The Yahoo! Panic Hasn’t Stopped the Uptrend
by Graham Summers
September 22, 2006

On Tuesday, Yahoo! (YHOO) warned that its ad revenue growth was slowing.

Specifically, the Internet giant commented that automobile and financial companies were not buying ad space at the pace they were before. Consequently, the company now anticipates third quarter revenues at the lower end of its projected $1.1 billion to $1.2 billion range.

Shareholders of Yahoo! and every other internet stock on the planet reacted like the God of the Old Testament and smote the sector something fierce: Yahoo! shares dropped 13% in one day. The Internet ETF (HHH) plummeted... and bounced.

It’s just another case of investor emotions gone out of control. Yahoo! didn’t even state that it would miss estimates, just that its results would be at the lower end of its expected range!

But it’s presented us with another great buying opportunity.

Internet stocks have been in a strong uptrend in the last couple months. And the fact that the ETF bounced right back above its 50-day moving average after a sell-off of this magnitude indicates that this uptrend isn’t over yet.

There’s also a historic trend here. Historically, the Internet sector has performed well in the fourth quarter. Looking at a three-year chart for the Internet ETF, you see strong rallies starting in both September ’04 and September ’05.

Internet stocks are still cheap. The four largest holdings in the Internet ETF: Yahoo!, eBay, Time Warner, and Amazon are all still trading significantly below their historic valuation multiples.

Internet stocks are now even more out of favor than before. The uptrend is still going. And best of all, these stocks are entering a period in which, historically, they’ve staged strong rallies.

Don’t write off this sector just yet. You may end up smiting yourself in the process.

Good trading,

Graham

Wal-Mart to Unveil New Generic Drug Strategy
“Retail giant Wal-Mart Stores Inc., eyeing a long list of brand-name pharmaceuticals about to lose patent protection, is expected today to announce a low-price strategy for generic drugs sold at its pharmacies, according to people familiar with its plans.

The Bentonville, Ark., company has scheduled an announcement this morning at a Wal-Mart store in Tampa, Fla., to detail what it is promoting as a "major health-care initiative." A spokeswoman declined to comment.

It is unclear whether the company, which operates pharmacies inside its discount stores, has struck exclusive agreements with generic-drug makers to lock in prices. The generic-drug market is a $27-billion-a-year business and is a key part of efforts to lower health-care costs.”
WSJ ($) Read On...

Baht Rebounds From Biggest Loss in Three Years
“Thailand's baht rebounded from the biggest loss in almost three years as investors bet this week's coup will break a political deadlock that stalled public works spending and slowed economic growth. Stocks pared early declines.

The baht rose the most in more than four months after army chief Sondhi Boonyarataklin took power without bloodshed and pledged to hold elections in October 2007. Central bank Governor Pridiyathorn Devakula said the authority hadn't bought baht to support the exchange rate and currency trading is back to normal.

‘This represents a buying opportunity as it removes the political roadblock from the economy,’ said Richard Yetsenga, a currency strategist at HSBC Holdings Plc in Hong Kong. ‘The coup is as calm as you could possibly expect.’”
Read On...

•
Insider buying at large cap stocks hit a four-year high in June/July.

•
Hedge Funds pile into commodities, and promptly begin to lose their shirts.

•
In The News: Wal-Mart to sell generic drugs for $4, existing and new generic drug prices possibly affected. Thailand's currency rebounds after biggest loss in three years.

Last Change 52-Wk

S&P 500 1321.18 0.10% 6.73%

Oil (USO)* 58.32 0.45% -14.03%

Gold (GLD)* 58.23 1.45% 27.08%

Silver (SLV)* 111.70 3.44% -19.13%

US Dollar 85.80 -0.21% -2.57%

Euro 1.270 0.36% 3.78%

VIX 11.78 0.17% 4.99%

^HUI 306.84 2.82% 28.10%

10-year yield 4.81% 0.01 0.55

* Since ETF inception

Company	Sym	Industry
iShares Belgium	EWK	Belgian stocks
iShares Netherlands	EWN	Dutch stocks
iShares Spain	EWP	Spanish stocks
Ireland Fund	IRL	Irish stocks
Allied Irish Banks	AIB	Irish Banks
Verizon	VZ	telecom
China Mobile	CHL	telecom
AT&T	T	telecom
Bellsouth	BLS	telecom
iShares Telecom	IXP	telecom ETF
Host Hotels	HST	hotels
Marriot	MAR	hotels
Unilever	UL	consumer prod.
General Mills	GIS	food
McDonalds	MCD	fast food
Food & Beverage	PBJ	food & bev. ETF
Metlife	MET	insurance
Allstate	ALL	insurance
Humana	HUM	insurance
JC Penney	JCP	retail
Ann Taylor	ANN	retail
American Healthcare	AHS	healthcare
Cisco	CSCO	networks
Equity Office Prop.	EOP	REIT
Dividend Achievers	PEY	income stocks
Mattel	MAT	toys
Walt Disney	DIS	entertainment
Game Stop	GME	video games
Gymboree	GYMB	children's clothes
Priceline	PCLN	online travel
AutoZone	AZO	auto parts
WD 40	WDFC	lubricants
T. Rowe Price	TROW	asset mgmt.

Company	Sym	Industry
Westmoreland Coal	WLB	coal
James River Coal	JRCC	coal
Williams Coal	WTU	coal
Whittier Energy	WHIT	oil
Teton Energy	TEC	oil
Callon Petroleum	CPE	oil
Journal Register	JRC	newspapers
Bally Total Fitness	BFT	health clubs
Brasil Telecom	BTM	telecom
Companhia Brasil.	CBD	food retailer
TRM	TRMM	ATMs

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The Yahoo! Panic Hasn’t Stopped the Uptrend by Graham Summers September 22, 2006

The Yahoo! Panic Hasn’t Stopped the Uptrend
by Graham Summers
September 22, 2006