Industry Group Analysis

This Week: Big Chart Update for the Week of January 7

1.	Introduction
2.	Groups That Are Heating Up
3.	Groups That Are Cooling Off
4.	On The Radar Screen This Week
5.	Disclaimer

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1.	Introduction

Sentiment that the economy will rebound later this year has
resulted in investors looking past the upcoming earnings
season and instead increasing their level of risk tolerance.
This change in sentiment has resulted in industry groups such
as Electronics/Semiconductors {.DSE} and
Homes/Hotels-Motels-Inns {.HOT} rising on the Big Chart.

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2.	Groups That Are Heating Up

Growing optimism for an economic recovery has driven the
ranking for Electronics/Semiconductors {.DSE} up to the 98th
percentile.  Investors have been ignoring valuations in order
to avoid risking the next big run up in chip stocks.
Historically, semiconductor stocks have appreciated in price
6-9 months before a recovery occurs and with news of price
increases coming out of Asia, the current sentiment is that a
bottom has been reached by the industry.  Chip stocks that
have recently traded upwards include Globespan {GSPN}, Amkor
Technology {AMKR}, Taiwan Semiconductor {TSM}, Micron
Technology {MU}, and ASM International {ASMI}.

Homes/Hotels-Motels-Inns {.HOT} has been making a material
rebound, rising from the 2nd percentile to the 50th
percentile during the past five weeks.   Analysts have been
gradually upping their ratings on stocks such as Fairmont
Hotels {FHR}, Host Marriott {HOT}, and Hilton {HLT} on the
basis of an expected economic recovery, a decrease in the
rate of revenue decline, and valuation.  Notably, growth for
many companies in this group is not expected to return until
the second half of the year, at the earliest, but increased
confidence over airport security could cause industry
conditions to improve sooner.

Other groups with rising rankings include Basic/Metal {.MET},
Broadcasting/Television {.BTV}, Computer/Components {.DCO},
Home/Pet & Supplies {.PET}, Machinery/Machine Tools {.MMT},
Publishing/Graphics/Supplies {.GSE}, and
Services/Advertising {.ADV}.

To view the Big Chart click the link below.

http://www.wallstreetcity.com/commentary/commentary_group_rotation.asp
____________________________________________________________

3.	Groups That Are Cooling Off

Despite the increased level of risk tolerance being priced
into the market, Drugs/Biotechnology {.DBI} has lagged on the
Big Chart.  Rankings for the industry group have fallen for
five consecutive weeks.  Part of this decline has been caused
by news events over the past few days.  First, Abgenix {ABGX}
announced on Thursday that its rheumtoid arthritis drug,
ABX-IL8, failed to show stastical improvements.  Then,
ImClone Systems {IMCL} began tumbling on Friday as word about
a negative article in the The Cancer Letter spread.  The
newsletter stated that FDA is refusing to review IMCL's
application for Erbitux, a treatment for colon cancer.  The
two announcements are sharp a reminder of the risks inherent
with with many biotechnology companies.

Other groups with rising rankings include Basic/Metal {.MET},
Broadcasting/Television {.BTV}, Computer/Components {.DCO},
Home/Pet & Supplies {.PET}, Machinery/Machine Tools {.MMT},
Publishing/Graphics/Supplies {.GSE}, and Services/Advertising
{.ADV}.

To view the Big Chart click the link below.

http://www.wallstreetcity.com/commentary/commentary_group_rotation.asp
____________________________________________________________

4.	On The Radar Screen This Week

Services/Advertising {.ADV} has improved its rank for four
consecutive weeks and now sits just shy of the top quintile.
The industry group is very dependant on economic cycles for
revenue growth and and optimism over a recovery has resulted
in several stocks testing their six-month highs, including
Publicis Group {PUB}, WPP Group {WPPGY}, Catilina Marketing
{POS}, and Omnicom Group {OMC}.  With little in the way of
economic news this week, expect short-term sentiment to
determine the price direction of this group.

To view the Big Chart click the link below.

http://www.wallstreetcity.com/commentary/commentary_group_rotation.asp

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5.	Disclaimer

WallStreetCity's Industry Group Analysis is published solely
for informational purposes and is not a solicitation or an
offer to buy or sell any stock, mutual fund or other security.
The information obtained from internal and external sources
is considered reliable, but has not been independently
verified for accuracy and completeness.  WallStreetCity, its
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time have a position in the securities mentioned and may sell
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result in or guarantee profits in trading.  Past performance
is no indication of future results.

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