Weekly Market Overview - 12/28/2007

All the major US indices were negative. For the week the Dow Jones Industrial Average gave back 84.78 points, or 0.63%. The Standard & Poor's 500 Index lost 5.97 points, or 0.40%, while the Nasdaq Composite gave back 17.53 points, or 0.65%. For a forth week in a row the Energy was the strongest sector. The Energy sector represents more then 12% of the S&P 500 index. It is up more than 23% YTD compared to a 4.24% gain for the S&P 500. The S&P analysts have a neutral fundamental outlook for the Energy sector. They are expecting the near-term decline in oil prices and below-market PE growth in 2008. The Energy sector's PE projected five-year EPS growth rate (PEG) ratio of 1 time is below the S&P's 1.1 times. The technical indicators of the S&P 500 Energy sector are negative. The sector could see a 10% to 15% correction over the next couple of months. The Energy has been in an uptrend since the beginning of the year. The technical outlook for crude oil has deteriorated and a sharp correction is possible over the coming months. The worse performing sector of the week was the Health Care sector followed by the Financial sector. For the third consecutive week the Basic Materials sector is the most overvalued sector followed by Utilities, while Industrial Metals/Mineral, Major Integrated Oil/Gas, and Independent Oil & Gas are among the most overvalued industries. The Financial sector is the most oversold sector followed by Services while Regional-Pacific Banks, Wholesale Other, and Specialty Eateries are among the most oversold industries.

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