According to what I wrote last year, 12/30/05 to be exact, 2007 should be a good year for the stock market. This view was based upon my faith in the Presidential Cycle. I have written about this phenomenon on several previous occasions and the references were cited in last year's Views. A more extensive review of the subject was written by Mr. David Penn in Stocks & Commodities Magazine, December 2006, pg. 26.

As Mr. Penn phrased it, one should buy stocks at the mid-term elections and sell stocks at the Presidential elections. In other words, a low point in stock prices, a good buying opportunity, usually occurs near the end of a President's second year in office and a high point in prices, a time to sell, usually occurs near the end of the fourth year in office. This year, a double-bottom was formed in June and July instead of the more traditional October bottom. Nevertheless, 2006 ended, as expected, with stock prices in a rally mode. If all goes according to historical precedent, stock prices should be nicely higher this time next year.

This is not to say that 2007 will be a walk-in-the-park. A quick look at an All-Weekly display of our Market Timing Graph shows that stock prices rose sharply from both the October 1998 and October 2002 bottoms only to encounter turbulent times before taking off in the following year. Indeed, the Price of the VectorVest Composite was lower on 10/22/99 than it was on 12/31/98. Similarly, the Price of the V V C was lower on 03/14/03 than it was on 12/27/02.

It also would be foolish to expect the kind of rally in 2007 that occurred in 1999 and 2003. While there is plenty of fuel in the way of valuation to power such a rally, there are far too many obstacles, geopolitical and economic, for investors to overcome to achieve the huge gains garnered in those years. So I expect to see very good, but not spectacular price performance in The Year Ahead.

DOGS OF THE DOW.
As I sat at my desk this morning, I noticed that CNBC was having another talk fest over "The Dogs of the Dow" and I wondered why do they waste their time on such drivel? Here's a stock picking system that's alleged to beat the market by a few measly points and it gets all kinds of media attention every year. Is it part of a vast Wall Street conspiracy to have us accept mediocrity as a norm for expectations?

Here's a stock picking system that works 99.26% of the time. The top 20 stocks ranked by VST-Vector as of 12/28/05 have gained an average of 38.10% with 14 winners and 6 losers as of yesterday's close. Take that, Dogs of the Dow.

HAVE A HAPPY, HEALTHY AND PROSPEROUS NEW YEAR.

Dear Santa:
I'm not a kid anymore, but I'm writing to you to ask for something I really want. I don't expect to see it under the tree on Christmas morning, but I do want it very much. Let me explain.

When I sort stocks by Comfort Index, CI, descending in Stock Viewer and look at graphs of the top stocks, my eyes turn from brown to green. Take China Life, for example. It seems that this stock has been going up forever and it just keeps going higher and higher. I finally bought it a couple of months ago, so I'm not complaining. But I do want to know how I could have found it at $40 a share instead of $80. That's what I want for Christmas, a way to find really big winners when they are in the early stages of development.

Now, I'm not asking for your help just because I'm lazy. I've been working on this problem for a long time. So let me tell you about some of the things I've tried. First of all, it is clear that all of these stocks repeatedly hit new highs. So I developed searches which found stocks which had repeatedly hit new highs. The problem here was that by the time I locked onto them, they were overbought and tended to go down too often. After considerable experimentation, I finally designed some searches which found stocks hitting 52-week highs, but were not overbought. I did this by including a weekly trend in the searches in which Rec was <>B, <>B, <>B, <>B, B, B. In preliminary testing, it has given some pretty good results. Price appreciation performance was not as good as I would have liked, but the percentage of winners was high and the draw-downs were small. There are many other things that I have tried that haven't worked, so I could still use your help.

Santa, I can't close this letter without thanking you, once again, for all the great gifts I've received over the years. I don't need or want a PlayStation, an X-Box or a new set of golf clubs. I already have VectorVest, the Best Gift Ever.

Merry Christmas,
Bart DiLiddo

The Cambridge Energy Research Associates' (CERA) Annual Executive Conference will convene on February 12, 2007 in Houston Texas. It is advertised to focus on the critical strategic and investment choices in an era of anxiety over energy and to highlight the critical role of technology and innovation in meeting the geopolitical, supply, and environmental challenges of world energy. Everybody who is anybody in the field of energy, worldwide, will be at this conference. Let us hope that something helpful comes out of this event. Lord knows we need it.

One doesn't need to go to a high-powered conference to know that this country has an energy problem. We don't have an energy policy that is worth a hoot and we're becoming more and more dependent on foreign sources of energy that are unfriendly or openly hostile to our country. A few years ago, I thought that a stable, democratic Iraq would help stabilize the Middle East and ensure dependable energy supplies from that region. Well, that's not going to happen. Russia, a country that once looked like it could become a reliable supplier with close ties to the U.S., has done some things recently that suggest it too will not be a close ally of the U.S. Finally, energy consumption keeps increasing and competition for oil, gas and coal has intensified. So what's the answer?

