The Deen's List Vol.6 #316

The Deen's List^TM

Our Goal: To outperform the S&P through up markets and down.

A service of Deen Capital Management, Inc. (www.deencapital.com)

Vol.6 #316 Sunday, October 5, 2008 5:03PM EDT

Please read carefully our disclaimers at the end of this newsletter.

Weekly Status Report: Contents

Performance
Market Commentary
Open Positions
Stocks Sold Over Past 13 Weeks
Subscription Information
Privacy Policy
Disclaimers
Contact Us

Performance

Deen Capital S&P 500

Year-to-date as of October 3, 2008 -20.2% * -23.9%

12 months (Oct 3, 2007 to Oct 3, 2008) -17.8% * -27.1%

* An average of managed accounts, net after all commissions and fees.

Click here for more performance data.

Click here for information on managed accounts.

Market Commentary

Market Stance: BEARISH (since September 24, 2008)

The market continues to be ruled by fear. We had a huge down day on Monday, still more selling later in the week, and the market (not Deen Capital, just the market averages) now stand at multi-year lows. This $700 billion bailout from Congress was our best hope at restoring some measure of investor confidence, and on that score it appears so far to have failed.

And this extreme level of fear I have to say is well-founded. It seems that "blue chip" financial institutions are failing almost daily. I don't have to tell you we are in the midst of a global financial crisis of historic proportions.

Thanks to my focus on preserving capital during bear markets by sitting on cash, the damage to Deen Capital accounts last week was much less severe than to the S&P 500 or to the vast majority of stocks and stock-based mutual funds. On Monday, 'Black Monday', as some have called it, the day that changed the nation's attitude about the government bailout, the S&P shed 8.8% of its value, while Deen Capital accounts gave back 2.7%. For the week as a whole, the scorecard reads: S&P -9.3%, Deen Capital -3.0%.

The single most important thing I do is to manage your percentage of cash, keeping it very high during bear markets in order to minimize your (and my) losses. This past week is a textbook illustration of this point.

If you are thinking that several years worth of gains have been wiped out and turned into losses just recently, you are right if you are talking about the market indexes and most stock-based investments. But you are wrong if you are talking about Deen Capital accounts. Over the past 24 months, for example, October 3 2006 to October 3 2008, the S&P (even including dividends) is down -13%, while the average Deen Capital account is up about +10%.

Mid-day Monday, we moved from 50% cash to 94% cash, which is where we are now. Our biggest "risk" now is missing out on the next big rally. In this very strong downtrend, with no sign of a bottom, that "risk" takes a back seat to simple preservation of capital. "Rule #1 of investing is don't lose money. Rule #2 is don't forget Rule #1." [Warren Buffett]

However, when the time is right, I will be quick to put our cash back to work. And my three technical indicators will be my primary guide as to when is the right time. (You may recall I turned bullish for a few days in late September, going against my indicators, on the strength of the record-setting buying volume of September 18 and 19. With the benefit of hindsight, I see now that that was a mistake.)

I am particularly keeping an eye on my NASDAQ Timing Model. It is often the first to register an important market turning point. If it gives a signal, I will turn bullish. So far, it is still on its bearish signal (a very good bearish signal!) of September 4.

Of this I am sure -- sooner or later, there will be another bull market. And I intend to participate.

My Three Primary Technical Indicators:

                                       Prior week             Now
                                       ----------           -------
NASDAQ Timing Model (Ver.10q):           BEARISH            BEARISH (1)
Last signal:  BEARISH on Sep 4, 2008

Performance of Recent Stock Picks:  -4.7 BEARISH       -9.0 BEARISH (2)

Market Internals:                    27% BEARISH        10% BEARISH (3)

-----------------------------------------------------------------------
Market's Overall Technical Rating:       BEARISH            BEARISH

Stocks:Cash ratio (average):              50:50              6:94

(1) A proprietary computer model based on technical analysis of the NASDAQ Composite.

(2) This number (from -10 to +10) is based on the performance of ALL my recent stock picks (I actually buy only some of these). A positive number means my recent stock picks are generally rising; a negative number means they are generally falling. Even so, I consider a reading below +3.1 to be bearish. I require a reading of +5.6 or better to call this indicator bullish.

