Welcome to the Moderate Trader. Within these pages a potential investor can easily find information that will be helpful when making the decision to buy or sell a stock. These factors are explored in detail in the section titled “Investing On July 27, 2004, United States Steel Corporation (NYSE symbol: X), closed at $34.07 per share. Read on to see how we rate this stock. We are also featuring Elan Corporation, plc., (NYSE symbol: ELN) that closed at $19.87 per ADR on July 27, 2004. Those wondering whether to buy or sell these stocks will want to read the Buy & Sellsection.


In our Model Portfolio section, investors will find a brief description about each stock in our portfolio, our target level at which to buy these stocks, approximately when to sell them, and at what price level.


Read our Buy Alertsection to find out which stocks will be bought when they reach our target levels.


For your convenience we have listed the stock split dates and change in value for each one of the stocks held in our Model Portfolio in the section titled Model Portfolio Chart


In May 2002, we started a section called New Investors with a list of stocks provided in Model Portfolio II that may be bought by investors who are just starting to build their stock portfolio.


We welcome your questions, or comments. Please E-mail them to: webmaster@moderatetrader.com

JESSICA BEZOLD, Editor

Uncertainty about the outcome of Presidential election and about Iraq is affecting the market negatively. Furthermore, on July 19, 2004, oil closed at $41.44 a barrel and this will result in a higher price for gasoline, furthermore diminishing the disposable income of consumers, thus adding more downward pressure on the economy that has just started to decelerate. As the pace of the economy slows, the revenues and earnings of corporations could fall during the second half.

On many occasions a company’s earnings exceed analysts’ expectations and yet the stock falls. On the other hand, there are times when a company’s earnings are below analysts’ expectations and the stock rises. This is what happened to the stock of Juniper Networks, Inc., on July 13, 2004. According to Generally Accepted Accounting Principles the company reported a net loss of $0.02 per share for the second quarter. The earnings were below analysts expectations but the stock jumped to $24.15 per share in after-hours trading, up from its closing price of $22.00 per share.

On July 14, 2004, the stock of Juniper Networks, Inc., closed at $24.59 per share, up $2.59 for the day. Although this stock exceeded its June 30, 2004, resistance level of $24.57 per share by 2 cents it did not maintain its uptrend. As the money flow fell, JNPR proceeded to descend. The slow stochastic indicator generated a sell signal in January 2004. Depending on the money flow and other technical indicators, this stock could maintain its downtrend until mid 2005. If the money flow were to fall $11.4 billion between July 2004 and July 2005, this equity could fall to a low of $2.15 per share. At such a level we would rate this stock a speculative buy.

As the interest rates for the fixed rate mortgages rose, they had a negative effect on the housing market. The housing starts fell 8.5 percent in June 2004. During the past three years the stocks of some homebuilders rose tenfold as more future homeowners proceeded to buy their homes. Among these stocks was Ryland Group, Inc., whose stock closed at a high of $94.14 per share on December 1, 2003, up 941 percent in three years.

In September 2003, we featured stocks of several homebuilders in our Buy & Sell section. We had a sell rating on all of these stocks at that time because we anticipated that the Fed would start raising interest rates and that would affect this sector negatively. It turned out that the Fed was in no hurry to start raising rates and these stocks maintained their uptrend for a few more months.

Among these stocks was Hovnanian Enterprises, Inc., (NYSE symbol: HOV) and we stated: “The money flow rose $751 million during the following four weeks and this equity attempted to test its resistance level. The stock was not able to break through its resistance level of $69.17 and closed at $66.11 per share on September 4, 2003. On September 22, 2003, this equity closed at $63.67 per share and was fully valued. Speculators who bought this stock below $51.25 per share in August 2003 may want to sell it to lock in a short-term gain of 24 percent.

In mid-September 2003, the long-term fast stochastic indicator generated a sell signal. If the money flow were to fall $980 million during the next 8 weeks, this stock could drop to a low of $47.92 per share, perhaps by the end of November 2003. Depending on other technical indicators, this equity could maintain its downtrend and test a low level of $28.72 per share by April 2004.”

To our surprise, money flowing into this stock continued to ascend and on December 8, 2003, the stock of Hovnanian Enterprises, Inc., closed at a high of $96.60 per share. As the money flow proceeded to fall, this equity reversed its uptrend and started to descend. On March 29, 2004, the company issued a 2 for 1 stock split. The stock continued to fall and closed at a low of $29.33 per share on July 21, 2004 (that would be $58.66 per share at a pre split level, or $5.01 below our sell level of $63.67 issued on September 22, 2003). Depending on the money flow and other technical indicators, the stocks of home builders could fall at a slow pace and it could take as long as two years for some of these to reach the bottom.

The Fed does not consider inflation a serious threat…yet. On Wednesday, June 30, 2004, the Fed raised the fed funds rate by 25 basis points, or a quarter of a percentage point, to 1.25 percent. In our opinion, the Fed is behind the curve and has kept interest rates too low for too long. The Fed should have started tightening several months ago. Wall Street is projecting that the Fed could do several rate increases during the second half. Before the end of this year the Fed funds rate could reach 2 percent.

If this were to happen, it could still be too little and too late. In our opinion, if the Fed does not get aggressive with raising interest rates, inflation could accelerate at a fast pace. Once that happens the stocks in some sectors could fall tremendously and the major stock indexes could fall below their low levels reached in 2002, either by the end of this year, or in the first half of 2005. Due to the probability of such a horrendous scenario, we will maintain high exposure in cash in our Model Portfolio. As of July 27, 2004, after the market closed, the asset allocation in our Model Portfolio was 11 percent equities and 89 percent cash.

In January 2004, we stated: [Many money managers are advising their clients to remain fully invested in stocks, and they believe that stocks are headed higher. From a contrarian’s point of view, this is a negative sign. The S&P 500 stock index is already trading at 27 times trailing earnings, above the historic average of 16. Some investors are asking this question: “Can this rally last, and if not, when will it end?”]

On February 17, 2004, the Dow Jones industrial average closed at 10714.88, up 87.03 points, while the Nasdaq composite index closed at 2080.35, up 26.79 points. Speculators who have cash on the sidelines should wait patiently and then start buying stocks when they reach their low levels. Many tech stocks may test their support levels by mid September 2004, or October 2004. Some of these tech stocks may never again reach such low levels. On the contrary, three years from now some of these tech stocks may revisit their previous highs and reward investors with gains as high as 400 percent.

