OUTLOOK

"Bullish on Banks"

11/9/2007

We believe the KBW Bank Index, representative of bank stocks, is due for a rebound rally.  From its 52 week low of 90.03 reached on 11/8/07, we believe the KBW Bank Index will rally to 96 or more within the next 8 weeks.

With the parade of large banks reporting their subprime losses, we think a significant amount of bad news has been discounted into bank stock prices.  Our system is showing favorable conditions for going long on bank stocks, given the current valuations, sentiment, and interest rate environment.

Mark Yuan, CFA