prudential equity group, llc prudential equity group, llc one new york plaza 15 th floor new york,...

Prudential Equity Group, LLC

Prudential Equity Group, LLC One New York Plaza 15th Floor New York, NY 10292

Market Technician’s Association

Education Seminar 2005

All important disclosures can be found at the end of this document in the section entitled “Additional Information” beginning on page 44.

May 2005

Advanced CMT TopicsEquities: Practical

Applications/PresentationPeter J. Martin, CMT

V.P., Senior Technical AnalystPrudential Equity Group, LLC.

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Market Averages: Near-Term Trends(Daily Bar Charts)

Source: Reuters.; Prudential Equity Group, LLC.

200-Day Moving Average



The Nasdaq Composite failed to make a new high in

early March creating a negative

divergence.

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Market Averages: Near-Term Trends (Daily Bar Charts)





Holding just above long-term moving averages.

Broke below its long-term moving average and is staying there.

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Market Averages: Intermediate-Term Trends

(Weekly Bar Charts)

Source: Bloomberg L.P.; Prudential Equity Group, LLC.

Broke its 2-yearupward bias.

DJIA

Breach of its cyclical bull trend with negative

divergence.

MACD Indicator

NASDAQ Composite

Penetration of major uptrend

MACD Indicator

S&P 500

MACD shows negative divergence.

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Still holding up trend. Honor any breach!

MACD Negative Divergence


(Weekly Bar Charts)

Source: Bloomberg L.P..; Prudential Equity Group, LLC.

Breach of long-term up trend.

RSI shows negative divergence

S&P 400

S&P 600

Breach of up trend & negative divergence with

other averages and indicators.

Russell 2000

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Trend violation

Stochastic sell signal


(Monthly Bar Charts)Heavy overhead supply

Stochastic

Sell signal

Outside MonthResistance

Overbought

Potential sell signal


DJIA

S&P 500

NASDAQ Composite

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Break of trend

X X MACD Sell SignalX=Prior sell signals

X

XX

X


(Monthly Bar Charts)Possible Head & Shoulder top ?

Breaking trend.

MACD sell signal?

S&P 400

S&P 600

Russell 2000


Outside month

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Dow Theory(Line Charts-Closing Prices)


Positive Divergence sets up eventual buy signal.

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A/D Line Comparisons

Source: Lowry’s Reports.; Prudential Equity Group, LLC.

Primary A/D Line Still Below

MA

1-Year Low

Intermediate-Term Low

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XConfirmed

March price high


Barely confirmed

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Source: Dorsey, Wright & Associates; Prudential Equity Group, LLC.

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Source: Dorsey, Wright & Associates; Prudential Equity Group, LLC.

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Starting to converge

Oversold levels


(Cycle timing)

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Intermarket Analysis:Fixed Income: Yield On The Ten-Year Treasuries

Potential major bottom

in rates.

Near-term softness in rates.

0

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BOND YIELDS, U.S. GOVERNMENTSECURITIESTREASURY CONSTANT MATURITIES, 10YEARPERCENT PER ANNUMSOURCE: FRB H.15 'SELECTED INTERESTRATES' RELEASE

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Intermarket Analysis: Commodities

CRB Index


Normal correction

off top end of channel

Short-term correction underway

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Crude Oil

Intermediate-term trend is still up…

Correction underway!

Higher prices still appears attainable to

us. Upside objectives $61 and

$67

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Gold

Secular Bull Move

Major trend is up!

Minor support at

$423.

Major Base

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Intermarket Analysis: CurrenciesUS Dollar

Trend violation; More base building needed!

Three Important Lows

It will likely take much more time to reverse this three downward bias…

Short-term action is

rangebound $80-$85

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Source: Reuters. ; Prudential Equity Group, LLC.

Style Strategy Large Cap Value Vs. Growth

Russell 1000 Value Relative To Russell 1000 Growth

Value outperforming over

all time periods.

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Style Strategy Mid Cap Value Vs. Mid Cap Growth

Russell Mid Cap Value Relative To Russell Mid Cap Growth


New intermediate-term trend high.

Uptrend of mid 2003 low continues.

Its value over growth across all

time periods.

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Style Strategy Small Cap Value Vs. Small Cap

Growth Russell 2000 Value Relative to Russell 2000 Growth


Short-term trend is positive.

