August 27, 2006

Hello [[firstname]], and welcome to this weeks edition of the PowerInvesting Weekly Alert! As always, you will find our current market analysis followed by the stocks we are currently watching carefully. We expect these stocks to explode with quick gains of 5-30% or more if and when they breakout.

Recent Performance:

The market consolidated last week, bringing down some of our recent picks. Last weekends top pick was CTV which was roughly flat from Mondays open while the Russell 2000 small cap index was down nearly 1.5% for the week. Our #2 pick, STTX, has formed a tight consolidation and is just about to break its downtrend. We look for a nice pop on this one over the next couple weeks. Aggressive traders may want to jump on this one on Monday or Tuesday as the pullback after the initial surge has been on lighter volume while the stochastics and CCI are just now coming out of oversold levels. SMSC has held up pretty well despite the market pullback. The big disappointment was NURO, which moved down nearly 9% last week but is still above its $26 stop-loss level (closing price - note: this stop-loss target was not in last weekends alert.)

HL, from the previous week, made some upward movement last week - its up about 5% for the week and getting closer to its target gain. A couple of our other recent picks pulled back but are still above their stop-loss target and have a good shot at a rebound the way the market is setting up. We were encouraged to see GLBL finally motoring ahead - its up about 7% now from where we picked it a few weeks ago. It still has a beautiful long-term uptrend and is on its way higher.

It seems like every week we report the progress of OCN which is now up nearly 65% from where picked it in March! While ALY, picked just a couple months ago, is up around 35%. Just a couple examples of our many big winners this year and still some decent action for whats generally the slowest time of the year for the market. You can learn our techniques for identifying and managing these trading opportunities in our PowerInvesting ebook which can be downloaded at www.tradetobefree.com/100.html.

Market Analysis:

After the weak to moderate bullish confirmation day the prior week, the Nasdaq pulled back on lighter volume. Notice how the pullbacks over the last few months are getting flatter and flatter on the chart below. Last time we saw a bullish follow-through in June, the market sold off on higher volume. This time around, the sellers are nowhere to be found. The market is setting up nicely for another surge higher in the coming days, perhaps after a brief drop early next week.

The volume behaviour looks near perfect so far with every up day on slightly higher volume and every down day on lower volume as can be seen on the S&P 500 chart below. Just what you want to see after the bullish follow-through and the downtrend breaking on the major averages.

The yield on the 10-year treasury (a gauge of long-term interest rates) has been gradually moving toward its long-term support level over the past few weeks and is just about there now. A rebound off these levels is likely in the near future - especially if the downtrend resistance level shown below is broken.

Oil moved slightly higher for the week - its just under $73 per barrel. The price is in an intermediate downtrend now with a lower high followed by a lower low. It will be interesting to see how the price reacts to hurricane Ernesto moving towards the gulf of Mexico and the probable news that the first Atlantic hurricane of 2006 will not affect rigs in the gulf. We think oil is likely to fall towards its long-term uptrend support.

The new uptrend in the market is likely to continue over at least the next few weeks with some minor pullbacks along the way. We view these pullbacks as good short-term buying opportunities.

* All charts below courtesy of Stockcharts.com.

S&P 500 Chart: (if you can't see this image, try turning image filtering in your email or contact us at info@tradetobefree.com)

Nasdaq Chart:

$tnx Ten Year Note (interest rates):

Oil Chart:

This Weeks picks:

All of our picks are ranked in the top 2% of all stocks in terms of the following criteria at the time we publish the Weekly Alert.

1) Increasing future earnings expectations over the past few months.

2) Meeting and beating earnings expectations each quarter.

3) The reliability/track record of the analysts raising the earnings outlook.

GM Chart:

GM - General Motors Corporation (GM), together with its subsidiaries, primarily engages in the design, manufacture, and marketing of automotive products worldwide. GM seems to be really turning things around as of late. According to Yahoo Finance, the company beat expectations by nearly 270% this past quarter and over 170% the previous quarter. Meanwhile, 2007 estimates have nearly doubled in the past 90 days. This flies in the face of recent car sales data being down year over year, but the stock seems to be setting up for at least a short-term rally as it continues a nice, not-too-steep, long-term uptrend. Our target entry is once the short-term downtrend shown has been broken with a closing price and a target sell price of $33.59. Our stop-loss target is a close below $27.

