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[TTHQ Staff]

Gene Inger's Daily Briefing. . . . for Thursday, July 28, 2005: Good Evening; The 'Tan Book' . . . (beige if you prefer) report underpinned a market we'd forecast a rally within, primarily led by big-cap stocks anyway Wednesday afternoon, so action worked-out superbly. To that extent, we got new S&P Cash and Futures highs today. We ideally should accelerate a little higher, pullback (fill any gap-up); then slug it out. By no means does that mitigate the expressed details of certain issues of anxiety if not notoriety, as relates to the weeks ahead, as outlined in last night's Daily Briefing. But, as noted then too, we thought first a consolidation would complete, and take the market to slightly higher highs on the nearer-term. We'll have more on ramifications of the changing attitudes in Europe momentarily, but first a bit more on the market as well as some nuanced (important) clarifications on several stocks we'd like to note. MarketCast (intraday audio-email comments) guidelines did a 1233-34 long that was held through virtually all the day until the (near 1240) close; thus produced theoretical gains of excellent proportion, for September S&P's; the primarily tracked Index. We thought the Semiconductor Index (SOX) and Nasdaq 100 (NDX) would firm too, in the afternoon, but essentially we needed big-caps to bust-out-and-up a bit; got that. Tonight's remarks will highlight a bit more about the very interesting (even if often this doesn't superficially appear interesting) action by Ionatron (IOTN), with clarifications about a couple areas followers of this stock may find of short-term interest. And with near a 100% gain in the authentication/anti-counterfeiting recent selection, with a very unique 'chipless RFID' solution for the future, that this week obtained significant contracts with an American pharmaceutical company earlier, we have decided to now allow revealing to non-members the name of the firm. It is: InkSure (INKS). Of course that's primarily so interested parties are able to study about it a bit, prior to the company's first 'conference call'. In itself that's a significant departure for any OTC stock, typically they don't do 'cc's' after earnings reports. So, with this current pullback after a 100% gain in a matter of just a couple weeks, we suspect that for investors (including new ingerletter.com members) that didn't participate in the fairly swift run-up (for whom it may be suitable, as it is speculative, and we never comment on suitability of anything for anyone anytime, or suggest anyone being in anything), some might be interested in checking it out prior to the forthcoming report next week (sure we might see a pre-report push-up and profit-taking, but the small company's overall direction is what we're interested in, as InkSure (INKS); OTC 'bb' [which is in itself unusual for us as most stocks we follow are major technology firms] ideally gets near a conclusion of a little correction, and resumes upside.. balance is reserved). As to discussions about another potential technology stock; yes, that continues in the works, as we gradually learn more about it, and if and when we determine to include it in our limited coverage of special situations, we'll let our members know. So far the prospects (though there are never assurances) are interesting, innovative, and in at least one or two areas that do involve National Security, potentially revolutionary too. But potential goes way beyond 'covert' or security issues too; as we'll likely explore. (It should be noted not every stock is going to be a homerun or even successful.) This week we described prospects as to what brought so many skeptics and outright bears into the bullish camp after the SOX run-up and even the London bombing, and that continues to create an impression, illusory or not, that markets are incapable of decline. Well, that would be great, but is so unlikely that it probably is wishful thinking. But as we said, after a bit of rest, that didn't mean markets wouldn't rally (reserved for ingerletter.com), and it doesn't mean we don't continue in a slow growth modality that has (as forecast) characterized our bull market over recent years (more follows). But it also didn't mean times like August can't be erratic (more reserved for members), as or if (especially) a 'summer of terror' onslaught continues unfettered. A respected member of the investment community recalled the writings of an Italian lady that was (and remains) persecuted and prosecuted for simply stating reality (in fact she was once a left-leaning liberal who moved to the right after the terrorist wars began). Some of the points he reminded me of compel that I share my observations on both his sentiments and her thoughts, as too many (given the survey published by the media just today) suggests most people believe we aren't in a real Islamist war. The Italian (as noted insanely prosecuted for saying the truth over these last several years) writer uttered something like (paraphrasef as I can't recall this exactly): 'talks about the decadence of Westerners (that's her prior leftist orientation) identified with illusions of being able to deal amiably with the Enemy, and even less with their fear'. That's what Great Britain did for years, allowing and permitting potential terror groups to establish themselves in England, even where they were banned in Europe; which is itself overrun with groups that can harbor the worst of humanity within. What Great Britain has learned this month, and is responding to only now, is a sharp realization that their fear of being targeted, was that inbred 'fear that induced them to meekly host the enemy; to attempt to conquer him with sympathy, hoping that he will allow himself to be absorbed; while the enemy (the Islamists and quietly many Moslems who of course will not overtly