Intermediate-term trend is

neutral

Long-term still shows an upward bias.

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Style StrategyBy Capitalization

(Large Cap Vs. Small Cap) Russell 1000 Relative to Russell 2000

Short-term uptrend now in place.

Potential bias shift towards large-caps.

More time required to see

if trend violation is legitimate.

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(Large Cap Vs. Mid Cap) Russell 1000 Relative to Russell Mid Cap


Short-term transition towards

large caps.

Downtrends still in force. Mid

outperforming large-caps on both an intermediate and long-term basis.

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(Mid Cap Vs. Small Cap)

Russell Mid Cap Relative to Russell 2000


Slight breach of short-term. Trend

now neutral.

Intermediate-term trend still

favors mid-caps.

Back and forth action leads to neutral

condition on a long-term basis.

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Comparative Relative Strength: A Different Look

Source: Bloomberg L.P.

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S&P Sector AnalysisConsumer Discretionary

(Relative Vs. S&P 500)Weighting: S&P Actual 4/8/05—11.3%

Technical Opinion: Market Weight


Relative falling sharply.

Intermediate-Term trend is now neutral. Absolute trend is also

neutral.

Long-term trend is now neutral.

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S&P Sector AnalysisConsumer Staples


Technical Opinion: Market Weight


Uptrend, while erratic, is in place.

Intermediate-term & long-term trends maintaining their

neutral stance.

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S&P Sector AnalysisEnergy

(Relative Vs. S&P 500) Weighting: S&P Actual 4/8/05—8.8%

Technical Opinion: Overweight


Both absolute & relative trends are

consolidating recent sharp

upside.

Intermediate and long-term trends remain positive.

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S&P Sector AnalysisFinancials


Technical Opinion: Underweight


Relative strength in a short-term

downtrend

Intermediate downtrend

now in force.

Major shift in trend.

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S&P Sector AnalysisHealth Care

(Relative Vs. S&P 500)Weighting: S&P Actual 4/8/05—

13.2% Technical Opinion: Market Weight


Short-term uptrend now in place.

Long-term trend is now neutral.

Breach of intermediate-term

downtrend.

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S&P Sector AnalysisIndustrials

(Relative Vs. S&P 500)Weighting: S&P Actual 4/8/05—

11.9% Technical Opinion: Overweight


Intermediate-term relative strength trend is neutral. Absolute trend is also neutral.

Short-term trend is neutral.

Longer-Term trend does still have an upward

bias.

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S&P Sector AnalysisInformation Technology


Technical Opinion: Underweight


Short-term downtrend in place.

Intermediate-term downtrend has been

extended.

Downtrend in place.

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S&P Sector AnalysisMaterials

(Relative Vs. S&P 500) Weighting: S&P Actual 4/8/05—

3.2%Technical Opinion: Overweight


Intermediate and Long-term uptrends

remain intact.

Short-term trend has transitioned to

neutral.

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S&P Sector AnalysisTelecomm Services(Relative Vs. S&P 500)

Weighting: S&P Actual 4/8/05—3.1% Technical Opinion: Market Weight


Accelerated downtrend has been breached.

Intermediate and long-term trends remain neutral.

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S&P Sector AnalysisUtilities


Technical Opinion: Overweight


All absolute & relative price trends remain positive.

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Prudential Equity Group’s Proprietary Technical

Rankings

Price: Comp. Rel . Strength:

Uptrend = Actually making money Uptrend = Outperforming the market, “Best - of - both worlds”

1 1


Neutral = Not making, nor losing money Uptrend = Outperforming the market

2 2


Uptrend = Actually making money Even with the market

3 3


Neutral = Not making, nor losing money Neutral = even with the market

4 4


Downtrend = Losing money

Uptrend = Outperforming the market

5 5


Downtrend = Losing money Neutral = Even with the market

6 6


Uptrend = Actually making money Underperforming the market

7 7


Neutral = Not making, nor losing money Down = Underperforming the market

8 8


Downtrend = Losing Money Down = Underperforming the market, “Worst - of - both - worlds”

9 9



1 1





1 1



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5 5







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6 6





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9 9





9 9

Ranking Description

1 Price and relative strength up: You are actually making money and also beating the market. The best of both worlds.

2 Price neutral and relative strength up: You are actually not making or losing money but you are beating the market.

3 Price up and relative strength neutral: You are actually making moneybut you are only even with the market.

4 Price and relative strength neutral: You are actually not making or losingmoney and you are only even with the market.

5 Price down and relative strength up: You are actually losing moneybut you are outperforming the market.

6 Price down and relative strength neutral: You are actually losing money but you are even with the market.

7 Price up and relative strength down: You are actually making money but you are underperforming the market.

8 Price neutral and relative strength down: You are actually not making money or losing it but you are underperforming the market.

