OUTLOOK

"Hitting a Home Run on Crude Oil"

3/2/2007

In our Outlook on 1/17/07, we stated, "We believe that crude oil is due for a rebound rally to at least $55 per barrel from its close of $51.21 on 1/16/07."  We said this rally would occur within 8 weeks.

Our Forecast was correct.  Crude Oil did reach $55 or more within 8 weeks as it closed at $61.64 on 3/2/07.  The timing of our entry on 1/17/07 was nearly perfect since Crude Oil bottomed on 1/18/07, just 1 day after our entry.

We have exited our long position in USO at a price of $51.40 on 3/2/07 from an initial entry of $43.93 on 1/17/07.  The profit achieved on this trade was 17.00%, the most profitable trade we have made so far.

Looking forward in 2007, we will continue to apply our contrarian strategy in different markets, looking for opportunities that put the odds strongly in our favor.

Mark Yuan, CFA