As far back as in January 2002 we stated in Investing, “Warning! Speculators who have marginal accounts should minimize the margin level as soon as possible. Sell some of the stocks in your account during the market rallies in January 2002. Bring your margin level to zero, if possible. Speculators who do not bring their margin level to zero should be prepared to have enough cash on hand to add to their marginal account.”

We believe that the market is still in a secular long-term bear market and the extensive gains achieved during 2003 were due to a short-term bear market rally. Speculators who are still on margin should sell some of their blue chip stocks before they generate a loss. Continue to build your cash position. The market is overdue for a correction and when that happens the Dow could fall 25 percent or more, while the Nasdaq composite index could fall 30 percent. In a worst case scenario, some of the technology stocks could fall as much as 70 percent. If that were to happen, these marginal accounts could generate margin calls and many speculators may not be financially ready to meet them.

Applied Materials, Inc., (NASDAQ symbol: AMAT) is a major supplier of wafer processing equipment that is used to produce semiconductors. The company produces systems that use physical vapor deposition technology, chemical vapor deposition, and oxide etching.

On April 3, 2000, this stock closed at a high of $57.44 per share, after a 2 for 1 split that was issued on March 16, 2000. Afterwards, as the money flow started to fall, this equity proceeded to descend.

On July 16, 2001, this stock fell to a low of $41.95 per share and then closed at $45.86 on July 31, 2001. In the September issue of 2001, we stated that AMAT could fall to $39.00 per share in September and at such a level would be a strong buy. Due to the horrific events of September 11, 2001, this stock fell tremendously and closed at $27.87 on September 27, 2001.

The company issued a 2-for-1 stock split on April 17, 2002. After the stock split there were 320 shares in our Model Portfolio. Immediately after the company issued the stock split, this stock reversed its uptrend and proceeded to fall. On May 10, 2002, this stock closed at $23.70 per share. During the next four weeks money flow fell $1.4 billion and the stock closed at $19.83 per share on June 14, 2002.

In July 2002 we stated, “This stock could test its support level of $13.75 by October 2002.” This equity broke through this support level sooner than we projected and closed at $12.76 per share on August 5, 2002. Afterwards, this stock proceeded to test its resistance level and closed at $14.70 per share on August 16, 2002.

On November 15, 2002, AMAT closed at $15.83 per share. To our surprise, money flow rose $701 million during the next twelve days and this stock closed at a high of $17.49 per share on November 27, 2002. Afterwards, money flow proceeded to fall and this equity closed at $14.31 per share on May 16, 2003. On July 21, 2003, AMAT closed at $17.87 per share. To our surprise, the money flow rose $4.2 billion during the following four weeks and AMAT proceeded to test its resistance level. This equity closed at a high of $20.73 per share on August 21, 2003, and we stated: “At such a level this equity is overvalued and short-term may have no other way to go but down.” On September 22, 2003, AMAT closed at $19.67 per share.

Afterwards, as the money flow rose $5 billion, the stock reversed its short-term downtrend and proceeded to ascend. On October 20, 2003, this equity closed at $21.60 per share. During the next three weeks, as the money flow rose $5.4 billion, this stock proceeded to ascend. On November 6, 2003, AMAT closed at a high level of $25.61 per share. At that price level this equity was trading at 206 times earnings, which is almost unimaginable (does anyone remember the stock market bubble?). On November 6, 2003, this stock closed at $25.61 per share and was fully valued.

On January 16, 2004, AMAT closed at $24.41 per share and we stated: “While there is a very slight probability, depending on the positive money flow and other factors, that this equity could ascend and reach approximately $27.31 per share by February 17, 2004, afterwards this stock could fall.”

The money flow fell $3.7 billion during the next four weeks and the stock proceeded to pull back. On February 17, 2004, AMAT closed at $21.94 per share. In February 2004, we stated: “Although there is a very slight probability that this stock could still ascend and reach a high of approximately $27.31 per share during the next three weeks, the downside risk outweighs the upside potential.”

On April 12, 2004, AMAT closed at $22.84 per share and then proceeded to descend. This equity broke through its support level of $20.20 and closed at a low of $18.12 per share on May 3, 2004. Afterwards, as the money flow rose $2.5 billion, this stock proceeded to rebound and closed at $19.97 per share on May 28, 2004. On July 27, 2004, this equity closed at $16.18 per share.

If the money flow were to fall $12.8 billion during the next three months, this equity could fall to a low level. This stock could fall at a slower pace than we originally believed and although it may not reach our initial projected low of $6.27 per share, it could close at a low of $10.35 per share by mid October 2004.

Long-term, this stock could reach $48.25 per share, perhaps by 2008. There are 160 shares of AMAT left in our Model Portfolio and these will be held long-term.

CMGI, Inc., (NASDAQ symbol: CMGI) finds, acquires, develops, and operates Internet companies. It is one of the world’s largest Internet investment companies. CMGI consists of three venture capital funds.

CMGI, Inc., has developed a strategy to acquire start-up Internet companies, and then either sell them outright, or sell a minority interest and reinvest the cash proceeds. The company has a history of acquiring successful Internet companies. To find out more about CMGI, Inc., visit the company’s web site at www.CMGI.com.

Last year, CMGI, Inc., has sold some of its core holdings. Among them were the Alta Vista unit and uBid, Inc. Due to these sales we have revised our long-term sell target level from $59.75 to $17.50 per share.

The shares of CMGI, Inc., closed at a low of $0.29 per share on August 19, 2002. Afterwards, as the money flow rose $534 million during the following 11 months, this equity proceeded to ascend. On November 14, 2003, this stock closed at a high of $2.12 per share. As the money flow fell, this equity edged to a lower level and closed at $1.78 per share on December 31, 2003.

Afterwards, as the money flow rose $346 million during the next three weeks, this stock established a very strong uptrend. On January 22, 2004, this equity closed at a high of $3.10 per share. Afterwards, as the money flow started to fall, this stock reversed its course and proceeded to descend.

On December 19, 2003, we revised our rating for CMGI from a speculative long-term buy to a speculative long-term accumulate. On February 17, 2004, CMGI closed at $2.65 per share and we stated: “Speculators may establish half of their position at this price level, and if this stock were to fall below $1.02 per share, then buy the remaining half.”