9 Price down and relative strength down: You are not only losingmoney but also underperforming the market. The worst of both worlds.

Source: Prudential Equity Group, LLC.

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S&P 500 Aerospace/Defense Group&

Boeing Co. (BA)


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S&P 500 Air Freight & Logistics Group&

FedEx Corp. (FDX)


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S&P 500 Property & Casualty Group&

MBIA Inc. (MBI)


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S&P Groups That We Believe Are Investable


Technical Ranking Close As Of FundamentalS&P Group Intermediate-TermLong-TermCompany Symbol 4/29/05 Rating

Aerospace & Defense 1 1 Boeing Co. BA 59.52 Neutral WeightBroadcast & Cable TV 2 2 Comcast Corp.* CMCSA 32.10 OverweightConstruction Material 1 1 Vulcan Materials VMC 53.04 —Department Stores 1 1 Federated Department Stores FD 57.50 OverweightDistillers & Vinters 1 1 Brown-Forman BFB 55.50 Neutral WeightDistributors 2 1 Genuine Parts GPC 42.90 —Electric Utilities 1 1 DTE Energy DTE 45.95 —Forest Products 3 3 Weyerhaeuser WY 68.61 OverweightHealthcare Facility 1 1 Health Management Associates HMA 24.73 —Healthcare Services 1 1 Express Scripts* ESRX 89.64 Neutral WeightHouseware & Specialties 1 1 Fortune Brands FO 84.58 —Industrial Gases 1 1 Praxair Inc. PX 46.83 —Integrated Oil & Gas 3 1 Amerada Hess AHC 93.65 —Managed Health 2 1 UnitedHealth Group UNH 94.51 OverweightMulti Utility 1 1 Sempra Energy SRE 40.38 Neutral WeightOil & Gas Drilling 1 1 Noble Corp. NE 50.90 —Oil & Gas Exploration 2 1 Apache Corp. APA 56.29 Neutral WeightOil & Gas Refining & Marketing 2 2 Ashland Inc. ASH 67.24 —Railroads 2 2 CSX Corp. CSX 40.13 —Specialty Chemical 2 1 Rohm & Haas ROH 43.66 —Specialty Stores 2 1 Office Depot ODP 19.58 UnderweightTobacco 2 1 Altria Group MO 64.99 Overweight

* Prudential Equity Group, LLC makes a market in the shares of this company.

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S&P Groups That We Believe Are Avoidable


Technical Ranking Close As Of FundamentalS&P Group Intermediate-Term Long-Term Company Symbol 4/29/05 Rating

Air Freight & Logistics 9 9 Fedex Corp. FDX 84.95 —Auto Equipment 9 9 J ohnson Controls J CI 54.87 Neutral WeightAuto Manufacturing 9 9 Ford Motor F 9.11 UnderweightBiotech 8 8 Chiron Corp.* CHIR 34.15 UnderweightBrewers 6 9 Anheuser-Busch Companies BUD 46.87 Neutral WeightCommunication Equipment 9 9 QUALCOMM Inc.* QCOM 34.89 OverweightOther Diversified Financial Svcs. 9 8 J .P. Morgan Chase J PM 35.49 UnderweightElectric Equipment Mfg. 9 8 Tektronic Inc. TEK 21.66 —Internet Retail 9 9 eBay, Inc.* EBAY 31.71 Neutral WeightIT Consult & Services 9 9 Unisys UIS 6.49 —Motorcycle Manufacturing 9 9 Harley-Davidson Inc. HDI 47.02 Neutral WeightOffice Service & Supply 9 9 Pitney Bowes PBI 44.72 —Paper Products 9 9 International Paper IP 34.29 Neutral WeightPublishing & Printing 9 9 McGraw-Hill Co. MHP 87.08 OverweightSemi Equipment 9 9 Lam Research* LRCX 25.65 OverweightHyper & Supercenters 9 9 Wal-Mart Stores WMT 47.14 Neutral WeightThrifts & Mortgage 9 9 MGIC Investments MTG 59.00 UnderweightElectric Manufacturing Svcs 9 9 Molex Inc.* MOLX 25.41 —


Relative to J .P. Morgan Chase, the research analyst or an employee of the member firm with the ability to influence thesubstance of the research knows that this company is a client of Prudential Equity Group, LLC. In the past 12 months, we have provided non-investment banking securities related services to the companies.

