intermeeting by phone, if necessary. What was the emergency the last time you heard that, compared to now?

BUT, if the markets rise on a three legged stool, stocks, this month, may fall on having three legs kicked out from under them. It's not just the overly cautious outlooks from companies that have reported, it's Iran's determination to be as dumb as Saddam Hussein was, boasting of its plans for nuclear power. You'll recall, of course, how weak the market was in the months of "diplomatic" efforts before the inevitable US strikes against Iraq. Is it a problem that the US can't afford, economically or in troop strength, another war? You bet it does. But, then, look too, at what forcing the issue of democratic elections has done for Palestine; the populace elected leaders most of the world doesn't and won't recognize. If the Arab world believes the U.S. believes in freedom only if it dictates the terms, would that be a surprise?

We can all agree I'm not an economist, politician or diplomat but my sense of history dates back decades. Historically and seasonal patterns, perhaps, mean much more to me than most. So, again, I say: remember how the fall before the Iraqi invasion felt and ask, will Bush attack yet another country? Can he? Cause if he can't, a combination of Iran's independent desires for nuclear parity combined with a potential scandal vis a vis Plume/Libby and lobbyist Abramoff and even the most patriotic will have to question whether the U.S. is the best place to invest--after a putrid Q4 GDP print, no less.

February is NOT one of the worst months of the year but it is the second worst month of the 6 best months that run from November through May. Typically, leisure stocks like cruises, airlines, and retailers outperform. Sure enough, outperformance has often meant falling less than other stocks, when bear claws tighten their grip but there seem to be ever fewer places to hide. Pharmaceutical companies, once the dominant defensive play, haven't worked since the Clintons left the White House. At least not US ones, anyway. Foreign pharmaceuticals have been outperforming and, the stronger the dollar gets, the better they should perform. Not only is the US the biggest prescription drug consumer but, contrary to what you might have heard, some of the healthier seniors will actually save thousands under the Medicare Prescription Drug Plan. Understand, some of the seasonal outperforming groups have won their stripes by merely reporting earnings off the calendar year schedule typical of companies that report in January's earnings season. It's all momentum chasing the next hot story and possible surprise. Still, retail and leisure have outperformed like clockwork, just as utilities, gold, and REITs usually do in March.

With the bulk of the S&P 500 done reporting by early February, the conference and trade show season kicks back into high gear. None may be bigger than retail/apparel's own MAGIC, in Vegas, but plenty keep traders closely focused on the calendar.

"Defensive" consumer products  companies promise two big meetings. The First, The Soap & Detergent Association, meets the 4^th, CAGNY, the bigger event, starting the 20^th, and a near guarantee of some outperformance for the group. CAGNY covers the whole gamut of Consumer non-durables while Cosmetics, Toiletry & Fragrance waits until March 1^st to gather its members.

Pfizer plans an Analyst meeting on the 10^th, while every orthopaedic device manufacturer will host one during AAOS, which isn't until March 23rd.

Merrill Lynch hosts Small Cap Growth on the 7^th, in London, though the RUT makes it look like anything small is a growth stock, even as that group didn't prove immune from selling that started on the 3^rd. SG Cowen hosts its 27^th Annual Aerospace/Defense Technology Conference, starting the 7^th, too, the same day CSFB hosts Software, and Merrill hosts Global Pharmaceuticals, Biotech & Medical Devices, in New York. One day later, on the 8^th, CSFB hosts Financial Services in Miami, while McGraw Hill convenes a Media Summit in New York. Dya think some of the attendees will attend Grammy Award parties on the East Coast, while it'll be beamed from the Left Coast? Given that broadband, radio, satellite, and advertising are just some of the sectors covered, you can bet your bippy on that.

J.D. Power & Associates will host an Auto Roundtable, in Orlando, starting the 9^th, in advance of the National Autodealers Association meeting (11^th), and just in time for an earnings release from AutoNation, one of the biggest dealers in the country.

