APCC, a PIC List Selection (and a stock I also own) returned to the #5 Timeliness slot within Value Line this week. Value Line considers this very "out of favor" for the next 12 months. However, it's been our experience that #5 Timeliness usually offers us good value when buying high growth stocks. Let's see how the PIC APCC account is doing right now:

You can see that AIM's been putting some cash back to work here on a monthly basis. It might take a while to take some profit here, but we can easily see that much of the risk of buying this stock as a new holding is now abated. AIM was wise enough to take profits when V/L was still considering APCC more timely. AIM's been busy adding to the position just when V/L announces that its no longer a timely stock. I think they are out of phase, personally!

I completed some more detailed I-Wave history graphs for the web site. I took 7 year segments of the data base and isolated them graphically. You can now look at the I-Wave in the periods of 1982 - '88, 1989 - '95 and 1996 - '02. Of course you can always look at the current data as well here in the Newsletter. Please let me know if this way of viewing the 22 years of history is beneficial.

REPORT - WEEK OF 08/02/2004: I'm very lucky. Over ten years ago I started posting information about AIM on the partially public bulletin boards of the Prodigy network. It was slow at first, but there came to be a regular group of readers and posters that shared ideas on Mr. Lichello's AIM concept and possible investments to use with it. At that time I also started to publically discuss my I-Wave and its use as a risk indicator in conjunction with AIM. My, how time flies!

I don't know how many times I've read or heard from the various participants, "Your bulletin board seems to attract really good people and there's almost never any bickering." After sampling other bulletin boards, I have to agree that we've collected a very good group of quite civil people. Civility has a lot to do with the character of the individuals who display it. When civility breaks down, the civil people start by attempting to ignore the "food fight" mentality of those who spread insults rather than ideas. Following shortly afterward, the interested parties just give up and go away, not wanting to be hit with a wad of Mashed Potatoes themselves.

Well, what's the damage there? It's much like when one window is broken in a neighborhood and is left unrepaired. It acts as an invitation to others to throw stones. Pretty soon all the civil people move out. That's sad, because there's then no more exchange of ideas by those who keep civil discourse and shared ideas as part of their daily activity.

As I said, I'm very lucky. Thank you all for making it worth while.

The I-Wave is still slowly falling back toward its Low Risk point. We see a drop of two points this week with a month's worth of decline in risk prior to this. All of the components are currently in their own Neutral ranges. Speculation remains moderate in both the larger and smaller cap stocks.

We added a new inventory item this week. While a stock that we've been nursing along for a while had been signalling for a Buy, we took the value of that purchase and started a new position in Christopher & Banks (CBK). In the future when we are getting sell orders in either this new stock or the other one, we'll be selling the other and phasing out of it. CBK will receive the proceeds from those sales. The choice of starting this new position now was made based upon following the stock in our PIC example portfolio for a while. Right now CBK has been in the Buy mode in our hypothetical model, so we took that as a good sign to bet started.

There's not much else to report this week. I have updated all the I-Wave Component Graphs for those of you who are curious. As you'll see, all are in the lower half of their own data fields. This is generally good news for us for the future.

Note below the updated "Readership" analysis of the aim-users.com web site. The Canadians are a growing part of our regular readers and contributors. Thank you all!

REPORT - WEEK OF 07/26/2004: The week brought on some AIM activity for VIEW. Buys were made in several accounts.

Bought 17% more ADCT at $2.25
Bought 22% more GENE at $3.93
Bought 10% more CGNX at $28.04
Bought 7% more IBB at $63.88

There are other stocks that are calling for more purchases but I'm attempting to stick control the Purchasing Department at one purchase per inventory item per month.

Again this week the Speculation component of the I-Wave is showing bullishness. This is because there's not much in the way of gains in the last 13 weeks and losses actually are in greater number. This trend is as true of the small and mid cap sectors as it is of the larger cap markets. Even "value" sectors are suffering.

