As we trade week to week, some of these will come off the list, and new ones will be added. Again the 3 things these guys have on common are; ranked A for accumulation, exhibit a common trading pattern, and are under $10 a share.

The rules for trading will be to buy at the end of the day when the stock is closing lower when I give you the signal, and sell at the end of the day when the stock is closing higher when I give you the signal.

Keep an eye on this blog every day if you want to actively trade these stocks.-Jon

This week we are looking at shares of Fording Co, ticker FDG. FDG comes to us from our Trademechanic Portfolio, specifically from the on hold list.

This list is a secondary list derived from stocks that are in our portfolio universe, that have fallen into a decline.

Remember we always invest in a story, then try to combine good timing to maximize profits.

How we do that is by waiting for good stocks to go bad, then go good again. Shares of FDG have re-inverted, which is to say the current price is now higher then the price was 30 days ago. This now gives us the green light to consider buying the shares.

FDG mines coal to produce Coke. Coke is a key ingredient used in the making of steel, by converting iron ore into molten iron.

This is yet another play in the commodities sector that we continue to pour our resources into.

A look at the coal index, reveals an index that is now beginning another leg higher. Two factors we can point to that contribute to this are, rising US dollar, and global demand for steel.

We believe FDG to be a worthy long addition because of several factors.

We will be buyers of this stock on dips, selling the rallies in order to build an ownership position without risk.—Jon

As you know, we are looking to play the Santa Claus rally buying the small cap ETFs SAA and UWM.

The Santa Claus rally usually begins the last 5 trading days of the year, and carries into the first few days of the new year.

Because there is a full trading day on Dec 31st, but only a half day on Dec 24th, the bull run might start today, says Larry McMillan.

Usually we can expect the rally to move averages 2%, with small caps doing better than that. We figure by playing the 2xs pro shares, if small caps move 5-10%, we stand to make 20% return possibly over the next 10 trading days.

This year however with the end of the bull cycle looming, the risk are high for the bear to get the upper hand.

According to Mr. McMillan, if Santa Claus fails to show up to the party, this often leads to a nasty sell off in the beginning of the new year that often last for months.

Now, here at the Trademechanic, we have been saying for a while the bull cycle is ending and the typical 1st pull back phase of a bear campaign is down 20%.

We can speculate then, it is possible the beginning of the 20% haircut might begin in the next 10 trading days.

As always we have 2 playbooks, one bull and one bear. This is how we end up with 95% return over the lifetime of trading stocks.

In short be prepared to move out of the long ETFs, and back into the short ETFs, without hesitation.—Jon

Dec 20th Today we added to the high risk list shares of a household name, La-Z-Boy ticker LZB.

Couple of positives; Stock is trading for 300 million in market cap, with revenue over 1 billion. Book value is almost $9, current share price just over $7. Quick Ratio checks in at 1.48, which shows the company is able to pay their debt obligations with no problem.

The company has increased cash flow, at the same time reducing inventory. Downside, housing assest bubble has burst, and could last a while. This is a stock we like, and company insiders are buying.

We will wait for the market to send the shares back to $5, before we buy.--Jon

Not sure if you have heard or not but President Bush and Congress came to terms on a big energy spending bill that among other things, included some big payments for increased Ethanol usage.

If Trademechanics are looking to game this spending bill, look no further than the High Risk List.

A quick check of the High Risk list you will quickly find two Ethanol plays, PEIX an USBE.

PEIX is one that moves fast, a momentum players favorite. Wall Street in the past has been willing to run these shares up much higher then where we find them today.

However, the fundamentals don’t support the move. Trademechanics stick by the 1st rule of investing, which is buy top grade stocks and PEIX isn’t one.

Now, looking at USBE, that is another story that only looks better and better the more one looks.

Just looking at fundies, stock is trading at 12xs earnings in an industry that trades over 35xs earnings. Stock has a Quick Ratio of 1.70, anything over 1.00 shows a companies ability to pay their bills.

But here is where the trade comes in; the company has already agreed to be taken over in an all stock deal by Verasun Energy ticker VSE.

The deal calls for Verasun to pay .81 shares of VSE stock for each share of USBE stock.

If we take VSE current stock price of $15.71 x .81 we get $12.73 for USBE, or $1 dollar higher than today’s close.

This arbitrage play could be worth jumping on as the stock market incorrectly prices the range between VSE’s stock and USBE take over price.

Again, this is for you day traders who crave the action. Be careful however, as we value shares of USBE at $17, but only value VSE at $8.

One could guess the wrong way, caution is advised. ENJOY-Jon

In this chart, we are looking at the 40 day mva average, and the buy signals it gives as the market bounces off of it.

Here we are looking at a 5 year chart. The reason a 5 year chart, as we have been stating, bull cycles run in 5 year increments.

The thing to notice is the strength of the span between touches of the 40 day.

