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[TTHQ Staff]

Almanac Investor Alert - 1/7/2005 ***Down 1st 5 Days Warn?FREE Lunch 2004 Thins *** Markets continue to decline in 2005 posting a loss for the first five days. Officially, for our First Five Days Early Warning System the S&P 500 is down 2.1%. The Dow is off 1.7% for the year and NASDAQ has dropped 4.0%. This is cause for concern on top of the negative Santa Claus Rally mentioned in Tuesday s Alert. We have been warning of a top the first half of 2005 and this early negativity supports that position. We will, of course, defer to our January Barometer which relies on the performance of the S&P 500 for the entire month of January. If the whole month is down it would be even more concerning. This does not mean that from here the market will fall precipitously this sell-off may actually remove some froth from the market and fuel the push to the final top I have been discussing in the newsletter since the summer. This relates in part to the 3 Peaks and Domed House pattern. We may very well be plotting out point 20 on the Domed House at present. For now caution is in order but not panic. A final move to the top of about 10%-20% from current levels, as per our 2005 Annual Forecast, is still in the cards. I will address all of this further in next week s issue. We have already begun to raise some cash as one stock and several ETFs in the Portfolio have been stopped out. EZ-EM (EZM) closed below our 14.50 stop on 12/16/04 for better than a double. A dozen of our ETF Sector Selector positions have been stopped out as well 10 with gains, two with minor losses: Internet Architecture HOLDRS (IAH) on 1/4/05 at 37.00, 14.7% Internet Infrastructure HOLDRS (IIH) on 1/3/05 at 4.50, 32.4% iShares Goldman Sachs Tech (IGM) on 1/4/05 at 46.00, 9.5% Select Sector SPDR-Financial (XLF) on 12/20/04 at 30.00, 5.3% Internet HOLDRS (HHH) on 1/6/05 at 68.00, 11.2% iShares DJ US Tech Sector (IYW) on 1/5/05 at 47.00, 5.6% iShares Goldman Sachs Tech (IGM) on 1/5/05 at 45.00, 7.1% iShares S&P Global Tech Sector (IXN) on 1/5/05 at 50.00, 5.3% Technology Select Sector SPDR (XLK) on 1/4/05 at 20.75, 6.4% streetTRACKS MS Tech (MTK) on 1/6/05 at 48.00, 5.5% Central Fund of Canada (CEF) on 12/21/04 at 5.40, 4.4% iUnits S&P/TSX Capped Gold (XGD.T) on 1/4/05 at 50.00, 8.3% Gains in our Free Lunch Bargain Stock Strategy for 2004/2005 have begun to thin. In Tuesday s Alert I suggested to begin taking profits. The basket of 36 stocks still outpaces the market with an average gain of 10.4% today but that is down from an average gain of 22.3% on Tuesday. Use any rallies to continue to lighten up on these stocks. A full update will appear in next week s issue. -------------------------------------------------------------------------------- STANDARD TRADING GUIDELINES! BUY LIMITS ARE GOOD TILL CANCELLED. ALL STOPS EFFECTIVE ONLY WHEN THE STOCK CLOSES BELOW THE STOP PRICE. ALWAYS SELL HALF ON A DOUBLE. -------------------------------------------------------------------------------- Please trade carefully. Those who study market history are bound to profit from it. Sincerely, Jeffrey A. Hirsch, Editor & Publisher