At 35% Cash indicated this week for the I-Wave Stocks, we're well below the average value for stocks. While not "Low Risk" yet, the market is offering us some interesting possibilities in some sectors. It's interesting to note that several of my "biotech" stocks have been asking for more AIM buys right when the "biotech index" ETF was also requesting attention. This confirmation that it's a "sector" rotation and not just an individual company problem gives extra confidence in making AIM buys.

In absolute terms, the I-Wave risk has been declining for a long time.

Are you able to control your urges to spend too quickly? Are you controlling your urge to flee the markets completely? Maintain your vigilance. Review your equities frequently to assure yourself they are still suitable for your portfolio. Let AIM help when it can. Over the years I've found quiet markets to be the most frustrating - far more so than even bear markets.

REPORT - WEEK OF 07/19/2004: It would appear that there's just no such thing as "good news" any more. July doesn't want to give LONG investors anything to cheer about. In Value Line's Best Performers list, the "best" this week is up just 54.9% in the last 13 weeks while the "worst" is down over 65% in the same time frame. There's been enough carnage already to shift the I-Wave's Speculation component to finally show an over-sold condition. While it may not be the end of this current down trend, it does indicate a "bullish" time for investors this week.

Note how the Speculation component has become much less volatile in the last 12 months. It has been moderate in its measure of speculation and also much less volatile. This hasn't been particularly good for AIM market traders. You can view the rest of the IW component to see how they are doing as well. Please note that one is bullish while three remain neutral. If we look at speculation in the small and mid capitalization arena we find that it, too is moderate. So, where's the money flowing to these days? From what I've been able to gather, stock funds and foreign funds have been getting well below their average weekly inflows that were present since the beginning of the year. This lack of "new" cash for equity buying is putting a damper on the market. As I've stated before this will probably continue through the elections in November. It would appear that "new" cash is being accumulated in money market funds for now.

What are the benefits of such a market? Well for the investor looking for bargains, it offers a nice chance to do some bottom fishing. This week's Barrel Of Fish from Value Line include 40 stocks that are down between 36% and 54% in the last quarter. It is interesting to note that over half of the 40 are "technology" related stocks. Semiconductor manufacturers, software providers, computer component suppliers, etc are all well represented. Over my years of following this "Worst Performers" list in Value Line, any time I've seen ten or more stocks from the same sector it's meant there's been a serious sell off and that sector has been "over-sold." So, look to the Tech sector for relative bargains right now.

Another aspect of what we've been experiencing recently is that we have subdivided the market again. We have the NYSE doing pretty well on the one hand while the NASDAQ statistically having bad days one after another. Advances have held up well on the NYSE while on the NASDAQ they have been bearish for weeks. This last week Declining stocks outnumbered Advancing stocks by over 2:1. The same is true with the new highs and lows. NYSE is still posting more new Highs while the NASDAQ is posting more new Lows. How long this current pendulum swing will continue is not known. The last time we had Speculation this low, we had a nice 10% NASDAQ rally before the latest correction. Look back to earlier this year to see this.

The recent set-back in Technology has been enough to trip our first accumulation of extra shares. We purchased more of IYW (technology index fund) on July 15 at $43.79. We're ready with more cash should the market be nice enough to dip deeply and let us buy more.

REPORT - WEEK OF 07/12/2004: Of the dozen or so business sectors that I follow, only Energy and Basic Materials have managed to rise at all in the last two weeks. Not that the others are down significantly, just that they're all down. This is also reflected in the S&P500, the NASDAQ Composite and Dow 30 with lower closes for each of the last two weeks. Not a very glamorous start for July!

REPORT - WEEK OF 07/05/2004: Another week with not much happening at the Equity Warehouse. I've not had a trade since around the middle of June. This week we saw a significant change in attitude after Mr. Edwards was selected as the running mate for Mr. Kerry. Not much of a business "vote of confidence" I'd say. Well, we've known that the uncertainty of the elections has been the main cause of the stagnation of the markets. Because of this refocus on the election, investors are placing their bets and rebalancing their portfolios. Apparently Technology isn't where they want their money at this time.