Early in the bull cycle we see 1 year and 10 month spans. As we have gotten long in this cycle, now we are down to 1 month between 40 day retest.

This is further evidence of the end to the bull and the slow take over of the bear.

Given this information, we are market timing, taking our long positions down at historical timing bottoms, and looking to exit at historical timing tops.

The FED robbed us of the historical top this last go around. We currently have 1 indicator at or near a historical bottom, but not yet confirmed by our other timing indicator.

It is ok to take down selective longs right now, but just be aware, a possible fast move down is still in the cards, and is what we are expecting.--Jon

When one does 150% return in the stock market, what would he/she like for Christmas?

This might do for the weekend golfers, full time traders. The four passenger Electric model will set you back $22,450 while the gas version sells for $23,350.

Keep trading, stay positive, and stay with Trademechanic. We will help you make more money then you thought was possible.--Jon

The demographic Bush has her eye on covers people with at least Rmb1 million in liquid income, a group she labels high net-worth, replacing the traditional currency of dollars used to describe high net-worth individuals in the US with renminbi for China. “Focus on the demographic. That is our mantra – the high net-worth demographic," Bush says. "Anything that we do is based on that mantra." In China today this segment represents around 140 million people, with another 365 million people hovering below in a group Bush dubs the upwardly mobile middle class, with at least Rmb620,000 in assets and a household income of Rmb150,000 each year. As China’s booming economy continues to create more wealthy people, Bush is building a media network to help advertisers reach them. “The basic concept of the group is a one-stop shop for advertisers who want to be in the high net-worth,” she says.

Thus mobile firm Beijing Mobile Interactive, acquired in June, can dispense financial news to businessmen and women on the go, while Singshine, a radio sales and production consultancy with exclusive contracts with several radio broadcasters in Guangdong, expands XFM’s radio coverage to include drive-time in one of China’s richest cities. In a similar vein XFM also snapped up Convey, an outdoor media company with a strong presence in Southern China, to gain access to outdoor inventory in the exit and entry points to and from Macau and Hong Kong.

Additional purchases included a 70% stake in Small World Television, a TV production consultancy with which it had already developed several shows, while at the end of last month it made its biggest acquisition to date, advertising agency JCBN. The agency makes a lot of its money in online real estate and below-the-line services for imported spirits, claiming over 50% share for both markets, but the move was primarily motivated to build up an advertising base in Shanghai, Bush says, to complement XFM’s Northern China stronghold. Geographically, “we’re getting pretty comfortable where we are,” she says. “The next pieces would be very opportunistic and about broadening and deepening the platform itself.”

It is XFML’s TV business (Inner Mongolia Satellite TV) that continues to capture the attention of investors however. The ratecard is still heavily discounted but Bush says this will be tightened as the programming takes hold and more of the viewers she wants start to watch. Changing programming takes time however. “It’s a process in China,” she explains. It is not easy for a Western company to piggyback a national satellite channel, as Star TV has found out, but Bush is not letting up on what Rupert Murdoch did wrong, or she is doing right. “I’m not willing to give you my playbook. The barrier to entry is high and that’s an advantage for us. It did take us a number of years and I have a really great group of people in this team and in this company who understand the nuances of what we do.”

The full version of this feature can be found in the Q4 2007 edition of The Asia Media Journal magazine.

Here at Trademechanic, we don't guess, we don't go by opinion, we go by Math and History. This is why we have a 95% success ratio.

I am sure you have heard the phrase "History Repeats". The stock market is the ultimate history repeater.

Remember our playbook starting Nov 21st was to greatly reduce our short and switch very quickly into 100% long positions. I have provided some mathematical numbers we use below to show you why, and where we are today.

The playbook included Mr. FED man doing a big rate cut, and making it very clear he had a clue. I projected in that scenario us being able to stay 100% long into January.

Second piece of the puzzle was the 2nd week of the month trade that I blogged about. Until this past week, every single 2nd week of the month this year had finished higher.

Again we rely on mathematical certainty and history to guide us on how much we bet long, short or cash.

As is always the case, there are events that change the course of direction in the markets. However, if one takes a longer historical look, and applies our math calculations just on the actual market numbers, what we find is very consistent high and low figures, despite what events might have occurred during those times.

In other words, events like we had this week, which caused a change in direction, are only a short term effect.

Now a second part of being a success full trader is being able to have multiple play books.

Our play book of trending up into Jan was put solidly into doubt when we had the long range spike down day after the FED rate decision.

This is the trading against the spike scenario I wrote about with shares of CFC.

So what happened? We took no action that day, assuming the trend was still up. We need 2 more trading days to know for sure. Next trading day was another good clue, when the market could not hold the rally spike and finished just slightly higher.

This was flashing big warnings signs to us. This is a common thing you see in direction changes and sure enough, we couldn't close above resistance the next day, telling every experienced trader time to rebalance.