Weeks before MAGIC meets, 7^th Avenue will host runway shows, while World Shoe assembles in Vegas, starting the 10^th. Think it's retail season because of earnings, World Shoe, and MAGIC along? Not Quite, New York will host the American International Toy Fair, which means analysts will be crunching results from last Christmas at the same time they'll be assessing the potential for back-to-school and Christmas 2006, while fretting about how much the Winter Olympic broadcasts might cut into restaurant sales on Valentine's day. Never fear: there isn't a married or women in a committed relationship who doesn't know to start her Valentine's Day shopping for herself, on SuperBowl Sunday, the 6^th. The malls may have seen light traffic Sunday but I assure you the cosmetic and handbag counters, and more mature ladies stores were racking up sales SuperBowl Sunday. The usual suspects were busiest, and they both start with "C." Conversely, Apple had one of the slowest days in more than 6 months, albeit nothing to be ashamed of, especially compared to the local Sony Style, just yards away.

UBS does Healthcare on the 13^th, which overlaps with CEO/BioInvestor starting the 14^th. Merrill, ever the busy bee in February, hosts Insurance Investor starting the same day, and just days after former execs of both AIG and a division of Berkshire Hathaway were, finally indicted. CIBC, not afraid of some cold weather, returns for the Annual Whistler Institutional Investor Conference, on the 15^th but mind Bernanke at the House that day, Senate the next, cause that's where the financial news cameras will be pointed.

Come the 16^th, Citigroup hosts its Annual Leisure Day, the group, evidently, not worth more than a day to Citi, one of the DJIU's worst performing stocks this year. Roth Capital hosts its Annual Growth Conference starting the 20^th but one quick glance at the presentor list should convince "Growth" is in the eyes of the beholder, and clearly redefined at a lower level by Roth. Morgan Stanley hosts Bio Investor the 20^th, though MAGIC's start on the 21^st, almost assures a lot of press and analyst comments will be devoted to foretelling what will be hot seasons hence. Just remember, though, these were the same people who predicted every women would want a "bubble" skirt, an unflattering style still begging for customers on 75% off the last reduced price racks throughout the mall. Nevermind it was Womens Wear Daily that said it would be so. How do you think an analyst like me gets respect for her opinion? I actually ran retail stores that had to order 9 months in advance, and never committed a bubble skirt faux pas in the process. Come to think of it, last I was in retail there was nothing hotter than skin tight stretch ski pants, many with stirrups. THERE BAAAACK! (Maybe Fashion Ave should ask me what fits and sells well cause it flatters. Still got some in my closet, and was stopped 7 times at the mall today, asked where I get 'em).

You might think the month sounds busy enough but we're only just getting started. On the 21^st, there's an Alzheimer's Disease meeting from Keystone Seminars, RBC Capital hosts Telecom, Media, & Technology, in Whistler again. It is owned by the Royal Bank of Canada, after all. PiperJaffray Solar & Clean-tech Symposium meets in New York the same day, already a highlight of former oilman Pres. Bush's State of the Union observation of "America addicted to oil." HealthTech's Molecular Medicine Tri-Conference starts the same day, as does a meeting of the Am. Academy of Dermatology, in San Diego, and a surprisingly active M&A group, of late. The Newspaper Association of America meets in Atlanta, while CSB hosts an ECB Conference, in Frankfurt. Come the 26^th, Bear Stearns will host Media, Entertainment & information, in Palm Beach, while Goldman Sachs hosts its annual Technology Conference in Phoenix. (I haven't, yet, hacked the meeting site yet but hope to, as I did last year, so check back from time to time. Paying customer will get it if I do.) Texas Instruments hosts a DevCon, in Dallas, starting the 26^th, too, while London will be host to 21^st Century Communications World Forum, more geek event than most, organized by the IEC.

The 27^th brings busy Merrill back with the Global Automotive Conference from the Geneva Auto Show, while CIBC does Israeli Technology Equities from New York. Piper  hosts China Internet from Beijing a day later.

Not to leave anyone out, the Cattlemen's Beef Association, and PORK meet in February, along with the National Farm Machinery, the Int'l Zinc & Silver Conference, and Search Engine Strategies, a group that cracked seriously to start the month. For fireworks in stocks, perhaps PCIG, the Pacific Congress on I-Gaming, in Macau, is the one to start preparing for now, even as Singapore's coming plans for a gaming mecca draw near to being finalized. Doesn't matter that some potential investors have already pulled out of Singapore, scared off by escalating costs; someone's gonna win the rights to be first and clean up. Other notable events this month include PaperWeek, in Montreal, starting the 6^th, and Mortgage Technology, the day before. Internet Security came and went before this was posted, spoiled by McAfee's warning and Symantec's less than stellar outlook.

