OUTLOOK

"High Probabilities of a S&P 500 Rally"

11/12/2007

We believe the S&P 500 is due for a rebound rally within the next 8 weeks.  During this rally, we would expect the S&P 500 to reach at least 1500 or more from its recent close of 1453.70 on 11/9/07.

Fear is running rampant in the market as most of our sentiment indicators are reaching bearish extremes.  The turmoil in subprimes is no doubt weighing the market down with fear and uncertainty.  Fearful investors fled stocks last week as they were seeking flight to safety in treasury bonds.

We believe a significant amount of bad news has been discounted into the market already.  When the cloud of uncertainty in subprimes is lifted, the market should be primed to rally.

Mark Yuan, CFA