A surprise for me was that the bond funds strengthened at the same time. I guess we could figure a stronger bond market with the stock market weaker, but after all the cautionary talk about rising interest rates and inflation, it seems a bond rally is a bit misplaced. Maybe the realization that it's going to take a year or two to get short term rates back to more typical levels is why bond fund investors are willing to risk some money right now.

With most of the I-Wave's components in their own Neutral territory I'm afraid it's not of great predictive value. Market risk is moderate by historical measures. There's lots of uncertainty and that seems to be keeping the enthusiasm in check. Speculation in both the larger and smaller cap stocks remains quite moderate. Hardly any exuberance at all - Rational or Irrational!

REPORT - WEEK OF 06/28/2004: At the close of last week we saw the NASDAQ above 2000 for the first time in about 10 weeks. Do we dare call this a Summer rally? The Dow 30 has been stalled for couple of weeks. Underneath the big indexes we see some better news. Advances lead decliners last week by almost a 2:1 margin on both the NASDAQ and the NYSE. New Highs have also increased steadily with New Lows receding. So, there's underlying health that doesn't seem to want to expose itself in the major indexes.

Even with this current strength there is very little measurable speculation across the entire spread of company capitalizations. Some speculative money has been going into IPOs (initial pubilc offerings), but the dollar volume hasn't been great enough to affect the broader markets.

We continue to read only news in the weekly publications as the day to day is so loaded with trivia. I'm beginning to think that even weekly news is possibly more noise than signal. If I come across what I feel is a good publication for investors I'll bring it to your attention.

REPORT - WEEK OF 06/14/2004 AND 06/21/2004: A mix of buys and sells perked up the mood at VIEW in the last two weeks. Energy has been doing well while some technology stocks have been fading. I-Wave risk remains relatively low, but as you can see from the direction this week, it's starting to rise a bit. We'd had six weeks of negative Oscillator values prior to this week's change. That's been a pretty good indicator that risk has been declining. Now we're seeing at least a one week reversal. Most of that came from the increase in the 13 week Treasury rate jumping to over 1.4% this week.

We continue to wait out political and social events of this summer and fall while the market seeks to find direction.

REPORT - WEEK OF 06/07/2004: While this week has shown a bit more volatility than we've seen in recent weeks, it's hard for the investor to discern what meaning this might have for the market. I mentioned on the PIC List Bulletin Board this week that there's several worries around. The FED's anticipated move, earnings revisions, "bad guys" doing bad things. Phew! So many distractions!

One of the interesting things Don Carlson (An AIM board regular contributor) and I discussed while meeting recently was the lack of "sector rotation" after the market bottomed in late 2002. He had lots of "Fasttrack" data on hand so we looked at a broad cross section of the markets by sector and found that since the bottom, there's been amazing positive correlation of the majority of the sectors. I've never read of this before, but my theory is that when there's a major market tumble like we went through from 2000 through 2002, all the various sectors' cycles are "reset" to their low points at the same time.

If this is so, it will take time for them to start to fall out of phase with each other as their own business cycles return to normal. Since those cycles aren't all exactly the same period, we'll again see some rotation starting to occur as the market continues to recover. I think I've observed the first of this with a divergence in Biotech vs Tech trade patterns. We'll be watching this more closely over the next 6 months.

The I-Wave is at a relatively calm point in its range. It would appear that we could have a successful rally from these levels without extending the I-Wave into the High Risk territory. Don Carlson was kind enough to confirm the I-Wave's Average value along with it's 10% highest and lowest values. He also ran the top and bottom 20% and found that it coincides with the same values as standard deviation of +or- 1.4. Those values if I remember correctly fell at around 34% and 47% I believe (should have written them down). Don's done some testing using the I-Wave as a filter for AIM with some positive results.