Which brings us full circle: to the many structural problems facing the economy and the less than enthused outlooks offered by companies. In fact, many of the post earnings conference calls sounded reminescent of the ones we heard in 2000, when the economy was starting to spring leaks but many investors hadn't, yet, acknowledged the coming floods.

February may not be the worst month of the year and only the second worst month of the best 6 months but, then, it might pay to bear in mind the worst of the best 6 months--March--is still ahead. If you haven't asked "What Rally?" by the time this was posted, on 2/6, whaddya waiting for?

© Sandi Lynne 2006 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's alone and should be just one factor in more complete due diligence.
 
MUCH TROUBLE AHEAD
January 2006

Any January rallies are not only likely to be short-lived but, also, set the top for many months to come, if not for the year. For the DOW Industrials, that happened in 05 so the pattern should be familiar. Granted, there's likely to be one, multi-week rally when the FOMC finally signals its steady rate hike campaign is over but that could be well into the second quarter. In the meantime, Greenspan's last FOMC meeting, on the 31^st, and a looming 30-yr bond issue, scheduled for February 9^th, the first in 10 years, could weigh on the market. Of course, issuance of a 30 yr will require another lifting of the debt ceiling, but I'm assuming that's done or the FED does a coupon pass to withdraw shorter term paper first--whatever it takes to get the bond issue done. What that means for the 10-years, which had become the default paper, could be disruptive for weeks. Time was the 30-yr was the benchmark and one presumes it will rein supreme, again, especially in the face of still rising rates, providing a sure offset to 30-year mortgage paper, fixed rate mortgages far more appealing in the face of still rising rates.. The recent dip in mortgage rates and applications are merely par for the course, and reason the last week of the year is often opportune for savvy mortgage apps, when a slowdown usually makes lenders more competitive. 

Meanwhile, January promises to be as busy as it's ever been, with Q4 earnings ahead, and a slug of  significant trade shows and conferences before even the first half of the month passes. Best known of January meetings include the Consumer Electronics Show (CES), MacWorld, and the JP Morgan Healthcare Conference, formerly the Hambrecht & Quist Biotech Conference. There's also a 3-day weekend to Celebrate Martin Luther King Day, the 16^th, prior to which the Bond market closes early, Friday the 13^th.

Farm Equipment, Tropical Plants, Poultry Expo, Iowa Pork Congress, and the Cattleman's Beef Association, and Hong Kong Toys & Games Fair are some of the less frequent meetings, while the North American International Auto Show meets starting the 8^th, with all the new model introductions, coincident analyst meetings, and a JD Power Auto Roundtable scheduled, as well. The official Press days are the 8^th--10^th the official Securities Analyst Event at the show are the 12^th and 13^th. Needham hosts a Growth Conference that's a hodgepodge of sectors, while S.G. Cowen sticks to Consumer, concentrating on restaurants and leisure, both starting the 10th. 

For broader sector meetings, there's Aviation Issues and ISS SEMI Trends, while the Philadelphia National Candy, Gift & Gourmet show kicks off fall, since Halloween '06 candy introductions will get more press than Valentine's Day. . Raymond James hosts Growth Airline on the 26^th, though we could debate the paring of Growth and Airline, especially if the correction in energy runs its course and reverses. To that end, OPEC meets the last day of the month, the same day as the FOMC, and was threatening to start cutting production as last year ended. 

Citigroup hosts its annual Entertainment Media & Telecom Conference starting the 9^th but won't hog the spotlight. Not only is that the date of Howard Stern's live debut on Sirius Radio, but Citi doesn't have the exclusive. Mobile TV and Video Forum is in London, while the Next Big Idea: Future or Branded Entertainment will take place in Hollywood, CA, both starting the 17^th.  The Golden Globes Awards broadcast, by the way, starts on the 16^th.