This equity proceeded to descend and closed at a low of $2.01 per share on March 11, 2004. Afterwards this stock proceeded to rebound and closed at $2.58 per share on April 5, 2004. This stock was not able to break through its resistance level of $2.74 and once again proceeded to descend. As the money flow fell, this equity closed at $1.71 per share on May 17, 2004. Although this stock appeared to rebound and closed at $1.95 per share on June 30, 2004, it was still in a downtrend. On July 27, 2004, this stock closed at $1.40 per share and could fall below $1.00 per share by mid October 2004.

We would like to remind investors that the risk of owning this stock is high; therefore it should only be bought by speculators and should not account for more than three percent of one’s portfolio.

Cisco Systems, Inc., (NASDAQ symbol: CSCO) makes data networking equipment, data switches, and networking gear. Cisco Systems continues to expand its market share. As John T. Chambers, the CEO of Cisco Systems, continues to steer the company on a path to high growth, the long-term outlook for the company is good.

This stock closed at a low of $11.24 per share on September 27, 2001. It then proceeded to rebound and closed at $21.79 on December 6, 2001. Afterwards, as the money flow fell, this stock reversed its uptrend and proceeded to descend.

On July 21, 2003, this stock closed at $17.93 per share. We have been projecting that this equity may test its $8.60 support level by mid September 2003. It hasn’t happened because the money flow started rising at a fast pace and since June 2003, it rose $10.3 billion by November 12, 2003. Although we may have been wrong about the time frame when this equity could reach its low level, only time will tell if we were correct about the price that this stock could drop to.

This equity rose at a slow pace and it could also fall at a slow pace. In November 2003, we stated: “On November 20, 2003, this equity closed at $21.94 per share and is fully valued.” To our surprise, the money flow rose $6.9 billion during the following three weeks and CSCO continued its uptrend. On December 8, 2003, this stock closed at a high of $24.29 per share.

On January 16, 2004, this equity closed at $29.13 per share and we stated: “Speculators who own it may want to sell it.” During the next 7 weeks money flow fell $22.4 billion and this stock fell at a fast pace. On March 9, 2004, CSCO closed at a low of $22.12 per share. Afterwards, as the money flow rose this stock proceeded to rebound and closed at $24.81 per share on April 5, 2004.

This stock was not able to break through its resistance of $25.71 per share and once again proceeded to fall. On April 23, 2004, this equity closed at $23.32 per share and then proceeded to descend. Although the company reported earnings that were in line with expectations, this stock continued to descend and closed at $20.93 per share on May 17, 2004.

Afterwards, this equity proceeded to rebound and on June 30, 2004, closed at $23.70 per share. As the money flow fell, this stock proceeded to descend and closed at $20.71 per share on July 27, 2004.

In our opinion the stocks in the technology sector are overvalued and if the money flow were to fall $47 billion, CSCO could slowly descend and fall below $15.25 per share. At such a level we would rate this stock a speculative buy. Investors who already own this stock could add to their position at such price level.

Previously we stated that this stock should be held at least ten years. Although patient investors may want to hold this stock five years, speculators may achieve a better return by trading this equity. There are still 100 shares of CSCO left in our Model Portfolio and these will be held long-term.

Compuware Corporation (NASDAQ symbol: CPWR) makes software that manages corporate networks and improves productivity. The stock of Compuware Corporation reached a high of $40.00 per share in December 1999.

This stock closed at a high of $13.75 per share on January 24, 2002, and then proceeded to fall. Due to the weakness in the sector this stock maintained its downtrend and closed at $12.20 per share on March 15, 2002.

On April 4, 2002, this stock broke through its support level of $9.90 and closed at $8.28 per share, down $2.82 for the day. This equity continued its downtrend and closed at a low of $2.56 per share on August 13, 2002. Afterwards, as the money flow rose $1.1 billion during the following 16 months, this equity proceeded to ascend and closed at a high of $8.39 per share on January 26, 2004. Afterwards, as the money flow fell $294 million during the next two months, this stock edged lower and closed at $7.18 per share on March 24, 2004.

As the money flow edged higher, CPWR proceeded to ascend and on April 22, 2004, closed at $8.73 per share. Afterwards, as the money flow fell, this stock reversed its uptrend and proceeded to descend. On July 27, 2004, CPWR closed at $5.01 per share. If the money flow were to fall $725 million during the next three months, this stock could fall below $3.55 per share. Speculators may start to accumulate this equity at such price level.

Sold 500 warrants of Elan Corporation, plc, on July 20, 2004 at $0.85 per warrant. Elan Corporation, plc, (NYSE symbol: ELN) is a pharmaceutical manufacturer that develops and distributes a variety of prescription drugs. During the past seven years the company has expanded by making aggressive acquisitions. On April 12, 2002, five hundred warrants of Elan Corporation, plc, were bought at $0.50 per warrant.

These warrants trade under the symbol ELANZ and expire on August 31, 2005. As this equity tumbled, the price of warrants fell along with it and on October 22, 2002, ELANZ closed at a low of $0.06 per warrant.

In February 2004, Elan Corporation plc., announced that it plans to submit to the FDA an application for approval of Antegren ® for treatment of multiple sclerosis. The shares of Elan Corporation plc., immediately rocketed ten points and closed at $19.29 per share on March 24, 2004.

As the shares of Elan Corporation rocketed to higher levels, so did its warrants. In just 20 days, these warrants went from a low of $0.20 per warrant as of February 17, 2004, to a $2.15 per warrant reached at a close on March 8, 2004.

Afterwards, although the stock maintained its high level, these warrants proceeded to fall at a fast pace. On April 23, 2004, these warrants closed at $1.12 per warrant, down 50 percent from their high level reached on March 8, 2004. Furthermore, the daily trading volume of ELANZ fell to 125,900 on April 23, 2004. On the most active days, as many as 1,600,000 warrants have been traded in one day.

In the previous Moderate Traders we have stated: “If the ADR’s of Elan (ELN) are in an uptrend and trading above $18.40 per ADR, the daily trading volume of warrants (ELANZ) exceeds 600,000 for two consecutive days, and the warrants do not fall below $0.64 per warrant, then an additional $500.00 (five hundred dollars) worth of warrants will be bought and added to our Model Portfolio. Afterwards, if these warrants were to once again reach a high level of approximately $1.65 per warrant, all of these warrants would be sold immediately.”

These warrants continued to descend and closed at a low level of $0.58 per warrant on June 18, 2004. Afterwards, these warrants rallied temporarily and on July 7, 2004, closed at $0.94 per warrant. As the money flow fell, these warrants reversed their uptrend and proceeded to descend. On July 27, 2004, ELANZ closed at a low of $0.59 per warrant.