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Breaks Of Major Uptrends/Tops


Technical Ranking Close As Of FundamentalS&P Group Intermediate-Term Long-Term Company Symbol 4/29/05 Rating

Agricultural Products 9 4 Archer-Daniels Midland ADM 17.99 Neutral WeightApparel & Accessory 6 4 J ones Apparel Group J NY 30.45 Neutral WeightBanks Diversified 4 4 Bank of America BAC 45.04 OverweightCasino & Gaming 9 4 Int'l Game Technology IGT 26.89 OverweightComputer Hardware 9 4 NCR Corp. NCR 33.00 —Computer Storage & Per. 9 4 Qlogic Corp.* QLGC 33.23 —Construction & Farm Equipment 9 4 Caterpillar Inc. CAT 88.05 Neutral WeightAsset Management 9 4 Bank of New York BK 27.94 OverweightDiversified Comm. Svcs. 6 4 Cendant Corp. CD 19.91 —Employment Svcs. 9 4 Robert Half International RHI 24.82 —Footwear 9 4 Nike, Inc. NKE 76.81 Neutral WeightGas Utility 4 4 Keyspan Corp. KSE 37.93 —Healthcare Supply 2 4 Millipore Corp. MIL 48.22 —Home Improvement Retail 9 4 Home Depot HD 35.37 OverweightIndustrial Conglomerate 4 4 Tyco International TYC 31.31 OverweightIndustrial Machinery 9 4 Dover Corp. DOV 36.36 —Internet Software & Services 4 4 Yahoo! Inc.* YHOO 34.50 Neutral WeightConsumer Finance 6 4 MBNA Corp. KRB 19.75 OverweightMetal & Glass 9 4 Ball Corp. BLL 39.50 —Multiline Insurance 9 9 American Int'l Group AIG 50.85 OverweightOffice Electronics 9 4 Xerox Corp. XRX 13.25 —Packaged Foods 4 3 McCormick & Co. MKC 34.59 UnderweightProperty & Casualty 6 4 MBIA Inc. MBI 52.38 —Real Estate Investment 4 4 ProLogis Trust PLD 39.59 Neutral WeightRestaurants 6 2 Starbucks Corp.* SBUX 49.52 Neutral WeightSystems Software 6 4 Adobe Systems* ADBE 59.47 OverweightTire & Rubber 9 4 Cooper Tire & Rubber CTB 17.45 —Trading Cos. & Distributors 9 4 W.W. Grainger GWW 55.29 —Regional Banks 6 4 National City NCC 33.96 Neutral WeightSpecialty Finance 9 2 Moody's Corp. MCO 82.14 —Investment Bank & Brokerage 6 4 Merrill Lynch & Co. MER 53.93 —


Relative to Bank of America, Bank of New York, and National City, the research analyst or an employee of the member firm with the ability to influence the substance of the research knows that this company is a client of Prudential Equity Group, LLC. In the past 12 months, we have provided non-investment banking securities related services to the companies.