While JP Morgan's successor Healthcare Conference is notable for more pharmaceutical presentations than H&Q offered, Peptalk, aka Protein Information Week, from HealthTech, starting the 10^th, should pick up some slack for biotechs which didn't end last year strong, as they usually do, in anticipation. The Society for Immunology, Pacific, meets the 28^th, in Grove, California, by which time flu should be striking pockets of the US. Needham's Growth conference includes some smaller pharma development firms that may not make it into JPM's conference, while Rheumatologists meet the 21^st, in Snowmass, the Yankee Dental Congress, in Boston, starting the 25th, Society of Cardiothoracic Surgeons the 30th^, in New Orleans, one of the first shows to return to that still troubled city.

MacWorld, of course, is one of the pre-eminent events in technology, starting the 9^th, with rumors run amuck about Apple's supposed plans, from an early introduction of its coming Intel chip based machine to retirement or replacement of the popular iPod Shuffle. Little has been said about the Motorola ROKR, unlike runaway hit, the MOT RAZR, so look for potential successor and imitation phone products, too, though not likely a satellite radio capable iPod, yet, since Sirius, which has admitted to pursuing Apple, admits its efforts have come to  nothing, yet. A bigger video iPod, though, wouldn't surprise me, especially one cable of receiving live, broadcast TV to watch either in real-time or after storage on an iPod drive, streamed rather than downloaded earlier. Speaking of Video, NATPE, the association of Television Programmers, meets in Vegas on the 24^th, with a firm date for HDTV now set as February '09, which should inspire a new collection of set-top boxes, another area in which Motorola is near the top.  Of course, NATPE will, also, feature mid-season replacement shows for what's been a nearly forgettable fall TV season. Ironically, SEMPTE, for Motion Imagine meets right after NATPE ends, SEMPTE more for motion pictures than small screen programming, and concerned with the equipment more than content, which makes it very unlike NATPE. On the subject of phones, though Internet Telephony, alternately called VOIP 2.0, meets the 24^th, with EBAY, proposed owner of SKYPE, likely to be more noisy there. Ironically, NAMM, for Music Merchants, meets the 19^th, too. Of course, we probably can't talk about entertainment without mention the coming Winter Olympics, in Turin Italy, for which there's likely to be more access choices than ever before, broadband so much more pervasive than ever before. Mobile Games Forum, in London, the 25^th, will be repeated in the US in February, closer to release of Sony's new game box.

The so-called International Builders' Show. the 11^th, in Orlando, may not answer any of the questions traders have about housing but is sure to populize skyrocketing costs and shortages of materials, made worse by another bad hurricane season. The World of Concrete, likewise, meets the 17^th, Heating, Refrigeration & Air Conditioning starts the 23^rd.  

Major fashion events don't start until February, but January still promises regional shows and FAME, the Fashion Ave event for smaller, emerging labels. Chicago's Merchandise & Gift Show, starting the 6^th, is the biggest of those events but, still, minor compared to the New York International Show.

Leisure will be busy this month. ICE, the International Gaming/Leisure show in London doesn't often cause many ripples here, though California's Western Indian Gaming Conference, in Palm Springs, might, Both events start the 24^th while the overseas event ends with Mobile Gambling Summit on the 26^th.  The New York Boat Show, which started New Year's Eve, wraps the 8^th, both the New York and Detroit Auto Shows pushed out to later in the month though vehicle makers will weigh in with December sales to provide a quick look at consumers' major purchases as the year ended, and in the face of persistently costly fuel and increasing loan rates. The Super Show, in Orlando, starting the 23^rd, is where sporting goods manufacturers reveal their back to school and fall 2006 offerings but, also, at which, analysts often decide the markets have become too gloomy about retailer earnings. Unlike the summer SuperShow, the winter one is focused on snow/winter sports, perfect timing on the even of the Winter Olympics. Summer sports will get its first pulse of retailers at Action Sports, starting the 20^th, in San Diego. Retailers usually sell off from the time they release December comps, this year on the 6, until the end of the month, when Nike is usually the first to perk up. Even in Olympic years, pessimism prevails on the group, as post-Christmas sales lead to questions about margins, even when sales were robust. I don't think sales were as robust this year as some headlines may have suggested and think margins, indeed, suffered at the hands of steeper than usual pre-Christmas discounts, a pattern established soon after hurricane Katrina and the CNN effect put a damper on the most reckless spending. The PGA merchandise show starts the 26^th, too, which is often within days of Nike's sudden buying interest. The National Retail Federation hosts its own Big Show starts the 15^th but its more concerned with back office operations and supply chain than actual retail sales. Jewelers, who meet on the 22^nd in New York for Mother's Day and Graduation jewelry offerings may dispute some recent surveys that claim that sector's sales were off 4.6%, since it's more difficult to capture sales at department store jewelry counters or even watches, sold, now, at handbag shops.