Meetings like this are always a positive thing for me. It brings home just how important it is to have good communication and good explanation. I have a Fortune Cookie message taped inside my pocket secretary (what people used before palm pilots) that says, "Simplicity and clarity should be your theme." Well, I hope this newsletter has stayed with that suggestion. All I can say is I clearly and simply have enjoyed getting acquainted with so many of the AIM users over the years. Thank you.

REPORT - WEEK OF 05/31/2004: A rather short trip to the Low Risk territory didn't hurt the averages last week, but I guess it was just too good. So, now the I-Wave has returned to the Average Risk area if just barely. I'm still not optimistic about any sustained rally until after the U.S. elections in November. After that we'll have to see what's up.

In the meant time we will depend upon AIM to continue to guide our purchasing and sales efforts. Not much has been happening out in the Warehouse again this week. This makes me frustrated and I'm sure all of you feel similar feelings.

Essentially all my accounts ended May with a slight amount better value than the start. All are up slightly for the year as well. Each has also given back some value since reaching their peaks earlier this year. I'm beginning to feel like I could take a 6 month vacation and not much would change while I was away. I have my Limit orders placed should there be either a rally or decline take place, so there's not much for me to do other than take care of paper work while I wait.

I've also noticed a slowing down in the posting on the AIM bulletin board. This has occurred at other times when the market has been stalled. There's not much reason to post if we can't either complain or brag!

Individual stocks in my account have shown the most movement as would be expected. My various Exchange Traded Funds shows remarkable resilience during the month of May. Representative of how the accounts I manage have done would be my IRA. You can look at the most recent results at my Exchange Traded Funds page. Even though each component moved quite a bit, only the one bond fund tripped a Buy order. Overall, the pace was very steady as shown by this graphic

My whole idea for the IRA's makeup is to never get forced into a losing position. If I never lose money, then it's much easier for the account to do well over time - even if it's not making money very quickly. This is a case of slow and steady being a good overall plan. I'm looking forward to a time when we can put more of the accumulated cash reserve back to work in the market.

CENTER> <<<<<----------'AIM, The Investment Business Plan!'---------->>>>
Tom Veale

REPORT - WEEK OF 05/24/2004: For the first time in about a year, our beloved I-Wave is giving us a Low Risk signal. While not all of the IW components are in agreement that this is a Bullish period, they all are at the lower end of their own Neutral ranges. So, we can safely assume that AIM's been giving us proper instruction with its advice of Buying in recent weeks. Please check out the latest I-Wave Components to see how each piece is doing.

Declining stocks' losses exceeded advancing stocks' gains last week. This was the driving force that took the IW's Speculation component into its own Bullish range.

Here at VIEW, we've only had one extra buy this week. We added 13% to our GENE position at $4.50. Many of the rest of our equities' prices move upward during the week and away from their own Next Buy prices. This is the first week in some time where the major indexes moved upward together. While not yet a rocket ship, all added to their indexes.

It will be interesting to see if the I-Wave follows through with a second week of Low Risk for us this coming week. While this week's statistics are better than a week ago, I don't think they're enough better to lift the IW back to its own Average Risk range. This is good news for AIM users. Maybe we'll have a chance to put a bit more of our cash reserves back to work before the next rally.

REPORT - WEEK OF 05/10/2004 and 05/17/2004: The rather quick reversal of the I-Wave's direction might be of surprise to some of you. However, we'd noted that it was our Divergence component that had been driving the IW crazy for several weeks. It has shown very few new Lows and lots of new Highs for literally months. Then at the beginning of March it started to reverse itself. We went from having over 1000 new Highs (with less than 100 new Lows) to having nearly the reverse now.

An article in this week's BARRONS magazine alludes to the massive percent of average daily volume that's now being controlled by computer programs. They have some neat new names for Program trading if you care to read about them. The estimate is that nearly 40% of an average day's trading is being done as "program trading" by computers. One of the subsets of Program Trading is called "algorithm" trading. Some of this stuff sounds remarkably familiar. Call it computerized arbitrage. The theme of the article is that all this computer generated trading is creating so much background "noise" that it's very difficult to see what long term investors are doing. Maybe it doesn't matter, long term investors are nearly a minority now anyway!