Now, notice I didn't say exit, go into cash, or go short. I said rebalance. Remember our weighted scales approach. Always keep that vision in your mind when trading. We were over weight to the long side, now we needed to balance back to the middle, until we can look at week end numbers.

Looking at the numbers week end to week end is how we play this game, because their is too much noise during the week to get an accurate picture.

So, where are we now?

Date	VVC - Price	VVC - RT	% Buys	% Sells	BS Ratio	CG - Price	CG - RT	CG - BSR	MTI	Trend
12/14/2007	29.29	0.83	8.70	43.30	0.20	R	R	R	0.78	DnDn
12/13/2007	29.67	0.86	11.00	38.40	0.29	Y	R	R	0.87	DnDn
12/12/2007	29.80	0.87	11.60	36.30	0.32	G	Y	Y	0.91	UpDn
12/11/2007	29.67	0.87	9.70	36.00	0.27	Y	Y	Y	0.95	UpDn
12/10/2007	30.34	0.92	15.40	30.00	0.51	G	Y	Y	1.09	UpUp
12/7/2007	30.17	0.93	15.80	33.60	0.47	Y	Y	Y	1.02	UpUp
12/6/2007	30.17	0.92	15.70	33.90	0.46	G	Y	Y	0.95	UpDn
12/5/2007	29.73	0.88	12.20	37.60	0.32	G	Y	Y	0.81	UpDn
12/4/2007	29.37	0.86	9.80	41.00	0.24	Y	Y	Y	0.74	UpDn
12/3/2007	29.54	0.87	9.80	37.30	0.26	Y	Y	Y	0.77	UpDn
11/30/2007	29.66	0.91	12.60	36.10	0.35	G	Y	Y	0.76	UpDn
11/29/2007	29.51	0.89	11.40	38.20	0.30	Y	Y	Y	0.68	UpDn
11/28/2007	29.52	0.89	11.70	37.80	0.31	Y	Y	Y	0.63	UpDn
11/27/2007	28.82	0.83	7.50	45.40	0.16	Y	Y	Y	0.54	DnDn
11/26/2007	28.59	0.82	6.70	47.10	0.14	R	R	R	0.53	DnDn

This chart represents some numbers from the last month. We follow these numbers in relation to the big picture. If one is not investing the same way the general market is going, you will not make money.

In other words if the market trend is down as it was in November, then being mostly short is the way to make money. If the market trend is up, then being short is a death nail. Being long is the way to go.

We take 100% all in positions at tops and bottoms, because it's at these turning points, where the easy money is made.

If we start at the bottom column, dated Nov 26th, we see our composite price of $28.59. If we look over 5 columns to the BS Ratio column, we see that number checking in at 0.14.

This number has signaled a market bottom over the last 10 years of data, when it's below 0.20. This year in August it got down to 0.10 and might well do that again over the next few weeks, but bottom line, below 0.20 to Trademechanics signals time to start buying.

If you look over to the MTI column, second from last, you see on Nov 26th the number 0.53. This timing number has over history signaled bottoms below 0.55.

When these numbers signaled buy, I blogged that it is time to start buying and we are buying the Semi 2x Holders USD, and Financial 2x Holders UYG. I am sure a lot folks reading that at the time, thought I was crazy, and may have even moved on.

But what do I always ask of you when you come here; leave your prior baggage at the door. It does not serve you well.

What happened? Both of these ETF plays on that day were down big, USD at $66, UYG at $38. We bought on those days. Over the next 2 weeks, USD went to $81 from $66 and UYG went to $48 from $38, collectively moving over 25 points of gain for Trademechanics in just 2 weeks.

The Financials and the Semis, two of the worst performing sectors this year, yet we caught a 40% profit off the bottom. Had the FED done what he was supposed to do, we would still be making money on them.

To sum up, you can see where we are now. As of Dec 14th, our BS number is already back to 0.20, a historical bottom number, and the MTI is sitting at 0.78.

I have been asked are we going back short, and you can now see why I am not going back short.

At this point, we are looking for a fast move down by the market, once again a trading spike, to set us up. Keep in mind, this will be scary and it will be against your normal protection defense. For most folks it's like jumping out of a plane at 10,000 feet, and hoping the parachute works.

We envision the down spike being possible via tax loss selling.

If this occurs, the BS ratio will probably see 0.10 or something close, and MTI around 0.50.

We will play the rebound the same way again, USD, UYG and like to add in the Russell 2xs ETF for the Small Cap Rally I blogged about a few blogs below this one.

This coming week is options expiration, so I think the down spike will happen this week. Stay tuned.--Jon

Once again today a lack of conviction from the bulls forced our hand. We really needed to see a little more conviction, after the big FED induced down spike Tuesday.

Tuesdays long range down spike, followed by Wednesday feeble up day, then down most of the day today which still left the S&P below resistance level of 1490, required us to play some more defense.