So, after setting the scene for the month ahead, rest assured it's December retail sales, the coming FOMC meeting and changing of the guard, and the February 9^th resumption of 30-year bond sales that will be the shadow overriding the entire month. Given the uncertainty created by such revolutionary changes in the bond world, the odds of a rally gaining traction seems slim to none. Keep that in mind when a snap back rally appears cause that will only be the temporary effect of new retirement and bonus money hitting mutual funds--temporary the operative word. The recall how frustrating it was in 2005 to spend months longing for the January highs. Video taped replays are not what the bulls are looking for but, then, they weren't looking for a year ending in "5" to be down, either. It may not be P.C. to wear fur but in '06 bear skin is likely to be the smarter way to go.

© Sandi Lynne 2006 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's alone and should be only one factor in more complete due diligence.

RECALL THAT STOCKS PEAKED FOR THE YEAR EARLY IN JANUARY 2004
DECEMBER 2005

Pretty hard to believe the year is almost over but it is. We can all thank John Thain for allowing equities to close a day for Christmas and New Year, something Grasso's NYSE didn't do when holidays fell on a weekend, as Christmas and New Year's Day do this year. Despite two weeks few trade or conference events to end the year, December's calendar is flush with events, especially the firs two weeks, most particularly from the 5^th to the 8^th. A confluence of investment conferences and mid-quarter updates could make the week of the 5^th--9^th the noisiest week of the month, with Intel and Texas Instruments officially offering mid-quarters but most other chip companies doing the same, before presenting at Lehman Bros' Global Technology Conference, even as Cisco hosts analysts the 5--6^th. The internet, search, digital media, and traditional Media as well as Communications all star in conferences before the first full week of the month is over.

A number of healthcare concerns hold analysts meetings in December, including Wellpoint, Sierra Health, Merck,  Eli Lilly and Bristol-Meyers. CSFB, Citigroup,  and GE also hosts analysts meetings, as do tech companies Cisco and Hewlett Packard. So much for a quiet end to the year.

Healthcare roars back, this month, not just with analyst meetings but, also, Cervical Spine, Neuropsychopharmacology, Chemotherapy & Infection, Int'l Respiratory Congress, Antibody Therapeutics, Infectious Diseases, Breast Cancer Symposium, Society of Cell Biology, Optometry, Gastroenterologists, and Hematology.   ICAAC, the Interscience Conference on Antimicrobial Agents & Chemotherapy, usually a mover in October, has been rescheduled for mid-month, in Washington, D.C. after New Orleans proved unready to host large conventions so soon after Hurricane Katrina. The schedule shift has left many forgetting it's yet to come. Of course, the year won't be over before traders will be anticipating JP Morgan's Annual Healthcare Conference, in January, the successor to Hambrecht & Quist's former biotech conferences and usually a reason for biotech to outperform the broad indices this month and, not infrequently, reason for traditional pharmaceutical companies to suddenly catch a bid the last two days of the year.

VoIP companies could come under some pressure during ISS World, which stands for Intelligent Support Systems for Lawful Interception of VoIP and IP Enabled Services. Vonage and other VoIP providers have had a hard time getting signatures from subscribers for 911--location services, which are required. The IPv6 Summit in Reston is about the new internet protocol that will assure VoIP services don't cause an exhaustion of IP addresses, and is the network of choice for all Federal agencies by 2008, something analysts covering communications equipment stocks haven't overlooked. News should get the most attention at SatCom Australia, while networks stocks and providers will be out in force at GSM Americas, even though it's focused on the Latin and So. America, more than North America. As encompassing as it sounds, GSM Americas is nothing compared to the 3G Mobile World Forum, in Tokyo, January 23^rd.

