I love going to trade shows. I have a lot of fun working with the crowds surrounding our booth. I shock them by saying they can become stock market wizards in just a few minutes. Typically, nobody says a word, but their eyes get larger. Then I ask if someone would like to give me a stock to analyze.

Given the name or ticker symbol of the stock, I find it in Stock Viewer. Stock Viewer is a daunting screen for most people, so I carefully begin to explain the column headings, going from left to right. The first critical moment comes when we compare Price to Value. Most of the audience has never seen a stock's intrinsic value before, so I quickly explain what it is and why it's important to know.

Next, I go on to explain RV, RS and RT. I ask my listeners not to worry...all they need to know at this point is that a number above 1.00 is good and a number less than 1.00 is bad. Besides, all of these terms are explained in our Stock Analysis reports, which I show them. Finally, VST ties it all together, the higher the better!

Next, we look at the Comfort Index, CI. (In my computer I have CI placed right beside VST.) I use CI to describe what the stock's price performance has been like for the past year. It blows their minds when they see a graph showing exactly what I described. I explain that we prefer to own stocks with smooth patterns of rising prices, as reflected by high CI values, instead of stocks with wild, up and down price patterns and low CI's. I believe a stock's price pattern is like its DNA...its past behavior reveals what you should expect in the future. Once my listeners learn this bit of wisdom, they are well on their way to knowing how to pick winners from losers.

Finally, we take a test with another stock. Is Price above or below Value? Is the long-term price appreciation potential favorable or unfavorable? Does the company have a consistent, predictable financial track record? Is the stock's price trending higher or lower? Is the stock rated a Buy, Sell or Hold? As we answer these questions, the crowd begins to realize that they can learn a whole lot about a stock in just a matter of a few seconds...even if they had never heard of it before. They have become Stock Market Wizards.

VECTORVEST 101.
Mr. Steve Chappell gives us an elegant "Strategy of the Week" presentation this week which is remarkable for its simplicity and power. Everyone should see it. Visit the VectorVest University to see "VectorVest 101."

We had no sooner completed our work on nailing down the exact procedure for "Climbing the Golden Staircase" than we learned of a stunning presentation on Swing Trading. The presenter claimed to have earned over 30% profit last year on 48 trades with no losses. 100% winners!

The presenter was Ms. Haleen Uptain, a VectorVest subscriber and member of the Kansas City VV Users Group. We invited her to Charlotte and she recently gave the presentation to our management team. We were very impressed. Make no mistake, Ms. Uptain's swing trading system is the real deal. There are no gimmicks, just sensible rules and procedures. She designed her system so precisely and completely that anyone could use it to make money. Ms. Uptain works full-time, so she takes about 30 minutes each evening to plan and place her trades and that's it. She never deviates from the system. She says discipline is of utmost importance.

Ms. Uptain enjoys working with her system and wants to share it with others. So we agreed to create an event called, "The One-Day Precision Investing Seminar." This seminar will feature two trading systems: "Climbing the Golden Staircase" and "Swing Trading to Perfection," Each system is unique, yet has several things in common with the other: Each depends upon VectorVest for its market timing, stock analysis and search engine. Each system is precisely defined, spells out rules and procedures for knowing when, what and how to trade. That's why we call it Precision Investing.

P.S. Each system can help you make a lot of money.

THE WEDGE.
A daily graph of the VectorVest Composite, symbol VVC, shows that a classic Wedge Pattern of lower highs and higher lows has been formed since January 10th. Wedge patterns are the result of uncertainty by investors of where the market is headed. In this case, the pattern shows the successive lows rising faster than the highs were falling and is considered to be a bearish pattern. Today's trading of a double reversal certainly supports the thesis of uncertainty, and it wouldn't surprise me to see a test of the January 22nd low. So be prepared for a break-out from The Wedge.

CYA WITH COVERED CALLS.
Boy has this been a nasty market, up, down, up again, down again. But through it all, some stocks keep doing well. And they are tempting to buy. I wouldn't recommend it, but if you do buy stocks in this market, make sure they're optionable, so you can protect your behind. Ms. Angel Clark shows us how to mitigate risk in this week's "Strategy of the Week." Visit the VectorVest University for a wonderful presentation.

At both the Toronto Financial Forum and the Orlando World Money Show I was asked if VectorVest would email messages on its trades in the Model Portfolio. The answer was no.

First of all, VectorVest is an end-of-day service and we don't intend to give intraday signals with this product. We are working on a RealTime product, however, that will automatically email messages to you, so we might be able to use that capability in the future. VectorVest RealTime will be released in a few months...think June 1st. In the meantime we just have to do the best we can with what we have.

