Last Friday I said that the Buy/Sell Ratio, BSR, in our Market Timing System finally fell below 0.20 so I would normally start thinking about a bottom. But my bones were telling me it's better to sit and watch right now. So what happened?

On Monday, the big Wall Street banks and brokerage houses cranked up their hype machines and began telling us that everything is A-OK, subprime problems were under control, the credit crunch wasn't that bad, liquidity was still plentiful and that now was a good time to buy stocks, especially financial, housing and mortgage stocks. Their prices took off like birds. I couldn't believe it. Why would anybody want to buy these stocks? Were there that many shorts covering their positions? Or were the banks and the brokers buying stocks just to pump up prices. Market breadth was not good on Monday and this told me it was a phony rally.

So the snow job continued and actually got bolder through Tuesday. Stock prices closed higher once again. On Wednesday, a great earnings report and the charm of Mr. John Chambers, Chairman, President and CEO of Cisco Systems worked its magic. (See my essay of May 10, 2002). Stock prices soared and the Primary Wave of our Market Timing System gave an Up signal. We were looking to buy if the rally continued.

On Thursday, however, a little guy with thick glasses and wearing a green eye-shade deep in the bowels of the largest bank in France said, "sacre bleu," this can't go on. BNP Paribas halted withdrawals from three of its subprime-related funds because the funds couldn't be properly valued. They said it was because of the "complete evaporation" of liquidity in some parts of the market. Stock prices got hammered.

So what happened to all the reassuring words we heard? Just remember that the snow job we got last week came from the same people who told us to buy stocks all the way down in the bear market of 2000-2002. Sure I like to buy stocks when they are cheap, but I try to never, ever buy them on the way down. That's why I waited for the Primary Wave to give an Up signal before even thinking about going long. And I may even wait for a Confirmed Up signal before jumping back into this market. So here we are watching the slam, bang, bone crushing sell-off we were looking for. What do we do now?

How about doing some window shopping? And I said window shopping, not buying. Wouldn't it be nice to find some good stocks we wish we had already owned. The easiest way to find these stocks is to simply sort Stock Viewer by RS. These stocks are some of the best to own for the long-term. As of last night, the highest ranked stock by RS was Stryker Corp., SYK. Look at the EPS pattern on an All Weekly graph. It doesn't get any better than that folks. I've written about shopping for high RS stocks before, so see my essays of August 4, 2006, October 14, 2005 and May 13, 2005.

If you're looking for more excitement, simply read the Views every night. We'll list some good strategies for you when we decide to go long in our Model Portfolio. To see how well these strategies have performed in the past, visit the VectorVest University. It's a great way to see what's going on in the market. And this week Mr. Bill Shelton will be giving a great presentation on Window Shopping For Bargains.

ARE YOU KIDDING ME?
Take a look at a five year graph of Westwood One, WON. Note that it closed at $39.06 per share on 01/10/03 and is at $3.40 on 08/09/07. Over this time, EPS has deteriorated from $1.15 per share to $0.24. GRT has gone from 25% per year to -5%. VectorVest currently values this stock at $2.37 per share and it has an "S" rating.

Yesterday I got an email from a newsletter I subscribe to. It said that, "Westwood One reported second quarter earnings and made 8 cents per share. It generated $15.8 million in free cash flow, versus $20.4 in the same period last year." Not ideal, but hardly Armageddon. Nevertheless, the market is hammering the stock and it's down about 60% from its reference price. So the editor quotes Peter Lynch who allegedly said, "I've bought stocks at $10 that went to $2 and then to $30. You just can't predict the bottom or the top."

Then the editor says, "Think about that. One of the greatest investors of all time doesn't think an 80% drop in share price is a big deal. It's a normal part of investing in individual stocks. We buy, sell, and hold based on evidence, not market-based ghosts and goblins. A volatile stock price isn't sufficient evidence to cause us to exit a potentially profitable and apparently undervalued stock. My advice is to HOLD Westwood One. Don't buy more. But if you haven't bought the stock yet, this is an ideal time to consider a new position."

The newsletter is touted as recommending "Safe Stocks Under $10 a Share." Are You Kidding Me?

CONTRA ETF WATCHLIST.
For your convenience, a new WatchList called "Contra ETFs" has been installed in the ETFs folder.