Since these warrants fell below $0.64 per warrant and the daily trading volume did not exceed 600,000 for two consecutive days, we are removing these warrants from our buy list. The ADR’s of Elan Corporation, plc., may have already reached their high level and could reverse their trend. Depending on the money flow and other technical indicators, the ADR’s of Elan Corporation, plc., could fall below $9.75 during the next five months and if that were to occur, the price of warrants would also fall substantially. In anticipation of such a probable event, 500 warrants that were held in our Model Portfolio were sold on July 20, 2004, at $0.85 per warrant.

Internet Capital Group (NASDAQ symbol: ICGE) is a venture capital group that owns a stake in approximately 30 Internet companies.

Due to the carnage in the Internet sector this stock closed at a low of $3.28 per share on December 29, 2000, down from its high of $143.55 reached in March 2000.

Afterwards, this stock proceeded to establish a slow upward momentum and closed at $6.44 per share on January 31, 2001. It is highly unlikely that this stock will ever revisit its previous high of $143.55 per share.

On April 12, 2002, an additional five hundred shares of Internet Capital Group were bought at $0.57 per share. These 500 shares will be held in our Model Portfolio long-term until this equity reaches our revised target level of $22.75 per share, perhaps by 2008. At such a level all of the shares will be sold immediately.

On June 2, 2003, ICGE closed at a high of $0.82 per share and then proceeded to descend. As the money flow fell $37 million during the following 25 days, this equity descended and closed at a low of $0.46 per share on June 27, 2003. On January 12, 2004, this stock closed at $0.61 per share. Afterwards, as the money flow fell $161 million during the next three months, this stock proceeded to fall and closed at $0.31 per share on April 23, 2004.

In April 2004, we stated: “There is a high probability that this stock could fall below $0.15 per share during 2004, therefore on January 16, 2004, we revised our rating from speculative long-term buy to a hold. We would like to remind investors that the risk of owning this stock is very high; therefore it should not account for more than three percent of one’s portfolio.”

A few days later Internet Capital Group, Inc., announced that its Board of Directors has approved a reverse stock split. The stock split was effective as of Monday, May 10, 2004, and was based on a ratio of 1 for 20. This equity will trade under a symbol ICGED until May 30, 2004, and then will revert to its old symbol of ICGE. An investor who owned 100 shares of ICGE will now have only 5 shares. There were 700 shares of ICGE in our Model Portfolio and now there are only 35 share.

On May 25, 2004, ICGED closed at $4.75 per share. This stock established a short-term uptrend and on June 30, 2004, ICGE closed at $7.70 per share. As the money flow fell, this stock reversed its trend and proceeded to descend. On July 27, 2004, ICGE closed at $5.51 per share.

There is a slight probability that this stock could fall to approximately $2.25 per share and speculators may start accumulating it at such level. We would like to reiterate that the risk of owning this stock is very high; therefore it should not account for more than three percent of a speculators portfolio.

JDS Uniphase Corporation (NASDAQ symbol: JDSU) makes components used in fiber-optic networks and is a leader in the sector.

Although our original objective was to buy 100 shares, due to the substantial amount of cash in our Model Portfolio, a decision was made to buy more shares. On February 6, 2002, two hundred shares of JDSU were bought at $6.33 per share.

Due to the negative outlook for this sector this stock continued to descend and closed at a low level of $1.62 per share on October 7, 2002. As the money flow rose $2.3 billion during the following 8 months, this stock proceeded to ascend and closed at a high of $4.28 per share on June 5, 2003.

As the money flow rose, this equity proceeded to ascend and closed at $4.28 per share on June 5, 2003. On August 21, 2003, JDSU closed at $3.50 per share and we stated: “If the money flow were to fall $420 million during the following 7 weeks, this stock could test its support level of $1.62 per share by mid October 2003 and speculators may want to buy it.”

The money flow rose by $1 billion during the next three weeks and the stock proceeded to ascend. On September 9, 2003, JDSU closed at $4.20 per share. The stock was not able to break through its resistance level of $4.28, reversed its course, and proceeded in a downtrend.

On December 19, 2003, this equity closed at $3.35 per share. As the money flow rose, JDSU proceeded to ascend and closed at $5.73 per share on January 20, 2004. Afterwards, as the money flow dropped, this stock fell and closed at $3.97 per share on March 24, 2004.

Afterwards this equity attempted to rebound but was not able to break through its recent resistance level of $4.75. On April 23, 2004, this stock closed at $4.25 per share. As the money flow continued to fall, this equity maintained its downtrend and closed at a low of $2.98 per share on May 17, 2004. Afterwards, this stock established a short-term uptrend and on June 30, 2004, closed at $3.79 per share.

On July 27, 2004, this equity closed at $3.03 per share. This stock could fall at a slow pace. If the money flow were to fall $874 million during the next three months, this stock could fall to $1.62 per share, perhaps by mid October 2004.

Due to the unfavorable short-term outlook for this sector it may take this stock longer to reach our sell target level. These 200 shares of JDSU will be sold as soon as this stock reaches approximately $12.26 per share, perhaps in the second half of 2006.

WorldCom Group (NASDAQ symbol: WCOEQ) has grown from a small telecommunications provider to a behemoth through mergers and acquisitions. On September 14, 1998, WorldCom merged with MCI Communications Corporation. Once this merger was finalized, WorldCom was in possession of one of the world’s largest and most advanced digital networks that connects local markets in the United States to more than 280 countries and locations worldwide.

Due to the accounting debacle that pushed WorldCom to its bankruptcy, this stock became worthless. Although these shares were cancelled on April 20, 2004, when the company emerged from bankruptcy, we will keep this stock symbol in our Model Portfolio as a reminder of what could happen to the stock of any company.

On July 20, 2004, a decision was made to sell 500 warrants of Elan Corporation, plc. These warrants trade on NASDAQ under the symbol ELANZ and expire on August 31, 2005. These 500 warrants were sold the same day at $0.85 per warrant. These warrants were bought on April 12, 2002, at $0.50 per warrant. This trade generated $414.05 cash after commission, and a long-term gain of $153.10, or 59 percent.

In the previous postings of the Moderate Trader we have stated: “If the ADR’s of Elan (ELN) are in an uptrend and trading above $18.40 per ADR, the daily trading volume of warrants (ELANZ) exceeds 600,000 for two consecutive days, and the warrants do not fall below $0.64 per warrant, then an additional $500.00 worth of warrants will be bought and added to our Model Portfolio. Afterwards, if these warrants were to once again reach a high level of approximately $1.65 per warrant, all of these warrants would be sold immediately. The risk of owning these warrants is high; therefore only speculators should buy them when all of the conditions listed above are met.”

