Nov. 13, 2008 -- WOW! ... +11.3%

Nothing surprises us anymore these days on Wall Street.  When the populist choice for President, Barack Obama, paraded his team of economic advisers onto the stage last week, the stock market continued its downward spiral.  When President Bush, with an approval rating lower than his hat size, addresses the sad state of the economy today, the market reverses course and rallies nearly 900 points on the Dow.

As the chart below of the S&P 500 Index shows, today's intraday rally was huge.  Technical support, and investor spirits, were completely broken this morning.  As we mentioned in this month's Primary Trend investment letter (mailed earlier this week), we may breach the October 10th intraday lows in terms of price, but the all-important internals (technical underpinnings) are NOT likely to confirm those price lows --- a would-be BULLISH development.  To us, this latest re-test of the October lows and subsequent +11.3% upside surge is just another building block to a stronger, longer term foundation from which to launch a cyclical bull market.

Oct. 30, 2008 -- Mortgage Crisis 101

M. Jay Wells does a fantastic job in today's headline story in Investor's Business Daily to uncover the petrie dish that is the U.S. housing crisis.  His timeline format is simple to absorb, yet complete in its unveiling of the cast of characters over the decades.  It is a long read, but in our estimation, worthy of the investment of time.  Click on the link below... 

 Why The Mortgage Crisis Happened

Oct. 29, 2008 -- Sweet November

We are fast-approaching a period that has been rewarding for investors ... the 6 months from November thru April.  The brutal October 2008 (see chart below) is at least being put to bed, and that, in and of itself, is a victory for investors.  More on the "Seasonal Upswing" in the November issue of :

The Primary Trend

[to be published next week].

Oct. 24, 2008 -- Enough Already!

[please see our "featured chart" section]

Oct. 17, 2008 -- New York Times (editorial)

"...bad news is an investor's best friend.  It lets you buy a slice of America's future at a marked-down price."

--- Warren Buffett

Oct. 16, 2008 -- Quote of the Day

"Men go mad in herds while they only recover their senses slowly, and one by one."

[from Charles Mackay's book, Extraordinary Popular Delusions and the Madness of Crowds, 1841]

Oct. 15, 2008 -- TESTING PROCESS

Never pretty, but often profitable.  We have reached extremely, extremely oversold levels.  The S&P 500 Index reached 840 and the DJIA hit 7900 last Friday (10/10/08), before reversing.  We are now testing those lows as we "speak."  Historically, climactic sell-off lows that "kill the bear" test those lows within 3-4 days of the initial low and again within 3-4 weeks and then 3-4 months.  Unfortunately, those tests can be even more emotionally traumatic for investors --- a deja vu/"here we go again" feeling that keeps investors on the sidelines...or worse, compels them to pull more money OUT.  That appears to be the case these days as mutual fund redemptions are surging, joining the hedge fund bandwagon.

These are difficult and trying times, to be sure ... and even moreso if you are an investor trying to put some of that dry powder to work in the equity markets as we are trying to do these days.  But we believe it is prudent to be "shopping" now.  As the old saying goes:  "Wall Street is the only place where, when they put merchandise on sale, the customers flee the store."    

The S&P 500 is cheaper by 40% in terms of price since the highs reached last year.  It is a little bit more difficult to discern valuations based on P/E multiples since the "E" is no doubt a moving target downward.  HOWEVER, historically, we are at levels that are in the bottom 20% of the bargain bin.

Indiscriminate selling ("throwing the baby out with the bathwater") is typically the hallmark of final bear stages, not the beginning.  Many great companies have now become good investments.  At the end of September, we stated:  "Amidst chaos lies opportunity.  We will no doubt get both in October."  Well, here we are ...

Welcome ... 

Below are some of the salient points of        The Primary Trend Fund (ticker: PTFDX):

• The Fund is 100% NO-load with NO sales commission, NO redemption charges and NO 12b-1 distribution fees.
• The Fund is managed by Arnold Investment Counsel, Inc., a Milwaukee-based investment adviser known for its conservative, low-risk, value-oriented  investment philosophy.
• The Fund pledges to provide a high level of shareholder communication.  Shareholders in the Fund receive a monthly investment letter, The Primary Trend, at no charge.

All of us at Arnold Investment Counsel and The Primary Trend Fund look forward to serving your investment needs and exceeding your expectations.

Call Us Today!

The Primary Trend Fund is now available to broker/dealers and advisers on the NSCC platform.

We are also registered in all 50 states, plus Guam and Puerto Rico.

Please contact us at (800) 443-6544 if you are interested in listing us on your platform!