Stock Picks for August 20, 2007

Opening a new stock pick on SCHN.  If there is a small pullback we should pick it up.  This company is way undervalued at current levels and future growth looks good. We sold QID for close to a 4% 2 week gain.  Not bad.  If the true bottom is 12000, this decision will be pre-mature.  We thought the risk was greater for the markets to trend upward.  Time will tell. We want to tip toe back into stock picks and the market in case 12000 is the bottom, not 12500 like it tested near intraday. Fed has certainly communicated that they may be willing to save a crash in the markets.  Early the morning before the markets opened, the Nikkei was down over 5%.  This, or more, was going to happen in the US markets and the fed stepped in.  This tells us that they may be willing to make a fed funds rate change if necessary. The Fed lowered the discount window.  Remember, this is the rate that banks can borrow money from the fed.  The funds rate is the rate at which banks borrow from each other.  If the market looks like it is getting into trouble again, or nearing a crash like it almost did Friday, then the Fed will most likely move on to their next tool, which is the funds rate.