Speaking of short term trades, on Monday I bought a very large percentage more shares of DIGL at $1.31 and yesterday we were able to sell some of those shares for $1.90 for a healthy 45% LIFO gain. Too bad it's not always that easy. Other recent trades include:

To summarize the year so far, I'd say that I spent the first two months doing some selling. I spent the second two months cooling my heels waiting for the market to do something. Now I've spent much of the month of May adding to my various positions.

It's that time of year when I start to play around with automobiles. Sometimes they're my own but sometimes they're cars owned by good friends. I helped a friend with his gorgeous Jaguar XKSS get his carburetors set for the season. While at it we found several little problems that needed to be addressed. I've been busy preparing my own race car for its first season. I've also been busy making sure the Piloto is ready for all the activity. It's been several years since I drove competitively so I need to get my license renewed. This involved getting a complete physical. I've not had one in a couple of years. It's been that long that I've included a physical workout to my daily routine. It seems that it's paying off. My blood pressure is down along with all sorts of blood chemistry things that had been hovering near their respective 'red zones." No medicines or drugs, just acting as my own personal drill instructor has brought my cholesterol down from 222 two years ago to 180 now. The rest of the blood chemistry followed suit. I don't think my cholesterol had been below 200 in over 15 years!

All that discussion is a prelude to my apology requesting everyone's forgiveness for missing last week's Newsletter! Maybe I'm getting in shape, but I seem to be getting lazier relative to the newsletter. I'll attempt to get it updated weekly for the rest of the summer or at least warn you when I'm not!

REPORT - WEEK OF 05/03/2004: Are you feeling a bit confused about the market's condition and direction? Are you having trouble second guessing what's next? Well, remember that our I-Wave's "Divergence" component has been showing us a Bearish signal for several weeks now.

A new company has shown up as a PIC List Candidate. Swift Transportation, a trucking company, makes the list as of last week. We've added it to our hypothetical portfolio at $17.39/share with $6000 allocated to the stock and $4000 set aside for its Cash Reserve (graphs will show up soon). I've never been a fan of the truck transport industry as an investment area. There's darned few good trucking companies. Even the good ones' stocks have severe reactions to fuel prices. Well, if anything can tame them, AIM should be able to. Remember, to even make it onto the PIC List companies have to have had ten years of exceptionally good performance. Always study any new idea carefully before investing.

As of a week ago, the PIC list overall was ahead of the S&P500 for the year and positive for the Year To Date. This last week saw several stocks drop to their individual buy points. Overall the portfolio remains substantially profitable boasting an overall profit of better than 30% for its life.

It seems to me that AIM is again giving us better advice than we seem to be able to find in either the financial publications or the television business shows. It had us selling heavily into the rally that many stocks had last year. It had us save our cash for a downturn of substance rather than wasting it on miniature dips. Now it's starting to advise us to start to think about adding to our positions as everyone else worries. Last week, for instance V.I.E.W. was selling shares of the biotech index fund, IBB, at $84.85. This week it's retreated to $77.00. Thank you AIM! Last week we added a few more shares of a corporate bond fund to inventory, CHY, at $14.89. This week it's at $15.18. Thank you AIM! Oh, if life were only so simple!

REPORT - WEEK OF 04/26/2004: It's time to look at what is happening with the individual components of the I-Wave to see if we can learn something about what the market has been doing this year. With this information we may also gain some insight into what might happen with the market for the rest of this year.

The biggest concern through the end of 2003 had been in the rising Relative Valuation we'd seen all through last year. It proved to be, as we'd guessed, the upper limiting factor for the market's rise. I'd predicted a 2050 cap on the NASDAQ which has turned out to be just about right. As we see corporate earnings improve, the Relative Valuation should get some relief. However, that also assumes the FED doesn't raise interest rates in concert with the rising earnings.

My Speculation Index is currently at very moderate levels. It monitors the 1700 larger cap stocks listed in Value Line, so it's this group that's not having much speculative activity.

