In simple terms, Market Edge is institutional level technical research that specializes in identifying when conditions are favorable or unfavorable for investing in specific equities and in alerting you to when these conditions are likely to change.

Whether you are a fundamentalist or a technician, Market Edge is best used as a "Second Opinion" to your own investment information and biases.

If the opinion is a "long", the rest of the world sees what you see and your chances of success are high. If the opinion is an "avoid, the stock is out of favor and not likely to rise in price. We suggest you wait until Market Edge's opinion changes for the better. Rather than guess where the bottom is, Market Edge will keep you out of the decline and upgrade the opinion once the stock has suggested a bottom is in place and a new uptrend is underway.

From a technical standpoint, a "long" that you may consider for new or additional purchases should have a spread between its closing price and sell stop in the range of 5% or greater and have a score of either 0 or -1. Preferably, the Up/Down slope, our most sensitive indicator of accumulation and distribution, should be pointed UP. Stocks meeting these standards are clearly technically healthy.

A "long" that fails to meet the above standards should be considered a "hold". Stocks that fall into this group are typically experiencing pullbacks, but it's too early to determine whether these are normal pullbacks or the beginnings of a serious decline.

A "long" that flashes one or more of the following warning signs is in trouble. At this point, you should be monitoring the stock closely and considering defensive strategies:

• breaks the Sell Stop,
• Score drops to -3,
• Score drops to -4,
• the opinion gets downgraded to Neutral.

Create one list of your actual holdings. The second list should consist of stocks that you follow or have an interest in buying. Alternatively, you may choose to have your second portfolio consist of "recommended" stocks from one of your favorite research sources. Stock Watch will generate buy and sell signals for both lists.

Usually, too many bullish or bearish filters used together will create a mutually exclusive setup, thereby eliminating every stock in the universe. If this occurs, remove one filter and your search should yield the desired results.

Not necessarily. While "avoids" are likely to be dead money, not all will experience significant declines. If the "Avoid" also contains the recommendation "Stock is a short sale candidate", then selling is an option worth considering.

The score component is one of the key features of Market Edge's opinions. Scores range from 0 to -4 for "Longs", indicating levels of deterioration and guiding you to an exit point. Scores of -3 and -4 indicate a stock that is breaking down and in trouble. Conversely, "Avoids" have scores ranging from 0 to +4, indicating levels of improvement and guiding you to an entry point. Scores of +3 and +4 indicate a stock that is in the process of bottoming and turning around.

Recommended only for aggressive traders, you may choose to front run "Neutrals" before they become "Longs". Do this only once a stock has penetrated its Buy Stop to the upside! Front running the Buy Stop is like taking a second mortgage to open a margin account: too much risk . For safer plays, look for one additional confirming indicator such as a score of +3, an opinion upgrade to "Neutral", or an up/down slope that is "up".

We suggest buying the companies you like when they are upgraded to "long". When the score drops to a -3 or -4, monitor the position closely. You may choose to weather any pullbacks or you may consider either selling, holding or hedging the position.

The Market Letter is a weekly technical outlook. This outlook is a compilation of sentiment, momentum and cycle models that attempt to forecast the future direction of the markets. You should find the DJIA price and time targets especially useful. Additionally, "On The Edge" contains a monthly review and commentary of the markets and these models for those who prefer a more in-depth analysis.

This means that although the stock is a buy candidate, there is a high probability that you may be able to purchase the stock at a slightly lower price over the next few days, if you choose to wait.

You can send your questions via e-mail to Dr. Market Edge at thedoc@marketedge.com. The Good Doctor attempts to answer every e-mail within four hours during the week and within twenty-four hours on weekends and holidays.

While we reserve the right to add or delete stocks to the database at our discretion, we'll be happy to add stocks for you as long as they have nine months of trading history, trade daily, and are not "penny" or "pink sheet" equities. You may e-mail your requests to Dr. Market Edge at support@marketedge.com.