BUY SELL OR HOLD

Markets are off their highs but are still acting well into the noon hour. The DJIA +106, NAZ +19 and SPX +9.

Strong sectors include gaming, biotechs, internets, tech and retail while oils, homies and defense lags.

NYSE internals have weakened but are still strong at +900 and the NAZ at +600.

OEX - 80 WINNERS- MCD GM LEH AVP LTD EXC S BAX EMC- LOSERS- BDK WMB COP DIS UTX TYC AES AA IP DELL EK SLB;

NDX - 75 WINNERS- ERIC CTXS ERTS JAVA WYNN ATVI XMSR EBAY CELG CHRW NVDA ADSK; LOSERS- XRAY LMAR LBTYA ISRG FLEX APOL NIHD DISCA;

VIX down 4%- still overbought;

GS seems to have hit its head at the 38.2% FIB number- 186 and is now only up about 40 cents after higher by $3+ earlier;

Crude up near all time highs as oil stocks lag- hmmm- funny how oil goes up just about anytime there is an oil related announcement-;

My guess is with tech and internals acting so well we probably get another ramp in the afternoon and we may get a +175 day on the DJIA.

Lots of talk about whether stocks or cheap. I remember way back to October 2002 when the SPX traded down to 790 and lots of folks were shorting all the indexes (it worked will for a few years). So at SPX 1460 - whats the deal?

According to today's WSJ, the DJIA is trading at a trailing PE of 15.74 and a trailing PE of 15. The SPX at 16.93 and a forward PE of 15.25.

The latest edition of Value Line gives the DJIA a forward PE of 14.9 and a reminder blurb that on October 9, 2002, the DJIA bottom, the forward PE was 15.2.

The S and P newsletter "Outlook" puts a 2007 earnings PE on the SPX at 15.62 and and 15.14 on the DJIA.

Bottom line, the markets are hardly expensive and when you compare equities to the 10 year

Bond at 4.33% its tough to make an argument that stocks are expensive. Of course this all assumes that earnings won't tank and I think that is a good bet as the indexes are well diversified among many industries and have lots of foreign sales/profits.