The second major and, perhaps, even more important reason for not sending these email messages with our current service is that I want you to learn how and when to make these trades yourself. The "Riding-the-Wave" strategy of the Model Portfolio is meant to illustrate how one might go long or short as the markets' trends unfold. It is not intended to be a newsletter for you to follow. If you do want to use it as a guide to make trades, however, I want it to be as easy and effective to use as possible. So here's a short summary of how I have gone about managing this portfolio:

I have been using the Up and Dn signals of the Primary Wave as my triggers to go long or short. I have always gone to cash when switching from long to short or vice versa. I have always informed you in advance of whether I intended to go long or short the next day. On many occasions, this policy has hampered my ability to trade as effectively as I could have, had I had the freedom to switch strategies if the market sharply went in the reverse direction. In other words, I have passed-up many opportunities to go long on big up days or short on big down days because I was prepared to go the other direction. I don't want this to happen to you. So I want to show you how to anticipate a change in direction of the Primary Wave by using the Market Timing Graph.

For example, the Price of the VectorVest Composite, V V C, closed at $27.60 per share yesterday, February 14, 2008. It closed at $27.32 last Friday, February 8, 2008. So it has to go down at least 29 cents per share today for it to close below last Friday's Price of $27.32. If it does, the Primary Wave will go from Up to Dn. Will it happen? I don't think so. The Price of the V V C fell 30 cents yesterday when the Dow fell 174 points and the Nasdaq fell 40 points. As I write this essay, the Dow is down only 42 points and NASDAQ 15 points, so I expect the V V C to fall only about 10 cents per share today. Consequently, the Primary Wave would remain in the Up mode. So what am I going to do Tuesday? (The market is closed Monday.)

Frankly, I'm fixing to go short if the sell-off continues. But, and this is a big but, I'd like to go long if the market explodes to the upside. I'd go long with top VST stocks. There's no good reason to sit and watch a big day go to waste. If I were sitting in cash, fixing to go long, and the market crashed, I'd go short with the "Worst Stocks Over $20.00."

With these two strategies, top VST stocks on up moves and Worst Stocks Over $20.00, I could take advantage of big up or down days whenever they occurred. I think you should too. The anticipation of short-term changes in market direction and the ability to react to big counter moves should allow us to achieve Better Entries.

WORST STOCKS OVER $20.00.
As an alternative to going long or short with the Primary Wave, Mr. Glenn Tompkins illustrates the rewards of sticking with the underlying trend in this week's "Strategy of the Week." Visit the VectorVest University to see how it's done.

Both the Wall Street Journal and Investor's Business Daily reported this week that with about 60% of the companies having reported so far, fourth-quarter earnings of S&P 500 companies are down about 20%. Both papers were quick to say that the short-fall was due primarily to the huge losses reported by banks and brokers. Excluding financials, Q4 earnings were up about 11%. So, IBD headlines, Q4 earnings "weren't too bad."

It's this kind of thinking that has gotten investor's into trouble in the past. One simply cannot exclude the fate of financials. They are the main reason the economy and stock market are in trouble. Ironically, neither paper touched upon the true implications of the earnings short-fall.

The "Truth Chart," first presented in my essay of March 21, 2003, shows that Bear Market Scenarios exist whenever S&P 500 earnings are decreasing. I have written about the significance of the S&P 500 earnings trend many times over the past five years. See, for example, my essay of October 13, 2006, in which I labeled the S&P 500 earnings trend indicator "The Bull/Bear Market Indicator." On January 12, 2007, I said that I didn't expect this indicator to go below 1.00 soon. But that was more than a year ago.

We watch the S&P 500 earnings trend very carefully and report on it every week in the Investment Climate section of these Views. Last week the trend indicator showed a reading of 1.02, which meant S&P 500 earnings were still rising, but barely. This week, the trend indicator is at 1.00. It will probably drop below 1.00 next week. When it does happen, we will begin characterizing the Investment Climate in terms of Bear Market Scenarios.

So what does this mean? It means that we have to accept the "New Reality," which I wrote about on January 18, 2008. It means that we have to recognize that the Pros have gone from buying the dips to selling the rallies. It means that we'll be dusting off more of our old shorting strategies and making more money from shorting stocks. It means we'll go back to creating "Bear Market Beater" strategies. It means waiting longer between sustainable rallies. Yes, there will be rallies and we'll be ready for them. In the meantime we need be patient and invest according to the Rules Of The Bear.

GRAVITY.
Gravity used to be one of our best performing strategies during the 2000-2002 bear market. Mr. Gordon White brings it back to life in this week's "Strategy of the Week." Visit the VectorVest University to see how it's done.