StockPickReport Commentary - September 10, 2007

Neil Batho Trader/Analyst That's why it's more of a trading environment now, rather than, "hey just hold and don't worry about it." Dear Fellow Trader, Regardless of everything else happening in the markets right now, there is one thing that you need to know about: GOLD. Yes, gold is back. And, it could continue a second huge run upward. Last time, we bought gold under streetTRACKS Gold Shares (GLD). In fact, we bought when gold was at $420 in 2005, and sold at $705 in 2006. Then, we didn't touch it again until it fell to $560. In fact we bought the day after gold sold off $40 in one day. Then we sold around $600. We also has two successful trades of iShares Silver Trust (SLV) during that time. That was over a year ago, and during that time I have had numerous emails asking, "Is it time to buy gold?" My answer was always, "No. Wait it out. Wait for the big move, then get the pullback." So, obviously, that move came last week. Why didn't we get this big move? Because there is a very very important trading rule you must remember: You cannot time the breakout. If you are buying a stock before it has broken out, you will be disappointed 75% of the time or more, as the stock may rally a bit, only to be sold off again. What I normally do, is wait for the breakout, then buy the pullback, even if the stock has fallen a little below the breakout area, yet rests right on the trend. To me, that is the pattern I always look for, because it is by far the most successful pattern. Why? Because the second mouse is the one who gets the cheese. That's why. As for stocks, yes, I did get on the side of bullish last week, and we already had a successful stock trade in Genentech Inc. (DNA). And, our oilfield services stock is up as well. I actually thought it would pullback a bit, and it did. It gapped down on Friday morning. That means that the stock price opened about $1.00 lower than it had closed the night before. I like this when we're buying because we snatched them up and then the stock was only down a few pennies in the day, so we're up a bit. I'm not overly bullish, but I am looking for opportunities on the long side now instead of the short side. Sometimes you don't know how long these indicators will last. It may only be a few more days because of the huge volatility these days. If things switch back to negative, then things could get quite ugly, and we could even see Dow 11,500. It's because the market wants "certainty" even if it's certainty of bad news. Not kidding. But since there's not certainty, volatility is high, and things could get ugly. That's why it's more of a trading environment now, rather than, "hey just hold and don't worry about it." Sincerely, Neil Batho Commentary and Trade Alerts arrive in your inbox 5 days a week Sunday - Thursday between approximately 7:00 pm - 11:00 pm Pacific. The views in this letter are our opinion only and should not be considered personalized investment advice.

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