Stocks are vulnerable to a fast move down, forcing us out of some positions in order to more balance our portfolio in relation to market risk.

Remember our scales approach to things. We tip the scale to the bull side in big range day confirmed rallies or at historical long term bottoms. Tip to the bear side, having more shorts, near historical high points. Balance stocks and cash during inflection points, until a trend is confirmed.

Right now we still favor the long side, but are quickly moving closer with each sale to a larger cash position as a defense against a fast move down.

Today we sold shares of EBAY, XFML, USD, EBHI, and reduced our shares of TQNT to a full ownership position with no risk.

We put more money to work in shares of NM. We would like to overweight these shares because we feel we are getting them at a 60% discount to fair value, and the downside is very limited.

The markets are changing daily, and we had hoped to be able to be full in until at least Dec 31st.

As is always the case however, the market is the boss, we just follow orders. We can afford to miss a little upside, but do not want to get blind sided by a fast move down.—Jon

As so often happens on Wall Street, good odds go bad quick and vise versa. I really felt like CFC was a lock for $14-16 by Dec 21st, and even this morning that looked to be the case when it traded as high as $12.45.

However, true to form this year when it comes to financials, we get headlines like this, “Morgan Stanley drop a bombshell on Citigroup (C - Cramer's Take - Stockpickr - Rating) calling the banking giant its top short idea for 2008.”

We also got several other banks announcing more write downs. This coupled with a FED who is obviously in over his head right now, the risk/reward picture for CFC just became not favorable enough.

CFC is only 1 news announcement away from hitting $5 if its bad, or $15 if its good, and the odds favor bad.

So we closed out that position today while we still had a 12% profit.

Probably by next Friday Dec 21st, that will prove to be the wrong move, but these waters are just to bloody right now.

We are keeping the ETFC trade on, and added to our position in NM with the CFC profits.—Jon

Ok, the FED is a whimp and threw us a little curve ball today. I got something to say to you about that, "DONT LOSE FOCUS!".

A rally everyday in an uptrend has never happend before in the history of the stock market, we shouldn't expect that to happen now.

After todays FED induced sell off, which was bound to happen if not today then tomorrow, we are sitting at 1 Distribution day for the DOW, and 2 distribution days for the NASDAQ since the bottom in late November.

If you have been with Trademechanic for a while, you know we look under the hood, and dont associate our selves with the emotion of the day.

Let me ask you a question, do you get scared when you go to work every day. Are you anxious about the days outcome?

We trade for a living, this is our job. What makes everyone think professional traders get nervous.

Its a job, a job we love doing, and just like any other job, having had many years of success in the past, we assume the outcome for us will be the same going forward.

OK, Jon, so what are we doing then? Good question, here is the answer.

First are target re-position date for now is Dec 21st. This is the day options expire. Also is the date the January trade goes into effect. Also is a time period that tax loss selling will happen.

What is the January Effect Trade? The January Effect, of course, is the seasonal tendency for stocks of small companies to outperform the large-caps around the turn of the year.

A study by Pradyot K. Sen, a professor of accounting at the University of Cincinnati; Jens Stephan, an associate professor of accounting at that same institution; and Kathryn E. Easterday, a PhD student there, goes back in history, measuring this seasonal pattern's magnitude back to the early 1940s.

The authors of this study don't deny that the January Effect was stronger in the decades of the 1960s and 1970s than it has been more recently. But this does not mean that the long-term trend is a declining one. That's because they found that, in more recent decades, this seasonal pattern has "simply reverted to levels that existed before" the 1960s. What stands out from their long-term perspective is not that the January Effect was unusually weak in recent decades, but instead that it was unusually strong in the decades of the 1960s and 1970s.

The researchers conclude by writing that they "find no evidence to support an inference that the market has learned about the January anomaly and is correcting it over time."

As you can see by this chart, an investment in small caps between the weeks of Dec 20th through Jan 9th, have consistantly returned profits all but 2 years.

Now, we are long a number of small caps stocks. The names are, GROW, BOOM, NM, ENG, XFML, TQNT, IOM, CYD, EBHI, and I am sure a few others.

My plan is to lighten our load on shares of CFC, EBAY, RIO, GES, HOS, USD and a few others if need be.

I would like to add in possibly shares of ETF SAA, which contain shares of CROX, OII, RESP, TRMB, VSEA, SGR to name a few. This is S&P SmallCap 2xs. Or possibly the UWM OR UKK, which contains CMG, FLIR, PCLN, BID.

This is all of course assuming the market will continue higher the next 2 weeks.

The bottom line right now is the short trade technically is not there, the long trade is still the highest probable trade.

For now we need to stay the current course and be prepared to take down the January Effect Trade.--Jon

Its Bonus time on Wall St and the boys are working hard to make sure they keep getting those fat end of the year performance checks, as evidence by the nice rally over the last 2 weeks.