act against society, but would welcome the change) is the one who wants to absorb' (to absorb England, in the long run). We think Holland learned this and quietly is changing their policies. France will have too; Germany essentially 'gets it' more since the 9/11 attacks were planned there. If anything it was incredible to hear the Mayor of London speak of 'dialogue' with those who would terrorize their cities; it is even more incredible (even stunning) to hear the Church in Rome talking about 'dialogue' (the new Pope actually said that); vacant of the knowledge of what bin Laden has said; or maybe still not taking seriously what al Qaeda has promised. That is: to attack Italy and possibly the Vatican itself. Will the Church then realize that (in Islamic terms) this is the counterattack to the liberation of much of Europe from Islamic invaders, that was mounted in Spain, then in Vienna, as the hordes tried to push north, and in the Balkans or so on for a number of centuries? Will Christianity realize (as Judaic/Christian theologians often dismiss, because they want to expess the 'turn the other cheek' or dialogue side of all faiths that profess the love of fellow-man) that the enemy doesn't care about any of that in any way? Will they grasp the prospect that the goal (Islamists don't mince words as relates to this) is essentially Eurabia, not Europe as we've known it. Sure Europe's truly tired of war, the memory of inaction during the Holocaust, the Inquisition long ago, and so on. But there's nothing to apologize for, and certainly not by enacting urgent self-defense, and that increasingly (if reluctantly, and that's part of the problem) is now the evolving case in Europe. It's a tough challenge, and we're sympathetic for those Moslems of a 'bent' to truly assimilate into European society, sadly caught-up in what their brethren have sown. But an assimilation must be real; not merely trying to transpose values of antiquity upon the rest of humanity in the name of 'their' religion, or being oblivious to those who do. The nations of Europe be aware; the people of Europe do wake-up; for if not, the bell tolls for thee. The enemy does not seek dialogue at all. Their goal is to tire and frustrate us, to confuse and disengage us from fostering democracy, and in the process, slowly but surely, to undermine and destroy our cherished institutions. This has been made clear. While their apologists sometimes are linked to terror, and have used pleas for tolerance (not by Moslems for us, but by the rest of us, as if we were the transgressors, which is utter nonsense in the modern age) too frequently. (Listen to their own words, not just by those trying to sober complacency of the past years) and in no unmistakable terms, you may see they're trying to defer policies that would restrict designs the enemy has on Europe, and eventually the rest of the world. Is this right wing or a conservative viewpoint? Increasingly these thoughts are coming from the mainstream and even the elitists in parts of Europe, because they are finally figuring-out the real threats, to their institutions, their way of life, and to their freedom. So our point here, as made frequently in the past about 'wake-up' calls in Europe can be seen basically as a movement away from complacency, inertia or wishful thinking; that allowed to be left alone (such as England did by allowing banned groups to meet in mosques for too long a time), or more absurdly, for 'dialogues' with those who wish to enslave (or if not consenting to enslavement or conversion, to kill); not to negotiate but to restrict, purge, or eliminate all those who would threaten Western Civilization. It's wartime, America grasps this better than Europe which belatedly increasingly now 'gets it'. But America also has dwelled too much on how we got here, rather than how to control and correct this (yes you have to understand the past to divine and handle the future; but that was done by the 9/11 Commission); now let's move on and make it clear that migration is not economic only in nature, but must be political. You must make the host country your allegiance and preferably affinity group, while religion is respected and heritage honored as the traditional case; a cultural memento of places people left, not as part of a subterfuge to export the worst aspects of foreign societies into free ones. It's in that spirit separation of 'church and state' is so very important. In no uncertain terms, I know most here (if not all) realize these factors; but it's part of a desire to communicate (and hope you do to) with other Americans and Europeans that the enemy is not merely terrorism of any moment or in any country. That is just a tactic (even countries like Egypt know this; where the enemy's objective is to not just drive out all Western influence, but to create an Islamic state, which they failed many times in the past to do; which is why the radicals were jailed there for decades over a period of time; not just after Western influences, and well before Israel existed or any of the so-called issues that are used to soften the resolve for a stiff-resistance against the real onslaught that's ongoing. The enemy is Islamic proselytizing. It's Islamism. Technically; keep in mind the September S&P has achieved almost everything we had in mind for this phase of April-July activity; though a little more certainly is always welcomed. Additionally, we understand (and finally so do sold-out bears & bulls that have now embraced the upside) how one can 'picture' the upside extension. We may be giving them too much credit, but we suspect they see our first leg up from those 2002 lows, the correction in 2004, and the subsequent (post-rally in later '04) rise that looks like it ought to eventually (barring exogenous events, disasters or something of a different nature that rocks the foundations of the economy) produce (reserved) up. Augusts are often difficult months (detail described on ingerletter.com). We know how folks are worried about housing of course; but shouldn't be because of China's move, (more), to an extent that the Fed manufactured the term 'conundrum' to describe the inability of an appropriate U.S. Agency (Fed) to influence intermediate and long rates. We had expected this result for months, and that game has been played (no idea as noted before why the big bond managers were clueless as to the real game going on in the world). In the new 'panic' from those suddenly figuring out China's role in this, we pointed out that it's not in China's interest to plunge a U.S. economy, dependant on consumer spending and housing into any sort of recession that they engineered, and it's in U.S. interests, as slowly and cautiously as possible, to extricate itself from overwhelming dominance of Treasury markets by foreign capital. You won't hear too much about actual issues on this, because they are politically sensitive real subjects. (reserved) Question remains whether the Fed engineers a 'soft landing' for housing. Later this year we think stock markets will actually accelerate even more dramatically as fund managers increasingly try craving-out a niche of net gains for the entire year. Eventually folks will start to absorb the reality of what happens to leveraged housing investments when prices come down, and if they don't plummet, we might simply get a 'balancing' of assets a bit better between financial holdings and property retention. Finally (we wish otherwise): our Oklahoma City Tinker AFB threat alert last week has now been confirmed. We have the details; provided in tonight's report. It is incredible that a rather wider FBI and Air Force security alert isn't being reported; it may be to prevent panic, but Government needs millions of eyes to look for these scoundrels, as clearly a criminal plot is trying to unfold in the U.S. by the terrorists. Consider this (thanks to an alert member who dug for details and as of now) found this: Battle Staff Directive #41, categorized as "For Official Use Only", was issued at Hill Air Force Base in Utah last week to raise a red flag about the incident at Tinker AFB, and presumably alert Air Police at their own facility to be on the lookout for assaults: "On 14 Jul 05, three individuals were observed outside the perimeter of Tinker AFB, OK. They were looking through binoculars, taking pictures and one appeared to be holding a large weapon at chest level. The weapon appeared to be aimed towards a low flying aircraft. The three individuals were described as being of Middle Eastern decent and left the area when approached. The weapon was later identified as a rocket launcher (MANPAD) and the low flying aircraft to be a B-1 Bomber. FBI in Oklahoma City & AFOSI [Air Force Office of Special Investigations] determined the threat to be credible." You will recall our report, which was almost identical, was pulled off the web source we got it within minutes thereafter. Eagle Eyes is a security anti-terrorist initiative for active and retired USAF personnel in the U.S. We believe it is active at this hour. We welcomed input (as requested and members provided) to enlighten us. In our opinion this is not something to keep from the American people; but enlist them in detection and apprehension of vermin on the loose, here. BOLO.. be on the lookout for signs of strange behavior by Middle Easterners especially if seen with tube-shaped objects, and report these to the nearest police, FBI, or USAF facility, if at all possible. Bits & Bytes . . . notes what may be a (reserved) sequence of events at Ionatron (IOTN), and reflects on the recent modest (normal) consolidation of InkSure (INKS). Also noted: Boeing (BA), Texas Instruments (TXN), Motorola (MOT), Intel (INTC), and little Cano Petroleum (CFW) which is a long-term tertiary recovery project (got an interesting mention in last Sunday's Los Angeles Times, so we'll note it as well). Members please note: we have no association with IOTN or any other publicly traded firm (never have had), other than as shareholders of course. Yours truly remains an Ionatron shareholder throughout coverage timeframes, as regularly noted. Comments are interpretative speculative postulations, provided 'as is with all faults', and all risks, with no assurance about future performance of anything in any way whatsoever. In summary . . events continue reminding us of risks Allied fighting forces face, given continued attacks on free peoples, by elements including organized terrorist armies in Iraq. A world awakening to terror and nuclear threats grows, as domestic concerns retreat from absorbing us. Remember; 7th Century al Quaeda monsters threaten most all Europeans, unless they evacuate entirely from Iraq & Afghanistan within 3 weeks. Obviously that won't occur (yes, even French and the Germans have more backbone than lots of folks think, especially given the situation now). Recently, they threatened Rome; and the Italian Prime Minister personally. The Vatican worries and most of the mainstream Islamic groups are protesting terror, but not all vigorously or with active preparation as one might expect when there's cancer to eliminate within one's body. McClellan Oscillator finds NY 'Mac' firming slightly (many comments reserved for ingerletter.com); currently -2 today; as NASDAQ advances; presently +10. Issues include oil, terror; of course Iraq; Europe moving to less-hostile stances vis-à-vis the United States or the other economic areas we've explored in tonight's greater detail. Note that (it is normal) some stocks sell off after good reports; buy the rumor sell the news, then of course up later if warranted (and we suspected warranted). S&P will be higher in the morning; then dip, then bounce again some more. Enjoy the evening! Gene Gene Inger, Publisher