(3) This is the percentage of stocks ($8 and up) which are trading above their 50-day moving average. The rating of this percentage (bullish, bearish or neutral) is based on which way it's been moving recently -- up, down or sideways.

-KD, Sunday, October 5, 2008

Open Positions

Model Portfolio

Company Name Stock
Symbol Buy
Date NetBuy
Price* Current
Price Weeks
Held % of
Portfolio Gain
(Loss)

Royal Gold Inc. RGLD 09/18/08 $37.73 $35.17 2.4 5.8% -6.8%

Cash 94.2%

Total 100%

* Buy prices shown are net after commissions and fees.

Stocks Sold Over Past 13 Weeks

Company Name Stock
Symbol Buy
Date NetBuy
Price* Sell
Date NetSell
Price* Weeks
Held Gain
(Loss)*

S&P Depositary Receipt SPY 09/25/08 $121.56 09/29/08 $113.48 0.6 -6.6%

S&P Depositary Receipt SPY 09/19/08 $124.54 09/29/08 $113.48 1.4 -8.9%

S&P Depository Receipt SPY 09/19/08 $124.33 09/24/08 $118.73 0.7 -4.5%

S&P Depository Receipt SPY 09/18/08 $120.17 09/24/08 $118.73 0.9 -1.2%

S&P Depository Receipt SPY 09/18/08 $120.17 09/22/08 $120.50 0.6 +0.3%

Varian Medical Systems VAR 07/24/08 $59.79 09/19/08 $60.12 8.1 +0.5%

Thoratec Corp. THOR 08/05/08 $23.18 09/19/08 $27.48 6.4 +18.6%

Covidien, Ltd. COV 08/05/08 $52.60 09/19/08 $53.60 6.4 +1.9%

Estee Lauder Cos Inc. EL 08/18/08 $51.31 09/19/08 $50.51 4.6 -1.6%

Super Micro Computer, Inc. SMCI 09/03/08 $10.71 09/17/08 $9.98 2.0 -6.8%

DXP Enterprises, Inc. DXPE 09/08/08 $60.40 09/17/08 $57.66 1.3 -4.5%

Questcor Pharmaceuticals, Inc. QCOR 09/11/08 $6.19 09/17/08 $5.78 0.9 -6.7%

CSX Corp. CSX 09/12/08 $61.28 09/16/08 $56.59 0.6 -7.7%

Solera Holdings Inc. SLH 08/28/08 $30.01 09/15/08 $28.74 2.6 -4.2%

II-VI, Inc. IIVI 09/08/08 $42.30 09/15/08 $40.26 1.0 -4.8%

Bruker Corp. BRKR 09/02/08 $16.37 09/12/08 $15.30 1.4 -6.5%

Parametric Tech PMTC 09/08/08 $20.77 09/11/08 $19.76 0.4 -4.9%

Sapient Corp. SAPE 08/27/08 $9.25 09/10/08 $8.66 2.0 -6.4%

SkillSoft PLC SKIL 08/22/08 $10.67 09/09/08 $10.43 2.6 -2.3%

Ebix Inc. EBIX 08/14/08 $105.10 09/05/08 $102.11 3.1 -2.8%

VisionChina Media Inc. VISN 08/21/08 $19.22 09/05/08 $17.33 2.1 -9.8%

LDK Solar Co. Ltd. LDK 08/26/08 $48.65 09/05/08 $43.52 1.4 -10.6%

Kendle International Inc. KNDL 08/28/08 $50.63 09/05/08 $46.49 1.1 -8.2%

II-VI, Inc. IIVI 08/05/08 $39.98 09/04/08 $41.88 4.3 +4.8%

PAREXEL International Corp. PRXL 08/07/08 $32.62 09/04/08 $30.63 4.0 -6.1%

SunPower Corp. SPWR 08/18/08 $89.00 09/03/08 $85.19 2.3 -4.3%

Woodward Governor WGOV 07/22/08 $44.19 09/02/08 $45.87 6.0 +3.8%

Amphenol Corp. APH 08/22/08 $48.98 08/25/08 $47.52 0.4 -3.0%

St. Jude Medical STJ 07/16/08 $45.55 08/20/08 $46.03 5.0 +1.0%

Sapient Corp. SAPE 08/08/08 $8.16 08/19/08 $8.70 1.6 +6.7%

Badger Meter Inc. BMI 07/22/08 $55.68 08/18/08 $51.49 3.9 -7.5%