If your a regular viewer of this web site, you caught the whole move.

Expect more of the same after the FED rate decision, for a little while longer, until Wall St is certain the bonus checks are a sure thing.

A lot of firms having to write down big loses on these financial derivative investments are none too happy, and a big return to finish the year is just what the doctor orderd.

As I was sitting in my back yard tonight wondering what the movers and shakers will spend their bonus checks on this year, I suddenly realized it was starring me right in the face.

We are up over 170% so far this year with 3 weeks left to go yet, and a better than 95% success ratio on our picks.

Stick with the Trademechanic over the next 52 weeks, and soon enough, you will have a nice bonus check to spend at the end of the year!--Jon

In my last blog I pointed out that every 2nd week of the month since late 2006, the DOW has finished higher. With the FED finally getting on board the rate cut train on Tuesday, it is almost a 100% certainty that this trend will hold again this week.

There are 2 good ways to play this. One is the Ultra Pro Shares DOW, ticker symbol DDM. We are currently long the Ultra Pro Semi USD.

The second trade of course is Financials. I am 100% certain the FED was consulted on the new White House mortage bail out plan. This is a multiple attack on the problem and we have yet to see the FEDs part in this attack. I am predicting, we will get a 75 basis point cut in the discount rate, with the promise of more to come.

We went long CFC last week at $9.50 per share. We already know Billionaire George Soros took a big stake in CFC as well.

CFC of course is the largest mortage lender in the USA, thus the obvious company that benefits the most from these government actions.

However, we also are aware that these actions don't erase the problems that exist.

The market being in a 45 day bull up cycle, will likely ignore any bad news, and spin everything as a positive.

The question then becomes in the short run, meaning up to options expiration on DEC 21ST, where does shares of CFC go?

On this 3 month chart of CFC, we see the downtrend is clearly broken. Now we have talked before about trend reversals, verses counter trends.

I have noted the long range spike at the bottom of this chart, with a line under it.

Trading against a spike, is one of the best chart patterns to have. If a stock can trade within the range of a spike for 7 to 13 trading days and move higher, that is the highest bottom formation that I know of.

You this is the case here. Counting from the false breakout high back in Sept, to the bottom spike, we see 45 trading days.

We can now assume the mirror image trade to happen in shares of CFC, 45 days in an uptrend.

Looking at the options, most put options are priced in a way, shares of CFC would have to be under $10 for them to be in the money on DEC 21st.

Given our high probability spike bottom, new Government bail out plan, and a FED rate cut, the odds of this stock being $9 on DEC 21st seem very remote.

Looking at the calls, the biggest bets are placed at a strike price that would require CFC to be trading above $13 to be in the money.

Putting all the pieces of the puzzle together, the path of least resistance seems higher. I expect shares of CFC to move at least 40% higher from here by DEC 21st.--Jon

As you will see by the chart below, the 2nd week of every month this year, the might DOW has finished higher.

We are long shares of USD, the 2xs Pro Ultra Semi, which contains DOW componet INTC. We expect to get $90-$100 for the shares.--Jon

So how do stock market investors make money off a falling U.S. dollar? When the value of the dollar tumbles versus foreign currencies, the time-honored advice is to buy shares of the big U.S-based multinationals that do so much business overseas.

But there's another group of stocks that does even better when the dollar is doing badly. Shares of small to midsize U.S. exporters can add big gains in market share overseas when a weak dollar makes their products cheaper for overseas customers.

Because of these companies' modest sizes, the swing in revenue from an increase in export business can have a much bigger impact on the bottom line than at a larger company such as PepsiCo. And because the gains are in new business and in market share, they're likely to have a longer-lasting effect on revenues and profits than the kind of gains that come merely from translating strong currencies into weak dollars. What kind of company do you look for?

Dynamic Materials BOOM

This company specializes in explosion-welded metal plates. Explosion welding uses an explosive charge to bond two plates of a base metal such as carbon steel with metals such as titanium or stainless steel that don't bond easily in traditional welding techniques.

Explosion welding is used in products that require resistance to corrosion, high temperatures and high pressures. That means that Dynamic Materials sells into some of the fastest-growing, most recession-resistant markets in the world: oil and gas exploration and production, oil refining, chemical production, aluminum production, shipbuilding, power generation and industrial refrigeration. No wonder that revenue is projected to grow by 35% in 2007 over 2006 and that it climbed by 49% in this year's third quarter.

About 50% of 2006 revenue came from outside the U.S., a figure that will rise for 2007 because the company recently bought out its largest European competitor, DYNAenergetics of Germany. The company's major competitors include Japan's Asahi Kasei.

--Jim Jubak

Time to look under the hood at where the money is going so far.

In doing this, we look for week over week strength, then examine how far along in the up cycle that sector is to determine if profit opportunities still exist.