AKS Chart:

AKS - AK Steel Holding Corporation, through its wholly owned subsidiary, AK Steel Corporation, produces flat-rolled carbon, stainless, and electrical steels, as well as tubular products in the United States. AKS beat in its latest quarter by over 20% while future estimates have gone up 15-20% over the past 3 months. The stock has been in a long symmetric triangle continuation pattern over the past several months. A close above the downtrend resistance shown above would most likely mean an upwards move of at least 20% will follow soon after. Our target entry is once the downtrend is broken with a closing price with a target sell price of $15.49. Our stop-loss target is a close below $11.75. You can learn more about how we determine when to buy and sell by reading our PowerInvesting ebook which can be downloaded at www.tradetobefree.com/100.html.

BAMM Chart:

BAMM - Books-A-Million, Inc. operates as a retailer of books in the southeastern United States. The company operates through two segments, Retail Trade and Electronic Commerce Trade. Future consensus estimates for BAMM have gone up nearly 10% the past 3 months as the stock continues its long-term uptrend. This may take another week or 2 to setup, but we would jump in once the downtrend is broken with a closing price. Our target sell price is $17.29 with a stop-loss target of a close below $13.19.

KSWS Chart:

KSWS - K*Swiss, Inc. engages in the design, development, and marketing of athletic footwear for sport, fitness activities, and casual wear in the United States and internationally. KSWS has beaten its consensus expectations each of the last 4 quarters by an average of 20%. Future estimates have moved up around 10% the past 3 months as well. The stock made a strong move about a month ago and is setting up for a nice trading opportunity here with a higher low forming after a long downtrend. Our target entry is once the downtrend shown above has broken with a target sell price of $28.89. Our stop-loss target is a close below $24.40.

The market is quietly setting up for another move higher. Disciplined trades should do well overall in this environment.

Brian C. Neall

Founder - TradeToBeFree.com

email: info@tradetobefree.com

www.tradetobefree.com

PS - If you would like to save money on your subscription, you can order an annual and lower your cost per month. If you ordered the PowerInvesting ebook, you can save another $39 off the total cost by entering the coupon code contained in the book when ordering. Just enter the code at the bottom of the billing information page when you order the annual subscription. http://www.tradetobefree.com/terms120.html to order.

Disclaimer:

Be advised that myself or tradetobefree.com will not be held responsible for any investment actions that you take as a result of the information in this email. tradetobefree.com or any of its employees are neither an investment advisor nor a financial advisor. Your subscription is an acknowledgement that information given by tradetobefree.com is for educational purposes only and in no way guarantees your profitability by trading stocks mentioned. The information given is intended to be an aid to your own investment process, and your investment actions should solely be based upon your own decisions and research. The information in this email is believed to be accurate, however tradetobefree.com does not guarantee the accuracy of its content. tradetobefree.com or members of its organization may or may not already own stocks mentioned here and will disclose such information upon writing about the stock in the weekly alert. You agree to hold tradetobefree.com completely blameless in the event of financial losses you may incur by trading stocks mentioned here. You should seek help from an investment professional for any questions you may have regarding your personal investment goals and plans. Tradetobefree.com is allowed up to 4 weeks of vacation per year from writing the PowerInvesting Weekly Email Alert. And finally, you agree that you will not copy or distribute the resources found on this website or in the PowerInvesting Weekly Email Alert, and that doing so automatically terminates your subscription without refund.

To cancel your Weekly Alert subscription, log into your PayPal account, find the subscription creation transaction in your account history, select it and choose the cancel button at the bottom of the page and confirm. This is required for monthly subscribers only when canceling and is all that is required. Using the unsubscribe link below does not cancel monthly subscriptions!