OUTLOOK

"Bullish on Oil Stocks"

3/24/2008

We believe the XOI index, an index of oil stocks, is due for a rebound rally.  Within the next 4 weeks, we expect the XOI index to rise to 1380 or more from its recent low of 1282.90 on 3/20/08.

Since our Call for a correction in the XOI on 12/31/07, the XOI has declined nearly 20% from its high of 1577.75 on 12/31/07 to a low of 1282.90 on 3/20/08.  Based on sentiment and valuation, we believe this correction is nearing an end.  We expect a rally in the XOI index within the next 4 weeks.

Mark Yuan, CFA