Homebuilders will release November sales and backlogs, while UBS hosted a Global Real Estate Conference in London, on the 1^st and 2^nd, and Bear Stearns will provide its year ahead. Metro NY Area Realtors meet in Atlantic City at Triple Play, which inventory builds of existing homes and price plateaus should be topics. Solar stocks could get a boost from Reinvention, about reinventing design for Greening the American Home is the theme.

The Federal Government's fiscal year began in October but typical delays passing a budget bill delayed orders from defense agencies. That started to change at the end of November, when contracts started getting unveiled. Aviation Week meets in New York starting the 5^th but the other coast will be home to an overlapping Military/Civilian Joint Use Issues Conference, even as Reno hosts Aerospace Sciences, El Paso (the city not company) hosts Space & Missile Defense Symposium, the AFCEA hosts Fall Intelligence, and CSFB gathers all the majors from the 6^th -- 8^th, concurrent with Aviation Week. Hewlett Packard hosts Identity Management/e-Authentication & Access in Washington, D.C. at its Center for Public Sector IT Thought Leadership-a think tank new to me so likely to be new to you, too. Fresh on the FAA's rumored decision to allow small tools, scissors, knitting needles and matches on airplanes, Air Cargo Security meets in D.C. starting the 5^th, with a lot of importers amongst the speakers, including security directors from K-Mart, Starbucks, GM, and Microsoft. Who knew? Directed Energy Weapons meets on the 13^th, as does Future Ground Forces. And you though RFID was it.

Power-Gen is the biggest of the power industry events, starting the 6^th, concurrent with Gas Powered Turbines and other related events. Bear Stearns will hold a Latin Energy One-on-One in Rio de Janeiro, hardly the stuff that moves markets. Snow and cold do, though, so keep an eye on energy shares and the price of crude. While November and early December have, traditionally, been times when energy stocks pulled back, providing entry for a run into March, E&P's didn't lose as much as they usually do, and service company shares actually broke to new all time highs, leaving little room for bargain shopping for energy bulls, despite the big break in crude prices from their summer highs at $70.

Media stocks have been some of the worst performers all year--the Pfizers and Mercks of entertainment. Cablevision's attempt to go private and Carl Icahn's agitation of Time Warner have done little to improve sentiment on the group, so an Investment conference starting the 6^th isn't likely to change that either. Before we know it, analysts will be talking up the Winter Olympics from Turin, Italy, in February, though even with an analyst meeting scheduled mid-month, NBC is too small a portion of GE's profits for the broadcast rights to mean as much as it might to a smaller, less diversified company.  Still, it's something for ad agencies to look forward to, as soon as Christmas promotions disappear. With an HDTV mandate deadline approaching more quickly, DV Expo, in Los Angeles, the 6^th, could be source of news and deals. Studios could also get a boost from nominations for the Golden Globes, the 13t^h, which has revived many a DVD from the bargain bin or movie debuted in fall. The Golden Globes are awarded by the Hollywood foreign press and, besides from a good record at foretelling the Academy Awards, include television awards, which the Oscar's don't. Ironically, NBC hosts the Golden Globe Awards, too, on January 16^th. With the anticipated biggest blockbuster of the holiday season. King Kong, coming from GE's Universal, too, Jeff Immelt might have more to say than usual about entertainment at his company's analyst meeting. Speaking of media and entertainment, Howard Stern's last day at Viacom's Infinity is December 16^th. Though his live show on Sirius Satellite Radio isn't scheduled to debut until January 9^th, I find it hard to believe Stern will simply pack up and go on vacation. I fully expect him to show up, probably on someone else's radio show, long before his official start at SIRI. Since we’re talking TV and Radio, you can tune into Victoria's Secret's fashions show on the 6^th, on CBS and watch Spike TV on the 10^th, for the 3^rd Annual Video Game Awards--where King Kong topped the heap, too.