Amphenol Corp. APH 08/06/08 $48.29 08/18/08 $50.15 1.7 +3.8%

Innophos Holdings Inc. IPHS 08/06/08 $34.71 08/15/08 $33.70 1.3 -2.9%

Amedisys Inc. AMED 07/17/08 $59.44 08/12/08 $54.31 3.7 -8.6%

Altera Corp. ALTR 07/18/08 $21.45 08/12/08 $23.71 3.6 +10.5%

IBM IBM 07/21/08 $129.38 08/12/08 $124.71 3.1 -3.6%

EZCORP, Inc. EZPW 07/25/08 $17.71 08/11/08 $15.48 2.4 -12.6%

Titan International Inc. TWI 07/31/08 $46.52 08/11/08 $40.35 1.6 -13.3%

Calgon Carbon Corp. CCC 07/31/08 $19.69 08/11/08 $18.70 1.6 -5.0%

America's Car-Mart, Inc. CRMT 07/03/08 $18.95 08/04/08 $19.34 4.6 +2.0%

Robbins & Myers Inc. RBN 07/16/08 $50.30 08/04/08 $48.98 2.7 -2.6%

Amphenol Corp. APH 07/17/08 $50.73 08/04/08 $46.32 2.6 -8.7%

Northwest Pipe Co. NWPX 07/23/08 $56.53 08/04/08 $52.56 1.7 -7.0%

Tyler Technologies Inc. TYL 07/25/08 $17.15 08/04/08 $15.37 1.4 -10.4%

VisionChina Media Inc. VISN 07/30/08 $23.16 08/04/08 $19.37 0.7 -16.4%

ENGlobal Corp. ENG 07/09/08 $13.92 07/31/08 $12.38 3.1 -11.1%

CIRCOR International Inc. CIR 07/10/08 $62.06 07/31/08 $59.62 3.0 -3.9%

Plexus Corp. PLXS 07/25/08 $30.28 07/30/08 $29.33 0.7 -3.1%

Balchem Corp. BCPC 07/08/08 $25.56 07/29/08 $25.69 3.0 +0.5%

AeroVironment Inc. AVAV 06/25/08 $28.28 07/24/08 $30.19 4.1 +6.7%

Fuel Systems Solutions Inc. FSYS 07/09/08 $31.64 07/24/08 $37.36 2.1 +18.1%

Crown Holdings Inc. CCK 07/18/08 $29.16 07/24/08 $27.65 0.9 -5.2%

Lufkin Industries Inc. LUFK 07/17/08 $91.00 07/18/08 $83.84 0.1 -7.9%

SAIC, Inc. SAI 06/04/08 $20.69 07/16/08 $19.05 6.0 -7.9%

AZZ Inc. AZZ 06/27/08 $39.10 07/14/08 $44.25 2.4 +13.2%

ENGlobal Corp. ENG 06/30/08 $14.31 07/07/08 $13.15 1.0 -8.1%

* Buy and sell prices shown are net after commissions and fees. This means that the gains/losses shown are also net after transaction expenses.

Subscription Information

Welcome to The Deen's List^TM, an e-mail stock newsletter from Deen Capital Management, Inc.

My intention is to inform you as quickly as is practical regarding my stock market moves. When I buy or sell a stock, first I take care of client accounts, then I buy/sell for my personal account(s), and then, third, I send out this newsletter.

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Disclaimers

All stocks discussed in The Deen's List^TM involve a high degree of risk. It should not be assumed that any stock discussed in The Deen's List^TM or purchased by Deen Capital Management, Inc. will be profitable.

Past performance is not necessarily indicative of future results.

The information contained herein has been compiled from sources deemed to be reliable; however, we are not responsible for its accuracy or completeness.

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