The market is starting to have good breadth. Advances outnumbered declines in most market sectors by at least ten to one. Volume was moderate, but when you consider how many players were on holiday it was very good. Most things were bullish. Industry groups were up. There were only five losing industry sectors. The NASDAQ 100 had only four losing sectors, while the Dow had none.

It appears those in the market since Christmas day are counting on a strong January-effect rally. There are a huge number of investors with massive stock losses left over from the past market crash. They have been selling their winners in order to take advantage of the tax break they get. When you have past losses you can deduct these losses from current winners, but you must sell in the current tax year (2003). The vast majority of these sellers will be buying back similar type stocks in January to follow the tax rule that you can't sell a stock in December and then buy the same stock right back in early January. I am not a tax advisor, so check with your tax advisor on the exact tax rule.

The trading range that has existed in the NYSE Money Flow Index now appears to be about ready to resolve its indecision pattern to the upside. It should be quite a January-effect rally.

Those who bought Medimmune Inc. (MEDI/NASDAQ) took a hit during the tax sell-off. MEDI is again under accumulation. It is a Phase-2 (buy). The same is true for Sirius Satellite Radio (SIRI/NASDAQ).

The gold stocks that I provided in Novmber are still a Phase-3 buy, while Golden Patriot Corp (GPTC/OTC BB) is a Phase-2 buy. Once the tax buy-back starts in earnest, GPTC should start to move higher.

Sell True Religion Apparel, Inc. (TRLG/OTC BB). It has hit the point I set for a "sell all shares" at 1.30. I sent out an alert to my subscribers to sell half of their TRLG shares on December 1, 2003, after the stock hit 3.20 and started to drop. For those who bought in at 2.10, it was a winner.

During the past market correction, the Pro Picks portfolio was down about 15%. It is currently back up to about 57%. That's about 5 points from its previous high. The portfolio is up about 12 points in the month of December. In the coming month I will start a new 2004 Pro Picks portfolio. This will provide those of you a chance to get in at the start. A number of you told me you were afraid to buy stocks that were already up over 50%.

Have a Happy New Year! I will talk to you next in the early January comments. The next Investment Tracker newsletter is due about mid January. For those who have been following me for at least five years, it doesn't get any better then those years. The Pro Picks portfolio has been up in double digits for the past five years. The lowest year was 2002 when the portfolio was up 15.66%. The highest year was 2001 when it was up 201%. There are still a few days left in this month, but barring a total collapse in the market, we should be up over 48% for 2003.

Kenneth Coleman