You can enjoy the Victoria's Secret Fashion Show on CBS, December 6^th, and shop until you drop, but it's rarely been profitable owning retailers in the weeks leading up to Christmas. In fact, in past years, the 3 weeks after Christmas have brought bigger sales to some retailers than the last two prior to the holiday. A combination of sales and gift card redemptions spur shopping loathers to finally hit the malls. Profit taking in retailers usually starts benignly enough, as if longs are afraid they'll miss the "Santa Claus Rally" after Christmas if they exit before December 25^th but this has too often proven the wrong move to make. Retailers often accelerate down in January, presenting opportunities that have proven reliable for longs in March through May. Just not this month. The International Council of Shopping Centers hosts meetings on each coast, this month, and could have more to say about retail sales as the month progresses.  The ICSC's economists tend to be closer to reality than the street's when they forecast holiday sales, so the group is closely watched. 

Financials offer the Superbowl of Indexing and Student Lending, as well as the analyst meetings mentioned earlier. The group has been strong this fall, and could lead again before the year is out. Of course, this year, the merger of Arca and NY Stock Exchange is the highpoint for financials, even as the indices are rebalanced after the close of trading on the 16^th, Quadruple Witch expiry. Expect web and newspaper articles gaming the reweightings and changes to appear starting the 5^th.

JupiterMedia, in what's shaping up as one of its last live conferences, hosts Search & Internet Content in Chicago. Internet Retailers have not been as strong this year as they were some years, so that group might play some catch-up. Truthfully, many bricks & mortar retailers have beefed up their online sites so well, and drawn on their buying power to offer such competitive deals, the age of relying on internet-only retailers to soar in December seems as quaint as a Pets.com sock but human nature being what it is, I still expect a portion of money flowing out of traditional retailers to find its way into online sellers, predictability the hallmark of the street. SG Cowen's Internet Conference on the 8^th may be timed for that to happen even if it isn't the cause of the sudden interest.

Travel & Leisure has usually sat aside in December, as analysts await weather disruptions and accept that bookings are strong. Casino hotels are widely believed to have comps too tough to beat so could also sit out this month, even as the Florida legislature meets in special session to attempt to craft regulations for slots in Broward County, approved by voters in 2004. Analysts will be looking much farther east, though, as the group awaits word from Singapore, and worries how much existing casinos in Macau will be hurt by new capacity coming online there, as well as in Singapore. To date, online travel services have been the place to be, so perhaps that's the group most vulnerable to some high altitude vertigo. Should crude rise with the falling temperatures, airlines, again, will be the group no one wants to touch.

In the past, biotech, digital tech, internet retailers, and financials have been strong in December. Whether that holds true this year or not will be determined by the end of the first full week of the month, when a handful of chip companies post mid-quarter updates and tech companies present at Lehman's conference. December has a reputation for being one of the strongest months of the year. That strength, however, as usually been achieved in the first and last few days of the month, with the weeks in between characterized by rallies that stall. Profit taking, year end rebalancing enhanced by rebalancing of the indices, tax loss selling, and fear of seeing profits flitter away have usually kept stocks in check. Only in the late stages of the bubble years were stocks able to soar all month--and no one wants to see that happen again, because the price paid in the New Year was simply too severe. Come the last few days of the month--post T-3 to be exact--stocks that do the best usually benefit from upcoming events. The Consumer Electronics Show, JP Morgan's Healthcare Conference, and Apple's MacWorld are the three events in January that usually transfix traders most as the year ends. The other stocks that perform best the last few days of the year are those that did the worst in the current year, particularly those that suffer the most tax loss selling in the first two weeks of the year. In recent years, the worst performers have suddenly revived as early as December 19^th, immediately after December options expire. Take your opportunities when they arrive. Just remember, many stocks put in their high for the year in early January, last year. Choose very carefully, and don't count on a rally that endures throughout the month. A lot of December's strength was pulled into November. Wall Street isn't easy street--though that's something easily forgotten when the rising tide lifts all boats, as it did in November. 

Do I think the DOW will finally break through 11,000, the S&P through 1270? Yes but I don't think either index follows through as much as the bulls hope, and I don't think either keeps the break out for long.

© Sandi Lynne 2005 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's alone and should be just one factor in more complete due diligence. EARLIER MONTHLY OUTLOOKS HERE

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