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Additional Information To view charts associated with the stocks mentioned in this report, please visit http://cm1.prusec.com. In addition, the applicable disclosures can be obtained by writing to: Prudential Equity Group, LLC, One New York Plaza – 17th floor, New York, NY 10292 Attention: Equity Research. Analyst Universe Coverage: J ared I. Muroff, CFA covers Boeing Co., Rockwell Collins, General Dynamics, Goodrich Corp., L-3 Communications Holdings, Lockheed Martin, Northrop Grumman, Raytheon Co. Katherine Styponias covers Comcast Corp., Cablevision Systems, The Walt Disney Company, EchoStar Communications, The DirecTV Group, Dreamworks Animation SKG, Liberty Media, Pixar, Six Flags, Time Warner, Viacom Inc. Wayne Hood covers BJ 's Wholesale Club, Costco Wholesale, Dollar General, Dollar Tree Stores, Federated Department Stores, Family Dollar Stores, The Home Depot, J .C. Penney, Nordstrom, Inc., Kohl's Corp., Lowe's Companies, May Department Stores, Saks Inc., Target Corp., Tractor Supply, Wal-Mart Stores. J ohn C. Tumazos covers Alcoa Inc., Barrick Gold, Abitibi-Consolidated, Alcan Inc., *Antofagasta PLC, Allegheny Technologies, AngloGold Ashanti, *BHP Billiton, Bowater, Inc., Freeport McMoRan Copper & Gold, Goldcorp Inc., Georgia-Pacific Group, International Paper, Louisiana-Pacific, MeadWestvaco Corp., Inco Limited, *Newmont Mining, Nucor Corp., *Novelis Inc., Plum Creek Timber, Phelps Dodge, Placer Dome, *Rio Tinto, Smurfit-Stone Container, Temple-Inland, *Worthington Industries, Weyerhaeuser Co., U.S. Steel. David H. Shove covers Aetna Inc., CIGNA Corp., Caremark Rx, Coventry Health Care, Express Scripts, HCA Inc., Health Net, Humana Inc., Medco Health Solutions, Sierra Health Services, Tenet Healthcare, Triad Hospitals, Universal Health Services, UnitedHealth Group, WellChoice Inc., WellPoint Inc. Vikas Dwivedi covers American Electric Power, CenterPoint Energy, Consolidated Edison, Entergy Corp., Exelon Corp., FPL Group, Southern Company, Sempra Energy, TXU Corp. J ason D. Gammel covers Apache Corp., Anadarko Petroleum, Burlington Resources, Chesapeake Energy, Devon Energy, EOG Resources, Kerr-McGee, Newfield Exploration, Occidental Petroleum, Pogo Producing, Pioneer Natural Resources, Unocal Corp., XTO Energy.