Since these warrants fell below $0.64 per warrant and the daily trading volume did not exceed 600,000 for two consecutive days, we are removing these warrants from our buy list. The ADR’s of Elan Corporation, plc., may have already reached their high level and could reverse their trend. Depending on the money flow and other technical indicators, the ADR’s of Elan Corporation, plc., could fall below $9.75 during the next five months and if that were to occur, the price of warrants would also fall substantially. In anticipation of such a probable event, all of the existing warrants that were held in our Model Portfolio were sold on July 20, 2004, at $0.85 per warrant.

The cash received from this trade was added to the existing cash in our Model Portfolio and now there is $58,887 cash in our Model Portfolio. After this trade, on July 27, 2004, the asset allocation of our Model Portfolio was 11 percent equities and 89 percent cash.

On September 22, 2003, we added several stocks to our list. Although there may not be enough cash in our Model Portfolioto buy all of these stocks, we do not anticipate that all of the equities that are on our buy list will reach our buy target levels. Our list is not in alphabetical order; the stocks are listed with the most desirable to own listed first and the less desirable listed last.

On July 27, 2004, the Dow and the Nasdaq were down for this year. The market is overdue for a major correction and when that happens, the Dow could fall 25 percent, while the Nasdaq Composite index could fall 30 percent. In a worst case scenario, some of the technology stocks could fall as much as 70 percent. While some of the tech stocks could drop sharply in a very short time, other stocks could fall at a slow pace; therefore we will wait patiently until the stocks on our list reach our buy target levels.

Nasdaq-100 Trust (AMEX symbol: QQQ) is a unit investment trust that invests in the largest companies traded on NASDAQ. The trust issues tracking stocks on the Nasdaq-100 Index called QQQ’s or Q’s. At the height of the Internet frenzy, QQQ’s closed at a high level of $117.55 in April 2000, their price doubling in less than a year.

Then, as the money flow proceeded to fall, QQQ’s, or cubes, as the tracking stock is commonly called, closed at a low level of $28.19 on September 21, 2001. Afterwards, as money flow rose $20 billion, cubes proceeded to test their resistance level and closed at $42.85 on December 5, 2001.

As the money flow fell, QQQ’s closed at $33.52 on April 12, 2002. At that time we stated: “There is a probability that cubes may test their support level of $28.19 by the end of May 2002.” Afterwards, money flow fell $18 billion during the next four weeks and QQQ’s closed at $28.70 on May 7, 2002.

Immediately afterwards, money flow rose $14.4 billion during the next ten days and QQQ’s closed at a high of $32.86 on May 16, 2002, then again resumed their downtrend. As the money flow fell, QQQ’s proceeded to descend and closed at a low of $20.35 on September 30, 2002.

To our surprise, money flow continued to rise and QQQ’s maintained their uptrend. Cubes closed at a high level of $38.59 on January 26, 2004. Afterwards this equity reversed its uptrend and proceeded to descend. The long-term slow stochastic indicator generated a sell signal in February 2004. If the money flow were to fall $97 billion between February 2004 and September 2004, cubes could fall to a low of $20.75, perhaps by mid October 2004. At such a level we would rate these a short-term buy and 250 QQQ’s would be bought and added to our Model Portfolio.

International Business Machines Corporation (NYSE symbol: IBM) is the world’s largest manufacturer of computer hardware. The stock of Big Blue closed at a high of $133.62 per share on September 1, 2000 and then proceeded to fall.

In October 2002, the stock of IBM Corporation found strong support and then proceeded in an uptrend. On February 4, 2004, this equity closed at a high of $100.19 per share and then reversed its course and proceeded to fall. As the money flow fell, this stock proceeded to break through its recent support levels and closed at a low of $85.53 per share on May 17, 2004.

We are maintaining our buy target level of $55.07 and believe International Business Machines Corporation could reach it by mid September 2004, or October 2004. On August 21, 2003, we decided to add International Business Machines Corporation to our buy list. If this stock were to fall to our projected buy target level of $55.07 per share, then 100 shares would be bought and added to our Model Portfolio.

Intel Corporation (NASDAQ symbol: INTC) is the leading manufacturer of microprocessors. The company continues to switch production to a 0.18 micron manufacturing process that yields more semiconductors from each wafer. If the money flow were to fall $57 billion between February 2004 and September 2004, this equity could descend to a low level of $16.75 per share, perhaps by mid September 2004, or beginning of October 2004. At such a level 400 shares of Intel Corporation would be bought and added to our Model Portfolio.

Advanced Micro Devices, Inc., (NYSE symbol: AMD) manufactures microprocessors, flash memory devices, data communications products, and network products. While the demand for microprocessors continued to grow worldwide in the year 2000, Intel Corporation was not able to produce enough chips due to insufficient manufacturing capacity. During that time AMD was able to increase its market share. AMD and Intel continue their fierce competition.

Long-term, AMD could continue to spend a large percentage of its gross revenues on research and development and try to keep pace with Intel by introducing faster processors to the market. As AMD sells a larger quantity of higher priced processors, the average selling price will continue to rise, thus improving profit margins.

Short-term, if the money flow were to fall $6.4 billion between April 2004 and October 2004, there is a slight probability that AMD could descend and reach our buy target level of $2.50 per share by October or November 2004. If this equity were to reach such a low level, 1,000 shares would be bought immediately and added to our Model Portfolio.

Rite Aid Corporation (NYSE symbol: RAD) is the third largest drug store chain in the United States. The company operates approximately 3,400 drug stores in 29 states.

In July 2003, we stated: “If the money flow were to rise sharply during the next four weeks, this equity could ascend to approximately $6.35 per share by the end of August 2003 and all of the shares held in our Model Portfolio would be sold.” The money flow did not rise sharply and RAD appeared to reverse its uptrend, that’s why 400 shares of RAD that were held in our Model Portfolio were sold at $4.41 per share.

The stock of Ride Aid Corporation maintained its uptrend, albeit at a slow pace. On December 8, 2003, RAD closed at a high of $6.40 per share, up $0.10 for the day, and then proceeded to descend. If the money flow were to fall $1.6 billion between March 2004 and September 2004, this equity could fall to a low of approximately $2.45 per share, perhaps by mid October 2004. If this stock were to fall to approximately $2.45 per share, then 700 shares of RAD would be bought and once again added to our Model Portfolio.

