The Deen's List Vol.6 #327

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 #327 Saturday, November 1, 2008 2:48PM 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 31, 2008 -19.8% * -32.9%

12 months (Oct 31, 2007 to Oct 31, 2008) -23.0% * -36.1%

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

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Market Commentary

Market Stance: BEARISH (since September 24, 2008)

October 2008 was the worst month for stocks in 21 years. The S&P gave back 16.8%. Deen Capital accounts, on the other hand, gained +0.6% on average. That's not a typo. We actually posted a gain.

This past week, on the other hand, was a big up week for the S&P, and we missed most of the gain. Critics of market timing will point to this as the reason why market timing doesn't work -- you miss out on the biggest up days. To this, I reply that I will happily miss out on 9 points of upside if, as part of the bargain, I also miss out on 24 points of downside! This was the story of October 2008: we missed 9 points of upside in the final week, but we avoided 24 points of downside prior to that.

So the big question now is: Has the market made an important bottom? Does last week's rally have legs? Should I be putting our cash back to work? My answer is that I am skeptical of this rally, but I am also nibbling. My proprietary NASDAQ Timing Model is in a position here where a good up day on strong volume would trigger a bullish signal. We've had the up days, but not the strong volume. This worries me. Still, 100% cash is probably no longer the optimum position for the best balance of risk vs. reward.

My technical indicators are finally starting to move, but they are still overall bearish. I have 2 neutral and 1 bearish indicator now. They had been unanimously bearish for several weeks prior.

I have started to do some nibbling. After so many weeks where the only thing driving stocks was fear, now I am seeing that sales and earnings are once again starting to matter. This is indicative of a healthy market. I see it in my index which tracks the performance of my recent stock picks -- it improved dramatically last week. And I see it in stocks like LHCG, which we bought Thursday morning on an earnings surprise, and by Friday's close we had a 15% gain.

Credit markets are thawing, the Fed is slashing interest rates, the price of oil is down dramatically, governments around the world are taking dramatic actions to avoid worldwide financial collapse, stocks have already priced in an extended recession, and the tone of the market is improving. I am close to turning bullish, but I am waiting for my indicators, which have served us very well indeed, to give the green light.

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:  -6.8 BEARISH       +4.7 NEUTRAL (2)

Market Internals:                     5% BEARISH        14% NEUTRAL (3)

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

Stocks:Cash ratio (average):              0:100              17:83

(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, Saturday, November 1, 2008

Open Positions

Model Portfolio

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

Thoratec Corp. THOR 10/31/08 $24.67 $24.62 0.1 7.9% -0.2%

LHC Group Inc. LHCG 10/30/08 $30.61 $35.28 0.3 9.1% +15.3%

Cash 82.9%

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 10/30/08 $94.91 10/31/08 $95.02 0.1 +0.1%

S&P Depositary Receipt SPY 10/17/08 $95.44 10/21/08 $95.81 0.6 +0.4%

Royal Gold Inc. RGLD 09/18/08 $37.73 10/16/08 $33.18 4.0 -12.1%

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%

* 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

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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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