Week ending Nov 30th Top 5 Sectors;

So far this week;

The two sectors leading the way both last week, and this week, Steel & Chemicals.

Looking at the both sectors, we find the Steel sector to be currently 50% under valued verses the Chemical sector at 20% under valued.

Having said that however, we believe the Steel sector has moved closer to its historical high end of its long term range.

Conversely, assuming the trend continues, the Chemicals sector is more early in its move, thus offers a safer, and potential more profitable entry for Trademechanics.

Ok, now lets go to our Focus List of Stocks to see what Chemical names are on the list. We find the following:

Two ways to approach this trade. We want to get this down to 1 pick out of the list. All we are trying to do is position ourselves in a sector that seems to be under valued, and early in a buy cycle.

First, we pull out the top 3 stocks as rated by IBD in their respective Chemical sectors.

The top 3 are:

ARG, CF, FMC.

Second, we pull out the 1 stock that has moved the least of the group, thus might offer the most upside. This is under the theory of a rising tide lifts all boats, fundamentals are second.

The winner here is CRDN, which is the worst rated one by IBD, no surprise.

Ok, next lets got to Valuation. First with the top 3.

Clearly the two that offer the best possible upside if they were to reach fair value, CF and FMC. Clearly FMC is the lower cost in terms of dollars per share.

So now we have narrowed our options down to FMC, the better value and CRDN, the one that has moved the least, but the worst fundamentals.

Next, lets move to 10 year historical performance to see where the stocks are in terms of bottom and top timing, not price, compared to where they have bottomed and topped over the last 10 years.

Here we are using the Relative Timing Indicator provided by Vector Vest.

First up we look at FMC. Currently sitting at 1.26 RT. Over the last 10 years, FMC has bottomed around .80 RT, and topped at 1.40 RT.

As you can see, even though the Chemical Sector has much room to run, FMC has led the pack and is only 11% from its historical 10 year RT top.

Next, we look at CRDN. Currently CRDN is setting at .53 RT. CRDN over the last 10 years, has bottomed at .40 RT and topped at 1.60.

Here we find CRDN is potentially 70% below its historical top.

Also CRDN is valued at $92 a share, for a potential 95% return if traded at fair value.

But wait, CRDN is more in the Defense sector. Yes, they do chemicals, but for Military functions. This is not a pure enough Chemical play, so we have to through it out.

Now we are back to our original value plays.

We already decided that FMC offers us the top potential return based on valuation. But we also find FMC to be a potential candidate for some fast profit taking.

If we toss out CF because its already almost $100, then we have only ARG left to look at.

Looking at ARG, it currently sits at 1.39 RT. A look at the past 10 year history, reveals .80 RT is the historical low, and 1.40 the historical high.

So, the end result, looks like FMC is our pick that provides the greatest upside potential, with the least amount of risk.

The last step is to wait on a combo Candle Stick formation, and low end Anthony Scale set up to make entry.

Notice we did not use a chart pattern of the actual stock. That is fools game.—Jon

The global commodities boom rolls on. Worldwide demand for iron ore, coal, copper and other materials seems to know no end.

Besides their importance in developed nations, such materials are key ingredients behind the rapid rise of emerging industrial economies in China and India.

As mining companies have stepped up production to meet demand, they've had to buy more equipment from suppliers — drills, giant shovels and other excavation tools.

One of those mining-company helpers is Bucyrus International . (BUCY) The firm specializes in large-scale excavation gear used in surface mining and more recently high-tech systems for underground coal mining.

It's one of the top two mining suppliers in the world, the other being Joy Global, (JOYG) based in Milwaukee.

Though headquartered in nearby South Milwaukee, Bucyrus has operations that span the globe. About 60% of its revenue comes from outside the U.S.

Although commodity-based businesses are typically cyclical, analysts see the current up cycle — now in its fourth year — extending at least another few years.

Analyst Seth Weber of Banc of America Securities writes that high commodity prices and capital expansion projects announced by mining firms are among the catalysts behind what will be an "extended cycle."

After five years of losses, business at Bucyrus picked up in 2004 and never looked back, with earnings rising from 48 cents a share that year to $2.25 in 2006.

This year, analysts polled by Thomson Financial expect earnings to rise 31% vs. 2006, to $2.95. They expect profit to climb 55% in 2008 and 31% in 2009.

Analyst Joel Tiss of Lehman Bros. sees earnings peaking in 2010. He wrote in a recent report that "the current mining cycle continues to have legs."

Chief Executive Timothy Sullivan told analysts in a November conference call that the Bucyrus surface mining shovel business is two-thirds sold out for 2008 and will probably be fully sold out by January at the latest. The company did not respond to interview requests.

Bucyrus entered the underground coal mining business when it acquired the German-based supplier DBT in May. Now the surface mining end of its business is reported as one of two divisions. The underground coal side made up more than half of third-quarter revenue.