Last week I pointed out that the Divergence component had turned Bearish for the first time in over a year. It continues again this week to be rather high. This confirms that last week's values weren't just a mistake.

Finally we come to the Zeal component. This one has been bullish for a very long time and only in recent times has it risen in risk profile to its own Neutral range.

The NYSE, Dow 30, S&P500 and NASDAQ Composite have all been flat now since the start of the year. The I-Wave's risk level has risen slowly of the last four months. It's an election year in the U.S. I think we can expect the markets won't make a dramatic move until after the elections. As I collect more data on the small and mid cap stocks I'll add to my Relative Valuation and Speculation graphs. This will give us a more complete image of where investors' money is moving. Right now it appears that the speculation in small caps is creating a bearish condition. Large cap stocks, by comparison are being roundly ignored. While not yet bullish, the level of speculative activity in large caps is very low. For those of you who invest in "style" type index funds (Growth or value, large or small cap, etc) this information might direct you to be following AIM's Sell advice for small caps and to be in a holding pattern on larger cap stocks.

REPORT - WEEK OF 04/12/2004 & 04/19/2004: For two weeks there has been steady erosion of the NYSE breadth. Decliners outpaced Advancers 23 to 11 two weeks ago and last week 26 to 8. This has caused a very quick switch in the Divergence component of the I-Wave. It has been essentially in its "bullish" area for a calendar year. In the span of just a couple of weeks it's jumped through its neutral zone to its "bearish" territory. Please remember that this statistically means a move from one side of the bell curve to the other. Neutral represents 80% of the database.

It is possible that this is just the 52 week data base catching up with itself. To suddenly have so many more New Lows (just 41 out of 3565 stocks two weeks ago compared to 302 out of 3561 stocks this last week) seems possibly to be an error at first glance. But on further examination I think it's a shift in where money is flowing.

High yielding stocks have been hit hard in the last two weeks. This is because there's also been many "growth and income" funds also being sold. I believe this is one of the sources of the "new lows" being registered. My guess is that those proceeds have been going to foreign fund investments (non U.S. based investments). From a contrary point of view, this may be signalling the end of the Dollar's drop against foreign currencies. If true, I hope you've been executing AIM's Sell Market Orders in your non U.S. investments and accumulating cheap Dollars with the proceeds.

Bob Norman of Newport Programs has been receiving a lot of requests relative to the fate of Newport's AIM program. In various forms it's been around since 1988, the oldest AIM computer software of which I'm aware. It's stayed easy to use, true to Mr. Lichello's original model yet flexible enough to allow some tinkering. Bob has reached a point in his life where he no longer has time to create a newer version yet feels some responsibility to those users out there who've faithfully updated their AIM accounts using his product.

He will entertain offers from anyone who'd be interested in modernizing the software for the latest operating systems, freshening up its user interface, possibly finishing up ideas he had for improvements to the software and most important, remain faithful to the basics of Mr. Lichello's AIM. Newport, while not the fanciest software for AIM, is a robust bit of programming that's been very stable since its DOS inception in 1993 through its later Windows version, with only a minor bump during the Y2K era. It is a Visual Basic platform. Its efficient use of memory, computing power and ease of use have given those who purchased it an excellent way to maintain their AIM accounts and produce excellent graphical histories.

What Bob is looking to sell is the program compilation, user and demo sales lists as well as his suggestions for modernizing the product. As Bob puts together a description of this small business he is also compiling a list of people who've expressed some interest in it. If you would like to be included on his distribution list for the offer to sell, please drop me an email with your mailing address. I'll pass those on to Newport.

Please note that Newport essentially prepared the AIM program for me alone back in the late '80s. It was later on that it became a commercial product. The name was derived from New portfolio, as it was a major improvement from its early "spreadsheet" days and also because of Port Washington being his home. It would please me to see it modernized and continued for another decade or so by yet another dedicated AIM user. I have neither the time or programming skills necessary to attempt such a task.