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Mark J . Rowen covers Amazon.com Inc., Bed Bath & Beyond, Best Buy, The Borders Group, Barnes & Noble, Circuit City Stores, eBay, Inc., Google Inc., Office Depot, RadioShack Corp., Staples, Inc., Toys "R" Us, Williams-Sonoma, Inc., Yahoo! Inc. Robert T. Campagnino covers Albertson's, Inc., British American Tobacco, Carolina Group, Kroger Co., Loews Corp., Altria Group, Wild Oats Markets, Reynolds American Inc., Safeway Inc., UST Inc., Whole Foods Market. Michael Bruynesteyn covers American Axle & Manufacturing Holdings, BorgWarner Inc., Dana Corp., DaimlerChrysler A.G., Delphi Corp., Ford Motor, General Motors, Gentex Corp., Honda Motor, J ohnson Controls, Lear Corp., Superior Industries International, Toyota Motors, Visteon Corp. J ohn S. Sonnier covers Amgen Inc., Amylin Pharmaceuticals, Biogen Idec, Cerus Corp., Chiron Corp., Genentech, Inc., Genzyme Corp.–General Division, Gilead Sciences, Guilford Pharmaceuticals, Human Genome Sciences, ImClone Systems, MedImmune Inc., Millennium Pharmaceuticals, Neose Technologies, OSI Pharmaceuticals, Trimeris Inc. J effrey G. Kanter covers Brown-Forman, Anheuser-Busch Companies, Coca-Cola Enterprises, Coca-Cola Hellenic Bottling Company, Coca-Cola Bottling Co. Consolidated, Cott Corp., Dean Foods, J ones Soda, The Coca-Cola Company, Coca-Cola FEMSA, S.A. de C.V., PepsiAmericas Inc., The Pepsi Bottling Group, PepsiCo Inc., The Boston Beer Company, Constellation Brands, Molson Coors Brewing Company. Inder M. Singh covers Avaya Inc., Avici Systems, Cisco Systems, Ericsson, Extreme Networks, Foundry Networks, J uniper Networks, Lucent Technologies, Motorola, Inc., Nokia Corp., Nortel Networks, QUALCOMM Inc., UTStarcom Inc. Michael L. Mayo covers Bank of America, BB&T Corp., Bank of New York, Citigroup Inc., Comerica Inc., Fifth Third Bancorp, J PMorgan Chase, KeyCorp, Mellon Financial, National City, Northern Trust, PNC Financial Services Group, SunTrust Banks, State Street, U.S. Bancorp, Wachovia Corp., Wells Fargo. William J . Lerner covers Argosy Gaming, Brunswick Corp., Carnival Corp., Caesars Entertainment, Harley-Davidson, Inc., Harrah's Entertainment, International Game Technology, Las Vegas Sands Mandalay Resort Group, Multimedia Games, MGM Mirage, Polaris Industries, Royal Caribbean Cruises, Shuffle Master, Station Casinos, Winnebago Industries, WMS Industries, Wynn Resorts. Steven N. Barlow covers Belo Corp., Dow J ones, Gannett Co., Hollinger International, The Interpublic Group of Companies, J ournal Register, Knight Ridder, Lee Enterprises, Media General, The McGraw-Hill Companies, The McClatchy Company, The New York Times Co., Omnicom Group, Pulitzer Inc., Scholastic Corp., Scripps (E.W.), Tribune Company, Valassis Communications, Washington Post, WPP Group. Ben Pang covers Applied Materials, Asyst Technologies, Brooks Automation, KLA-Tencor Corp., Lam Research, Mattson Technology, Novellus Systems. Bradley Ball covers American Express, Countrywide Financial, Capital One Financial, Fannie Mae, Freddie Mac, Golden West Financial, MBNA Corp., MGIC Investment, North Fork Bancorporation, PMI Group, Providian Financial, Radian Group, SLM Corp., Washington Mutual. Lizabeth Dunn covers Columbia Sportswear, J ones Apparel Group, Kellwood Co., Liz Claiborne, Inc., NIKE, Inc., Reebok Intl Ltd., Polo Ralph Lauren Corp., Tommy Hilfiger Corp., VF Corporation, Quiksilver, Inc. Andrew M. Casey covers AGCO Corp., Caterpillar Incorporated, Cummins Inc., Deere & Co., Eaton Corp., Ingersoll-Rand Company, Illinois Tool Works, Navistar International, PACCAR Inc., Parker Hannifin. Nicholas P. Heymann covers Black & Decker, Cooper Industries, Danaher Corp., Electrolux, Emerson Electric, General Electric, Honeywell International, ITT Industries, 3M Corp., Maytag Corp., Rockwell Automation, SPX Corp., Tyco International, United Technologies, Whirlpool Corp.

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J ohn A. Hall covers Alliance Capital Management Holding L.P., AFLAC Inc., American International Group*, Affiliated Managers Group, Franklin Resources, BlackRock, Inc., FBL Financial Group, The Hartford Financial Services Group, J anus Capital Group, Lincoln National, MetLife, Inc., Nationwide Financial Services, Principal Financial Group, Scottish Re Group, Torchmark Corp., T.Rowe Price Group, Waddell & Reed Financial. J ohn M. McMillin covers Archer Daniels Midland, Bunge Limited, ConAgra Foods, Campbell Soup, Corn Products International, Groupe Danone, General Mills, The Hain Celestial Group, Heinz (H.J .) Co., Hormel Foods, Hershey Company, Kellogg Co., Kraft Foods, McCormick & Co., Nestlé S.A., Smithfield Foods, The J .M. Smucker Company, Sara Lee, Sensient Technologies, Tyson Foods, Unilever PLC, Unilever N.V., William Wrigley J r. Co. J ames W. Sullivan covers Apartment Investment & Management, AMB Property, Arden Realty, Archstone-Smith Trust, AvalonBay Communities, Brandywine Realty Trust, BRE Properties, Boston Properties, CBL & Associates, Mack-Cali Realty , CenterPoint Properties Trust, Camden Property Trust, CarrAmerica Realty, Developers Diversified Realty, Duke Realty, Equity Office Properties Trust, Entertainment Properties Trust, Equity Residential Properties Trust, Essex Property Trust, FelCor Lodging Trust, First Industrial Realty Trust, Federal Realty Investment Trust, General Growth Properties, Glimcher Realty Trust, Health Care REIT, Health Care Property Investors, Highwoods Properties, Host Marriott, Healthcare Realty Trust, Kimco Realty, Kilroy Realty, LaSalle Hotel Properties, The Macerich Company, MeriStar Hospitality, Nationwide Health Properties, New Plan Excel Realty Trust, ProLogis Trust, Pan Pacific Retail Properties, Prentiss Properties Trust, Post Properties, Regency Centers, SL Green Realty, Simon Property Group, United Dominion Realty Trust, Weingarten Realty Investors. Larry Miller covers CKE Restaurants, Darden Restaurants, Brinker International, McDonald's Corp., Outback Steakhouse, RARE Hospitality International, Starbucks Corp., Wendy's International, Yum! Brands. Brent Thill covers Adobe Systems, Autodesk, Inc., Activision, Inc., BEA Systems, salesforce.com, inc., Electronic Arts, FileNet Corporation, Manhattan Associates, Microsoft Corp., Novell Inc., Oracle Corp., Red Hat, RightNow Technologies, Inc., SAP AG, Siebel Systems, THQ Inc, TIBCO Software, Take-Two Interactive Software, VERITAS Software, WebMethods Inc. Any OTC-traded securities or non-U.S. companies mentioned in this report may not be cleared for sale in all jurisdictions. Securities products and services are offered through Prudential Equity Group, LLC, a Prudential Financial company. When recommending the purchase or sale of a security, Prudential Equity Group, LLC is subject to a conflict of interest because should such advice be followed, and result in a transaction being executed