Underground sales totaled $263 million vs. $237 million in surface mining. Surface mining might have been second in sales, but it has higher margins.

Tiss wrote that the "most noteworthy" details of the firm's third-quarter results were that surface mining margins reached 19.7% and that underground margins were almost 14%, well ahead of the predicted 10%.

With the added revenue from the DBT acquisition, total revenue in the third quarter was 170% higher than last year's figure, coming in at $500.3 million. Surface mining sales rose 28% from last year's third quarter.

Earnings in the quarter were up 43% from last year, to 76 cents a share.

The market for underground equipment is not growing as fast as surface mining. It's "taking a little bit of a breather," Sullivan told analysts. He expects a rebound in the next few quarters.

Bucyrus' backlog as of Sept. 30 stood at $1.3 billion, which was down from the second-quarter backlog in both sectors.

"As these orders arrive in a fairly lumpy fashion," Tiss wrote, "we are not too concerned about the modest decline in underground and surface backlog at this point."

He said orders for large draglines — multimillion-dollar machines that scoop up dirt and rock — will likely shift to the middle of 2008. Port and rail congestion in Australia has been blamed for holding up new orders from major mining customers Down Under.

Bucyrus has been a leader in powerful dragline drive systems for nearly 30 years. About 400 of its drag-lines are now in operation, "generating annuities on parts and services," Sullivan said in the conference call.

One of the firm's largest customers is Australian mining giant BHP Billiton, (BHP) which has made a bid to acquire London-based rival Rio Tinto. (RTP) Rio Tinto aims to triple its iron ore output.

Unlike in Australia, bottlenecks don't seem to be a problem in Canada. In mid-September, Bucyrus confirmed it is building a new dragline for a major Canadian coal mining company, with a contract value of more than $100 million.

"The sale of this dragline highlights the ongoing demand for our products and services," CEO Sullivan said in a statement.

He told analysts his company is talking with producers in Canada's active oil sands "to get a bigger piece of the pie."

Chief Financial Officer Craig Mackus said in the conference call that capacity constraints are affecting surface mining sales. The ongoing expansion of the firm's South Milwaukee plant should be completed by the first quarter of 2008, he said.

Rival Joy Global, also hampered by capacity constraints, plans to expand plant capacity, including a new facility in China.

"The big issue out in the marketplace right now is not, gee, is there going to be machinery bought," Sullivan said during the conference call.

Based on announced capital expansion plans by major producers of iron ore, copper and gold, "that's a given," he said. "The concern by the producers right now is if they're going to get their equipment when they need it and when they want it."

All this week so far all I hear is how we are worried about this, and worried about that. Will Bernanke cut half or just twenty five, or even at all.

Let me end the suspense right now.

The market will rally for a few weeks, so stop the worry. Bernanke will cut 50 basis points.

He has promised a cut, and knows if he doesn’t deliver, the bear will come out swinging and probably crash the market.

I don’t think Big Ben wants a crash on his hands.

Stay long, do not sell any stock. You will not be able to get back in.—Jon

GROW a dog of a stock looks like it has yet 1 more leg down before putting in a bottom. The chart is reading that way and we can summize this in conjunction with tax loss sell and falling gold prices.

Hornbeck is another stock that wants to move lower. This one has a chance to begin moving higher if it can make a stand at $41. However, tax loss selling and falling oil prices might help run this one back to $37

Ebay looks like it wants to at least test $37, maybe $40 again. The downtrend has been broken and a new trend reversal seems to be in place.

BOOM seems to be making an exhaustion style high. We look for this one to retest $54-58 a share. We are looking for a 2-1 stock split.

CountryWide could go either way. It still has not broken the down trend line, but with congress about to step in and a big investment from George Soros, we like this one chances to move higher. Last week stock was upgraded with a price targe of $38.

Jon

The mighty eBay  (EBAY) hasn't done as well on the stock market since its explosive run-up from 1998 to 2005. But some counterparts are popping up from places that look more like the U.S. did five or 10 years ago.

Last year, Korea's Gmarket (GMKT) captured Wall Street's attention. Then in August, the initial offering of MercadoLibre (MELI) brought Latin America into the picture.

MercadoLibre — Spanish for "free market" — acts much like eBay does, hosting transactions between users who price and arrange sales themselves. When it started up in Argentina in 1999, it faced a market already crowded with about 40 peers, says co-founder and Chief Executive Marcos Galperin.

"We developed a better product, and we were more careful with cash expenses," said Galperin. "When the bubble burst, we were able to maintain our cash position."

Competition

Rivals fell away and MercadoLibre grew. It still faces smaller players in individual countries, but as a 13-country player, it commands the field. As of Sept. 30, it had 23.3 million registered users, up 41% from a year earlier.