Applied Materials, Inc., (NASDAQ symbol: AMAT) is a major supplier of wafer processing equipment that is used to produce semiconductors. On November 6, 2003, this stock closed at a high of $25.61 per share, up $0.66 for the day, and then proceeded to descend. If the money flow were to fall $24.7 billion between November 2003 and September 2004, this equity could fall to a low level. This equity could fall at a slower pace than we originally believed and although it may not reach our initial projected low of $6.27 per share, it could close at a low of $10.35 per share, perhaps by the end of September 2004.

We will wait until AMAT falls to its lowest level. Afterwards, when this equity reverses its trend and proceeds to ascend, 400 shares will be bought (preferably below $11.10 per share) and added to our Model Portfolio.

On April 17, 2003, we added the warrants of Elan Corporation, plc, to our buy list. These warrants trade on NASDAQ under the symbol ELANZ and expire on August 31, 2005.

Our initial buy target level for these warrants was $0.15 per warrant. On August 21, 2003, we lowered our buy target level to $0.05 per warrant. On January 16, 2004, these warrants closed at $0.25 per warrant. As the money flow edged lower these warrants closed at $0.20 on February 17, 2004, down $0.05 for the day.

In February 2004, Elan Corporation, plc., announced that it plans to submit to the FDA an application for approval of Antegren ® for treatment of multiple sclerosis. Since then, the ADR’s of Elan Corporation, plc., rocketed ten points and closed at a high of $21.47 on April 2, 2004.

As the ADR’s of Elan Corporation rocketed to higher levels, so did its warrants. In just 20 days, these warrants went from a low of $0.20 per warrant as of February 17, 2004, to $2.15 per warrant reached at closing on March 8, 2004.

Afterwards, although the ADR’s of Elan Corporation maintained their high level, these warrants proceeded to fall at a fast pace. On March 24, 2004, these warrants closed at $0.99 per warrant, down 54 percent from their high level reached on March 8, 2004. Furthermore, the daily trading volume of ELANZ fell to 205,000 on March 24, 2004. On the most active days, as many as 1,600,000 warrants were traded in one day, when they traded at a high of $2.15 per warrant.

These warrants have run away from us. We stubbornly maintained our buy target level of $0.05 per warrant. As the company announced its plans to submit an application for an approval of its new prescription drug, these warrants rocketed to a high level before we posted our next issue of Moderate Trader.

The daily average trading volume of ELANZ fell below 50,000 per day and their price continued to fall, albeit at a slow pace. On June 18, 2004, these warrants closed at $0.58 per warrant. Although these warrants attempted to test their recent resistance levels, they were only able to close at a high of $0.94 per warrant on July 7, 2004. Afterwards, these warrants once again reversed their uptrend and proceeded to fall. The daily average trading volume of ELANZ remained below 50,000 per day.

In the previous postings of the Moderate Trader we have stated: “If the ADR’s of Elan (ELN) are in an uptrend and trading above $18.40 per ADR, the daily trading volume of warrants (ELANZ) exceeds 600,000 for two consecutive days, and the warrants do not fall below $0.64 per warrant, then an additional $500.00 worth of warrants will be bought and added to our Model Portfolio. Afterwards, if these warrants were to once again reach a high level of approximately $1.65 per warrant, all of these warrants would be sold immediately. The risk of owning these warrants is high; therefore only speculators should buy them when all of the conditions listed above are met.”

Since these warrants fell below $0.64 per warrant and the daily trading volume did not exceed 600,000 for two consecutive days, we are removing these warrants from our buy list. The ADR’s of Elan Corporation, plc., may have already reached their high level and could reverse their trend. Depending on the money flow and other technical indicators, the ADR’s of Elan Corporation, plc., could fall below $9.75 during the next five months and if that were to occur, the price of warrants would also fall substantially. In anticipation of such a probable event, all of the existing warrants that were held in our Model Portfolio were sold on July 20, 2004, at $0.85 per warrant. Furthermore, warrants of Elan Corporation, plc., (NASDAQ symbol: ELANZ) will be removed from our buy list.

Cisco Systems, Inc., (NASDAQ symbol: CSCO) makes data networking equipment, data switches, and networking gear. Cisco Systems continues to expand its market share. On January 16, 2004, this stock closed at a high of $29.13 per share. Afterwards, this equity reversed its course and proceeded to descend. If the money flow were to fall $23.6 billion between January 2004 and September 2004, this stock could descend to a low of $10.60 per share, perhaps by mid September 2004, or October 2004, and 300 shares would be bought and added to our Model Portfolio.

LSI Logic Corporation (NYSE symbol: LSI) makes chips for cellular phones, satellite set-top boxes, DVD products, and personal computers. This stock has been in a long-term downtrend since March 2000, when it closed at a high of $88.25 per share. The most recent high was $11.45 per share, and this equity closed at that level on January 20, 2004. Afterwards, the money flow proceeded to fall once again and the stock started to descend. If the money flow were to fall $1.8 billion between January 2004 and September 2004, this equity could fall to a low of approximately $2.45 per share. If the stock of LSI Logic Corporation were to fall below $2.95 per share, perhaps by mid September 2004, then 1,000 shares would be bought and added to our Model Portfolio.

Microsoft Corporation (NASDAQ symbol: MSFT) is the largest maker of software. The operating system made by Microsoft is used in the majority of computers. The company has no debt and has approximately $55 billion in cash and short-term investments. On March 24, 2004, we lowered our buy target level for this stock from $21.25 per share to $18.75 per share.

On July 20, 2004, the company announced that its board of directors approved a one time dividend of $3.00 per share. The company also stated that it will buy approximately $30 billion of its stock during the next four years.

Due to these positive events this equity could remain in a short-term uptrend and it would not surprise us if the stock were to reach approximately $36.45 per share by mid December 2004.

We are still maintaining our buy target level of below $18.75 per share for this stock, although it could take much longer for this equity to reach it. If this stock were to fall below $18.75 per share, perhaps by mid June 2005, then 200 shares of MSFT would be bought and added to our Model Portfolio.

Oracle Corporation (NASDAQ symbol: ORCL) is the world’s third largest software company. The company makes database management system software. Approximately 90 percent of corporate websites are using Oracle’s database software. This stock reached its high level in August 2000, and since then has been in a long-term downtrend. If the money flow were to fall $72 billion between January 2004 and mid September 2004, this stock could descend to a level below $4.75 per share, perhaps by October 2004. At such a level 800 shares of Oracle Corporation will be bought and added to our Model Portfolio.