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through Prudential Equity Group, LLC, Prudential Equity Group, LLC stands to earn a brokerage compensation on the transaction. In addition, any order placed with Prudential Equity Group, LLC may be executed on either agency basis resulting in a commission payment to Prudential Equity Group, LLC or on a principal basis, versus Prudential Equity Group, LLC’s proprietary account, resulting in a mark-up or mark-down by Prudential Equity Group, LLC. There are risks inherent in international investments, which may make such investments unsuitable for certain clients. These include, for example, economic, political, currency exchange rate fluctuations, and limited availability of information on international securities. Prudential Equity Group, LLC, its affiliates, and its subsidiaries make no representation that the companies which issue securities which are the subject of their research reports are in compliance with certain informational reporting requirements imposed by the Securities Exchange Act of 1934. Sales of securities covered by this report may be made only in those jurisdictions where the security is qualified for sale. The contents of this publication have been approved for distribution by Bache Financial Limited, which is authorized and regulated by the Financial Services Authority. We recommend that you obtain the advice of your Financial Advisor regarding this or other investments. If you did not receive this research report directly from Prudential Equity Group, LLC (“PEG”) or Bache Financial Limited, your access to, and receipt of, this report does not by itself operate to establish a client-broker relationship between you and PEG or Bache Financial Limited, as the case may be. Accordingly, please direct any questions you may have regarding this report to the registered representative employed by the securities firm at which your account is held who is assigned to service your account, and not to PEG or any PEG analyst whose name appears above. Please note that PEG or Bache Financial Limited, as the case may be, bears no responsibility for any recommendation(s) or advice that such securities firm or its registered representatives may provide to you, regardless of whether any such recommendation or advice is based in whole or in part on this report.

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Important Disclosures Rating Distribution

Prudential Equity Group, LLC

Research Universe 05/06/05 Overweight(Buy)* 33.00% Neutral Weight(Hold)* 44.00% Underweight(Sell)* 23.00% Excludes Closed End Funds 03/31/05 Consolidated Overweight(Buy)* 32.00% Neutral Weight(Hold)* 45.00% Underweight(Sell)* 23.00% Excludes Closed End Funds 12/31/04 Consolidated Overweight(Buy)* 31.00% Neutral Weight(Hold)* 45.00% Underweight(Sell)* 24.00% Excludes Closed End Funds 09/30/04 Consolidated Overweight(Buy)* 31.00% Neutral Weight(Hold)* 48.00% Underweight(Sell)* 21.00% Excludes Closed End Funds * In accordance with applicable rules and regulations, we note above parenthetically that our stock ratings of “Overweight,” “Neutral Weight,” and “Underweight” most closely correspond with the more traditional ratings of “Buy,” “Hold,” and “Sell,” respectively; however, please note that their meanings are not the same. (See the definitions below.) We believe that an investor’s decision to buy or sell a security should always take into account, among other things, the investor’s particular investment objectives and experience, risk tolerance, and financial circumstances. Rather than being based on an expected deviation from a given benchmark (as buy, hold, and sell recommendations often are), our stock ratings are determined on a relative basis. When we assign an Overweight rating, we mean that we expect that the stock's total return will exceed the average total return of all of the stocks covered by the analyst (or analyst team). Our investment time frame is 12-18 months except as otherwise specified by the analyst in the report. When we assign a Neutral Weight rating, we mean that we expect that the stock's total return will be in line with the average total return of all of the stocks covered by the analyst (or analyst team). Our investment time frame is 12-18 months except as otherwise specified by the analyst in the report. When we assign an Underweight rating, we mean that we expect that the stock's total return will be below the average total return of all of the stocks covered by the analyst (or analyst team). Our investment time frame is 12-18 months except as otherwise specified by the analyst in the report.

