Selection

After a careful evaluation of the likely overall direction and trend of the U.S. equity markets, we incorporate a proprietary quantitative screening process which scours through thousands of equities which meet a strict fundamental and technical criteria. Some of the criteria for stock selection may include the following (although it is far from an exhaustive list):

Fundamental

• Must have projected annual earnings growth above the following annual projected P/E multiple - growth at a reasonable price (GARP)
• Three to five years of earnings and/or sales growth outperform 70% of all publicly traded companies
• Above 20% earnings and/or sales growth in current quarter vs. same quarter one year prior
• Historical sales, profit margin and return on equity outperform 60% of all publicly traded companies
• Positive cash flow

Technical

• Average daily trading volume above $10 million shares (ensuring adequate liquidity)
• The 50-DMA (day moving average) must be trading above the 200-DMA
• The 150-DMA must be upward sloping
• Price must be within 20% of a 52-week high
• Within top 40% of institutional accumulation (sponsorship / accumulation)
• Emerging from a price consolidation period

The quantitative screening process generates a select group of equities with increased success probabilities which is further scrutinized for addition to a watch list. When an individual equity from the list meets additional defined criteria it is added to the portfolio with no greater than a total 10% position with respect to weighting in the portfolio.