RF Micro-Devices, Inc., (NASDAQ symbol: RFMD) designs, develops, manufactures, and markets semiconductors and components for the wireless handset market, wireless Local Area Networks (LAN), pagers, the broadband cable communications sector, and wireless security. The company offers a wide selection of products such as amplifiers, mixers, single chip transmitters, receivers, and transceivers.

Among the microprocessors made by the company are gallium arsenide-based chips that are the most expensive and generate the highest profit margin. The company’s largest customer is the Nokia Corporation.

If the money flow were to fall $3.2 billion between March 2004 and mid August 2004, then this stock could descend to approximately $1.65 per share, perhaps by mid October 2004. At such a price level 800 shares of RF Micro-Devices, Inc., will be bought and added to our Model Portfolio.

Hewlett-Packard Company (NYSE symbol: HPQ) is the second largest computer manufacturer in the world. The company designs and makes notebook personal computers, servers, consumer PC’s, and networking equipment. If the money flow were to fall $11.4 billion between January 2004 and October 2004, this stock could fall below $10.95 per share by mid October 2004. If this stock were to fall below $9.95 per share, 100 shares will be bought and added to our Model Portfolio.

Yahoo, Inc., (NASDAQ symbol: YHOO) is a global Internet media company that provides comprehensive information and shopping services to over 200 million users worldwide. The company’s website, www.yahoo.com is the most visited site and has the highest name recognition.

On May 12, 2004, the company issued a 2 for 1 stock split. This stock ascended at a very slow pace and it could also descend at a slow pace. If the money flow were to fall $51.3 billion between May 2004 and February 2005, this stock could fall to a low of $9.75 per share, perhaps by mid March 2005. At such a level 200 shares would be bought and added to our Model Portfolio. Our previous buy target level was $14.45 per share but it has been adjusted for the recent stock split and the strength of the stock, to the new buy level of $9.75 per share.

The stock of Motorola, Inc., (NYSE symbol: MOT) had run-up and closed at $20.72 per share on April 22, 2004. At such a level this stock was overvalued. We will continue to monitor this equity. If the money flow were to fall $11.4 billion between April 2004 and October 2004, this stock could drop to a low level of approximately $4.95 per share, perhaps by mid October 2004. At such a level 300 shares would be bought and once again added to our Model Portfolio.

We will continue to monitor Dell Computer Corporation (NASDAQ symbol: DELL). This stock closed at $29.82 per share on November 15, 2002, and was trading at approximately 49 times earnings. In our May 2003 issue we stated: “On May 16, 2003, this stock closed at a high level of $31.19 per share and was fully valued.”

On February 10, 2003, this equity closed at a low level of $22.86 per share. Afterwards, as the money flow rose $15.6 billion during the next 8 months, this stock proceeded to ascend and on October 21, 2003, closed at $36.98 per share. At that time we stated: “This equity was overvalued at that level.”

On March 18, 2004, the 50-day moving average fell below the 200-day moving average indicating a strong downtrend. If the money flow were to fall $16.4 billion during the next five months, this stock could fall to a low of $17.75 per share, perhaps by mid November 2004. If this equity were to reach such a low level, 100 shares will be bought and added to our Model Portfolio. If this stock doesn’t reach our buy target level, then the cash will be used to buy more shares of Advanced Micro Devices, Inc., and another stock.

Nokia Corporation (NYSE symbol: NOK) is the world’s largest manufacturer of mobile phones. The company is located in Finland, with subsidiaries in the United Kingdom and China. This equity is still in an overall long-term downtrend. If the money flow were to fall $11.5 billion between March 2004 and October 2004, in a worst case scenario this equity could descend to a low level of $4.95 per ADR, perhaps by mid October 2004. If this equity were to reach such a low level, 600 ADR’s of Nokia Corporation will be bought and once again added to our Model Portfolio.

On October 18, 2002, we added the stock of Juniper Networks, Inc., (NASDAQ symbol: JNPR) to our buy list. The company makes Internet Protocol routers. This equity closed at a high of $30.39 per share on January 20, 2004, and then proceeded to descend. If this stock were to reach a low of approximately $2.15 per share, four hundred shares will be bought and added to our Model Portfolio. We will wait patiently until mid March 2005 for this stock to reach our buy target level.

We also added the stock of EMC Corporation (NYSE symbol: EMC) on October 18, 2002. If this stock were to reach a low of $2.55 per share, five hundred shares will be bought and added to our Model Portfolio. EMC Corporation is a major supplier of enterprise storage devices, software, and services. The company’s top of the line Symmetrix® system can hold 19 terabytes of data on 384 individual drives.

EMC Corporation acquired Data General in October 1999, and that added a selection of mid-priced storage devices. As the Internet continues to grow and hundreds of millions of people go online during the next decade, we predict that the need for storage devices could continue to grow in double-digits.

If this stock were to reach our buy target level of $2.55 per share, perhaps by October 2004, speculators may want to buy it and hold it at least two years. Do not commit more than five percent of your cash to this stock.

Corning Incorporated (NYSE symbol: GLW) is a major supplier of fiber-optic cable. Its inventory has been depleted to a low level and as the demand improves the company could sell more products. Afterwards this stock may establish a strong upward trend.

On March 11, 2002, this stock reached a high of $8.90 per share. Then, as money flow fell $631 million during the next four weeks, this equity proceeded to fall and closed at $6.38 per share on May 10, 2002. This stock continued its overall downtrend and closed at a low of $1.10 per share on October 8, 2002.

Afterwards, GLW established a strong uptrend and closed at a high of $13.78 per share on January 20, 2004. At that level this equity was fully valued. If the money flow were to fall $3.6 billion between January 2004 and September 2004, this stock could fall and reach our revised buy target level of $2.95 per share, perhaps by October 2004.

Vitesse Semiconductor Corporation (NASDAQ symbol: VTSS) makes gallium arsenide semiconductors that are used by manufacturers of networking equipment. On August 20, 2002, this equity was removed from the S&P 500 Index and 31.6 million shares were traded on that day.

At its height, in February 2000 this stock closed at $103.83 per share. It then proceeded in a downtrend. Among the company’s major customers are Cisco Systems and Lucent Technologies. When that sector rebounds, the stock of Vitesse Semiconductor Corporation could ascend to a higher level, but at this time this equity is in an overall long-term downtrend. This stock could fall to approximately $1.55 per share by mid October 2004. At such a level 800 shares would be bought and added to our Model Portfolio.