I don't know for sure, but I do know that nuclear energy is becoming more important. I was pleased to see that Mr. John W. Rowe, Chairman, President and CEO of Excelon Corporation will be a featured speaker at the CERA Conference. Excelon Corp., operates the largest nuclear fleet, 10 stations and 17 reactors, in the United States. Perhaps he will shed some light on where this country should be heading in regard to nuclear energy.

On August 20, 2004, I wrote a brief comment on an article which appeared in the August 2, 2004 issue of Barron's magazine called, "Reaching Critical Mass." It related to the supply-demand situation regarding uranium. Another article recently, December 5, 2006, appeared in the Wall Street Journal entitled, "Nuclear Power Revival Could Encounter Hurdles." It told about tight uranium supplies which have driven the price of processed uranium ore up more than 800% since 2001. Of course, the stock prices of uranium mining companies have soared along with the price of uranium ore.

While I cited my purchase of Cameco Corp., the world's largest producer of uranium ore, in that August 20th commentary, it has gone up in price only 273%. The stock prices of many of the small uranium miners that we track in VectorVest Canada have gone up much more than that. For example, the average price increase for the eleven uranium mining stocks we covered on 08/20/04 was 404.57%, with 100% winners. The average price increase of the 43 uranium stocks we covered on December 14, 2005, one year ago, was 134.05%, with 39 winners and four losers. The 60 uranium stocks we covered as of 09/14/06, three months ago, are up an average of 50.45% with 48 winners, 10 losers and two unchanged. Currently, VectorVest Canada covers 85 uranium stocks and they are all shown in an Industry Group called Mining(Uranium).

There aren't nearly as many uranium stocks covered in VectorVest OnLine and only a few appear to be pure plays. Therefore, V V OnLine does not contain a uranium Industry Group. We have prepared a WatchList called, "Uranium Stocks," however located in Special Watchlists.

For your information, Mr. James Cramer, the genius host of the Mad Money TV Show, says he would never give a uranium stock a "Buy, Buy, Buy" because they're too risky. You can take that for what it's worth, but as far as I can tell, the demand for nuclear power will increase by leaps and bounds. It won't happen overnight. When it does, however, the prices of uranium stocks will soar some more. I'm happy I own my Uranium Stocks.

Special Note: A portion of the information cited in this overview was taken from VectorVest Canada.

The lead article in the December 2006 issue of Stocks & Commodities magazine is titled, "Searching for (Trading) Certainty." The teaser says, "Trading is uncertain, but here's a sure thing." How could I not read it?

The author, Mr. Aaron Lynch, says, "Balancing the basic need for certainty coupled with an uncertain trading landscape, we must find an anchor or reference point from which to begin. For me and for all successful traders, that anchor is our chosen trading plan. My trading plan is structured around a tool known as a swing chart, based on the principles established by W. D. Gann." He also says that Gann referred to the swing chart as his "trendline indicator." It removes noise and allows for easy determination of a trend. Certainty is increased because even the most basic investor would benefit by looking for solid trends in which to take profits.

In their most basic form, swing charts are nothing more than bar charts of price plotted over a period of time. One can draw support and resistance lines on these charts to identify trends. More elaborate analysis of the price data may be used to eliminate time as a factor, creating Kagi charts and other similar charts. Lazy, as I am, I don't like drawing lines on lots of charts and, besides, I don't like Kagi charts. So I determine price trends using our Standard Graphs, and I also like to use ProTrader graphs.

Let's take a look at a 1-year, Daily Standard Graph of Florida Rock, FRK, for example. Change the default setup to eliminate Stop and add a 20-day Price MA. Now it is incredibly easy to see that FRK's Price began to rise on January 20th, hit a peak on May 10th, fell until August 14th and has been rising since then. It is interesting to note that RT was hitting a series of higher lows in December and January before FRK's Price took off on January 24th, and it began rising from its lowest point on July 28th, eleven days before FRK's Price touched bottom. A swing chart would never show you these momentum changes.

If you have ProTrader, the default DEW setup will also show you price trends. I like to clarify the graph by eliminating the envelopes and by increasing the height of the DPO section. Here too, it is incredibly easy to determine the price trends. The trend is up when Price is above the 30-day, Weighted MA and DPO is greater than zero, and it is down when Price is below the 30-day, Weighted MA and DPO is less than zero.

Now that we can easily determine price trends, Mr. Lynch says we have to have reasons to enter and to exit our trades. I agree. Clearly defined entry and exit points are crucial to any successful trading plan. Finally, Mr. Lynch says that money management can either make you or break you. This is true and VectorVest helps you here with the various money management selections available in Portfolio Manager.

The bottom line, then, is that the market is uncertain and it always will be. Your profits will increase, however, with a solid trading plan, executed with discipline. That's A Sure Thing.