OUTLOOK

"High Probabilities of a Rally in Transports"

1/7/2008

We believe the Dow Jones Transportation Average is due for a rebound rally within the next 4 weeks.  During this rally, we expect the index to rally to 4500 or more from its low of 4225.67 on 1/4/08.

The combination of a weak stock market and skyrocketing crude oil prices has wreaked havoc on transportation stocks.  This can be seen in the Dow Jones Transportation Average which has sank more than 20% below its 52 week high of 5514.59.  Currently, our system is showing favorable valuation and sentiment conditions in transport stocks which should lead to a rally in the short-term.

Mark Yuan, CFA