49Equity Research

Martin


Prior to September 8, 2003, our ratings were Buy, Hold, and Sell. A Buy rating meant that we believed that a stock of average or below-average risk offered the potential for total return of 15% or more over the following 12 to 18 months. For higher-risk stocks, we may have required a higher potential return to assign a Buy rating. When we reiterated a Buy rating, we were stating our belief that our price target was achievable over the following 12 to 18 months. A Sell rating meant that we believed that a stock of average or above-average risk had the potential to decline 15% or more over the next 12 to 18 months. For lower risk stocks, a lower potential decline may have been sufficient to warrant a Sell rating. When we reiterated a Sell rating, we were stating our belief that our price target was achievable over the following 12 to 18 months. A Hold rating signified our belief that a stock did not present sufficient upside or downside potential to warrant a Buy or a Sell rating, either because we viewed the stock as fairly valued or because we believed that there was too much uncertainty with regard to key variables for us to rate the stock a Buy or a Sell. When we assign an industry rating of Favorable, we mean that generally industry fundamentals/stock prospects are improving. When we assign an industry rating of Neutral, we mean that generally industry fundamentals/stock prospects are stable. When we assign an industry rating of Unfavorable, we mean that generally industry fundamentals/stock prospects are deteriorating. The methods used to determine the price target generally are based on future earning estimates, product performance expectations, cash flow methodology, historical and/or relative valuation multiples. The risks associated with achieving the price target generally include customer spending, industry competition and overall market conditions. Additional risk factors as they pertain to the analyst's specific investment thesis can be found within the note/report. The research analyst knows that an affiliate of Prudential Equity Group, LLC has received compensation for products or services provided to the subject company. Prudential Equity Group, LLC makes a market in the shares of CMCSA, ESRX, CHIR, QCOM, EBAY, LRCX, YHOO, SBUX, ADBE, MOLX, QLGC. Prudential Financial or one of its affiliates beneficially own 1% or more of any class of common equity securities of FD, ESRX, UNH, SRE, QCOM, EBAY, CAT, YHOO, SBUX, ADBE. Relative to J PM, BAC, BK, NCC, the research analyst or an employee of the member with the ability to influence the substance of the research knows that , J PM, BAC, BK, NCC is a client of Prudential Equity Group, LLC In the past 12 months we have provided non-investment banking securities related services to the subject company.

50Equity Research

Martin


The research analyst or an employee of Prudential Equity Group, LLC. with the ability to influence the substance of the research report knows an affiliate of Prudential Equity Group, LLC. received compensation for products or services other than investment banking services from Wal-Mart Stores in the past 12 months. A real estate affiliate of Prudential Equity Group, LLC is a party to a marketing agreement with Yahoo! Inc. Any analyst principally responsible for the analysis of any security or issuer included in this report certifies that the views expressed accurately reflect such research analyst's personal views about subject securities or issuers and certifies that no part of his or her compensation was, is, or will be directly or indirectly related to the specific recommendation or views contained in the research report. ©Prudential Equity Group, LLC, 2005, all rights reserved. One New York Plaza, New York, NY 10292 Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. Any statements nonfactual in nature constitute only current opinions, which are subject to change. Additional information on the securities discussed herein is available upon request. Prudential Equity Group, LLC and Prudential Financial, Inc. of the United States are not affiliated with Prudential plc of the United Kingdom.

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