Currently Brazil is its biggest market, supplying almost 43% of revenue. Argentina comes in second with 14% and Mexico third with 11%. The firm operates in 10 other countries, all in Latin America.

MercadoLibre's top three countries are also the top three Latin American Web consumers, making up more than 70% of the region's addressable market, according to RBC Capital Markets. It's still not that much of the overall population though. Just 34% of Argentina's people have Internet access. Brazil, though numerically biggest, has only 14% penetration.

However, this small base leaves lots of growing room. RBC estimates that Latin American e-commerce is growing about 30% to 35% a year, compared with 25% in the U.S.

"It's a more nascent market — probably the way the U.S. was back in '98," said Galperin. "The same thing can be said about broadband penetration."

The market differs from the U.S. in other ways. MercadoLibre maintains different portals within its main site for each country, as each deals in a different currency. In the case of Brazil, the nation speaks Portuguese rather than Spanish. Galperin says the site also sees more fixed-price selling and sales of new goods than eBay — something more like Amazon's (AMZN) marketplace.

MercadoLibre continues to move into new countries, with Costa Rica, the Dominican Republic and Panama the most recent entries. In 2004, the firm also made two major additions to its product line.

MercadoPago is the company's answer to eBay's PayPal system of electronic payments. Until quite recently, it was available only within MercadoLibre's site.

"MercadoLibre is smartly pursuing a strategy similar to eBay five to six years ago by integrating payments and transaction revenues," wrote RBC analyst Jordan Rohan in his Sept. 24 initiation report.

But in the last quarter, the firm launched an open version that, like PayPal, can be set up on anyone's site. For the first run, the company chose Chile — a smaller market that didn't have the earlier version. Galperin says that if this succeeds, MercadoLibre will roll it out in larger markets.

MercadoPago is still a minority of the firm's business, but it's getting bigger. In the third quarter, its revenue jumped 142% over a year ago to $4.7 million, or about 21% of total sales.

Also in 2004, MercadoLibre launched an online classifieds service. So far this has been mainly about cars, aided by the recent launch of Motors 3.0, which lets users search by make, model, year and so on. In 2005, the segment expanded into real estate.

All this has helped keep the company on a sharp growth curve. To get business it offered its services for free until 2000, but saw triple-digit annual sales gains the next three years. Profit came in 2005.

Sales Growth

In the most recent quarter, revenue rose 72% over the prior year to $22.8 million. Profit was 7 cents a share, vs. 1 cent a year ago.

Analysts polled by Thomson Financial expect this kind of thing to go on. For the full year they expect profit of 22 cents a share, compared with 3 cents last year. They see 145% growth next year and 56% the year after that.

Some uncertainties remain about the future. One of the big ones is just what eBay is going to do.

Until a year ago, MercadoLibre and eBay had a noncompete agreement. That's expired, but eBay still owns a chunk of MercadoLibre's stock.

"EBay has given no signal it may re-enter the market and is unlikely to do so while it still owns 18.5% of shares," wrote Rohan in his report.

Some analysts have speculated that eBay might eventually buy its Latin counterpart. However, MercadoLibre is also an acquirer. In 2005 it bought rival DeRamate.com, another multicountry marketplace with 1.3 million users. It cost $12.1 million.

Today we are issuing a strong buy on shares of LPHI. The Trademechanic will begin building a long term position in shares of LPHI.

We will use our swing trade metrics to slowly over time accumulate a solid position, buying the dips, and selling the rallies until we own our target amount of shares at no risk to Trademechanics.

Who is LPHI: LPHI is listed in the Insurance business sectors. However, the company is more in the class of a GOOG, EBAY, AMZN.

LPHI deals in the settlement of Viaticle Life Insurance contracts. Viaticle settlements are the sale of a life insurance policy by a terminally ill person to another buyer, before death.

The insured person receives cash payment now, the buyer gets the policy payout when the insured passes on.

We compare LPHI to a EBAY or GOOG because LPHI makes their money by taking a fee for matching up buyer and seller.

We compare LPHI to an AMZN because it’s a company that has no serious rival that is publicly traded, and Wall St has been willing to pay up for the shares.

The historical p/e range is between 28xs and 111xs. Currently we are sitting at 34xs earnings.

If we take the estimated EPS for 08 of 1.79x 111, we get a stock price of $198.

For us, we will be willing then to pay up to 50xs, or essentially trying to buy $1 for .50 cents.

If one goes to Yahoo, and clicks on competitors, you would see there are not any other public companies that Life competes against.

If one was to click on the analyst link, you would see only 1 analyst covers the stock.

Trademechanics look for stock picks that are flying under the radar of Wall Street, for half price, with great growth rates. This stock fits the profile.

We also like to own stocks without risk, so we will use our swing trade timing to slowly accumulate the amount of shares we would like to own.

Keep an eye on the Trade Alert section for entry and exits.—Jon