Sun Microsystems, Inc., (NASDAQ symbol: SUNW) is among the major suppliers of hardware to the Internet. The company continues to introduce competitively priced new servers in order to expand its market share.

If the money flow were to fall, then this stock could descend to $2.42 per share. Depending on the money flow and other technical indicators, this equity could maintain its downtrend and fall to a low level of $1.15 per share by mid October 2004. At such a level, 1,000 shares would be bought and added to our Model Portfolio.

Lucent Technologies, Inc., (NYSE symbol: LU) is the largest manufacturer of telecommunications equipment. Lucent Technologies makes fiber-optic equipment and optical network equipment that allows phone companies to increase capacity and to provide high speed Internet access.

This high flying stock closed at a high of $81.75 per share in December 1999 and has been in a downtrend ever since. At that time no one would have thought that this equity could fall below $10.00 per share. As the money flow fell, this stock continued to plunge and closed at $0.58 per share on October 11, 2002.

On October 18, 2002, Lucent Technologies announced that it will seek shareholder approval to do a reverse stock split to bring its stock price between $15.00 and $25.00 per share. If this reverse stock split were approved it could be as bad as 1 for 36 shares. In such a horrendous scenario an investor who owns 100 shares would receive less than three shares.

We will monitor this equity and if the company were to issue a reverse stock split, the stock could pull back to a lower level after two or three months. When this stock reaches its low level we may buy it again and add it to our Model Portfolio.

Nortel Networks Corp. (NYSE symbol: NT) is the leading provider of networking solutions, including optical networking solutions and wireless networking systems.

In September 2002 the company announced that it plans to do a reverse stock split of 1 for 20, or higher, in 2003.

We will monitor this equity and if the company were to issue a reverse stock split, the stock could pull back to a lower level after two or three months. When this stock reaches its low level we may buy it again and add it to our Model Portfolio.

Our Model Portfolio is overweighed in technology stocks. We advise investors against acquiring so many technology stocks in their portfolios. Investors may want to buy some of these stocks and add them to their portfolios while speculators who are below thirty years of age may consider allocating up to 50 percent of their portfolios to technology stocks.

Investors who are just starting out should establish a Roth Individual Retirement Account (commonly called a Roth IRA) and may buy equities listed below in our Model Portfolio II when they reach their lowest level. In the year 2002, the annual contribution limit for Roth IRA for these taxpayers who were under age 50, was $3,000.

The Roth IRA has many advantages. One of the biggest advantages is that no taxes are due on qualified withdrawals, while withdrawals from the traditional IRA are taxable.

By not having to pay taxes to the government, a retiree may be able to save over $200,000 throughout his or her retirement years. Surely, you could think of many ways to spend $200,000 on yourself and your family. Furthermore, an investor could trade stocks, knowing that any capital gains, short-term and long-term, achieved in the Roth IRA are not taxable. This allows each investor to reinvest these gains and to generate a much higher annual return on their portfolio.

Ericsson LM Telephone (NASDAQ symbol: ERICY) is a leading supplier of mobile phones and telecommunications equipment. On May 10, 2002, two hundred American Depository Receipts were bought at $2.29.

On October 23, 2002, the company issued a 1-for-10 reverse stock split and afterwards instead of 200 ADR’s there were only 20 ADR’s in our Model Portfolio II. On December 16, 2002, twenty ADR’s of ERICY were sold at $8.53 per ADR. The cash proceeds from this trade will be held in the Model Portfolio II.

Lucent Technologies, Inc. (NYSE symbol: LU) is the largest manufacturer of telecommunications equipment. Lucent Technologies makes fiber-optic equipment and optical network equipment that allows the phone companies to increase capacity and to provide high speed Internet access. On May 10, 2002, one hundred shares were bought at $4.46 per share.

On October 18, 2002, Lucent Technologies announced that it will seek shareholder approval to do a reverse stock split to bring its stock price between $15.00 and $25.00 per share. If shareholders were to approve this reverse stock split it could be as bad as 1-for-36 shares. In such a horrendous scenario an investor who owns 100 shares would receive less than three shares. On January 15, 2003, one hundred shares of LU were sold at $1.77 per share. The cash received from this trade will be held in Model Portfolio II.

Nortel Networks Corp. (NYSE symbol: NT) is the leading provider of networking solutions, including optical networking solutions and wireless networking systems. On May 10, 2002, one hundred shares were bought at $2.84 per share.

In September 2002, Nortel Networks announced that it plans to do a reverse stock split of 1-for-20, or higher. Due to this horrendous plan a decision was made to sell this stock. On January 15, 2003, one hundred shares of NT were sold at $2.43 per share. The cash received from this trade was added to the existing cash in Model Portfolio II.

Oracle Corporation (NASDAQ symbol: ORCL) is the world’s third largest software company. The company makes database management system software. Approximately 90 percent of corporate Web sites are using Oracle’s database software. On May 10, 2002, one hundred shares of Oracle Corporation were bought at $8.37 per share. This stock will be held long-term.

Rite Aid Corporation (NYSE symbol: RAD) is the third largest drug store chain in the United States. The company operates approximately 3,600 drug stores in 29 states.

This stock appeared to have reversed its uptrend and that’s why a decision was made to sell all of the shares of Ride Aid Corporation held in the Model Portfolio II.

On August 20, 2003, all 100 shares of RAD were sold at $4.41 per share. This trade generated $421.50 in cash, after commission, and it was added to the existing cash in our Model PortfolioII.

Sun Microsystems, Inc.(NASDAQ symbol: SUNW) is among the major suppliers of hardware to the Internet. The company continues to introduce new servers, competitively priced, in order to expand its market share. On July 10, 2002, one hundred shares of Sun Microsystems were bought at $5.12 per share and added to the Model Portfolio II.

Our initial objective was to hold this stock long-term until it reaches approximately $41.25 per share. Although short-term trend for this stock appeared to be upward, long-term this equity could continue to descend. Therefore, a decision was made to sell this stock. One hundred shares of SUNW were sold on June 12, 2003, at $5.47 per share and the cash was added to existing cash in Model Portfolio II.

A $2,000.00 contribution was made in December 2003. As of June 30, 2004, there was $3,496.05 cash in Model Portfolio II. Cash continues to generate interest of only 0.005 percent.