Mensa Mining Corp (EQBM)

[AHOWS]

HERE IS SOMETHING THAT WAS SENT TO ME ABOUT THE GENERAL MARKET CONDITIONS THIS DOES HAVE A BEARING ON EQBM NOW THAT DALIAN IS IN THE PICTURE...

From : Robert Edwards Sent : Monday, March 19, 2007 4:25 PM
: Is it over yet?


Dear A howard,

Over the last couple of weeks, I've gotten many calls from
subscribers asking about the market and if the pullback will
end soon.

At Schaeffer's, our goal is to help you make money,
regardless of market conditions. And our Research team has
put together the detailed report below to give you our take
on the recent market events.

This is a very important report and I encourage you to give
it a read right now. They've even included a link at the end
to a chapter on Money Management from our Home Study Program -
very important in today's environment.

If you have any questions, feel free to give me a call.

Robert Edwards
Schaeffer's Consultant

********************************************************

"Is it over yet?"

That question is perched on the tongue of many investors
right now following the violent swings the market has endured
during the past few weeks. After a three-month pullback and
consolidation in May through July 2006, the market rallied
with the predictability of a metronome. From its late-July
low, the S&P 500 Index (SPX) gained more than 19 percent
before tagging a multi-year high of 1,461.57 on February 22.

As investors review their portfolio holdings, they are left
wondering if the market will repeat itself this time and
rocket higher as it did in July 2006. Or do we have more
downside to endure from here? We'll soon touch on where we
think the market is headed from here, but first, let's
discuss the reasons for the pullback.

Reasons for the Pullback

From that February peak, the SPX has dropped approximately
6.7 percent to its low reached on March 14. The recent drop
in the broad market can mostly be attributed to two large
factors that have been prominently featured in the media:
the "Asian Contagion" and the ongoing subpime saga.

The ball started rolling on February 27, when the Shanghai
index endured a single-session plunge of nearly nine percent
on fears that the Chinese government would impose a series of
policies that would work to dampen speculation in the country.

Concerns in the region quickly shifted to Japan, as the yen
continued to rally against the various major currencies.
This had a painful effect on the export-dependent country, as
overseas earnings could be seriously hurt by the more
valuable yen. A stronger Japanese currency makes exporters'
goods more expensive overseas while lowering the value of
overseas sales when they are converted back into yen.

This rally in the yen has been fed by the unwinding of what
is known as the carry trade. For more than a decade,
investors have profited by borrowing yen at ultra-low
interest rates and using the funds to buy higher-yielding
investments based in other currencies. However, a variety of
hedge funds, insurance companies, and mutual funds have
started to exit those bets, which involves buying back the
sold yen to repay their loans. In the process, they've
sparked a sharp rise in the yen.

A second factor weighing down the broad market has been the
ongoing subprime lenders' woes. The steady rise in interest
rates has resulted in a sharp increase in the number of
mortgage defaults and delinquencies across the country,
particularly among subprime loans. In fact, on March 14, the
Mortgage Bankers Association said the rate of homes entering
the foreclosure process hit a record 0.54 percent and the
delinquency rate on U.S. home loans leapt to 4.95 percent
from 4.67 percent three months earlier. The rise was led by
subprime mortgages, where delinquencies increased to 13.33
percent from 12.56 percent, and FHA loans, which saw a
record-high delinquency rate of 13.46 percent.

At the center of much of the fervor has been New Century
Financial, which in the same week not only announced that it
was no longer accepting new loans, but also that all of its
lenders under its short-term repurchase agreements and
aggregation credit facilities had either discontinued their
financing or notified the company of their intent to do so.
Meanwhile, Accredited Home Lenders announced that it may look
to raise additional capital and cut more jobs, while
continuing to negotiate with its bank lenders about extending
funding.

Overall, while not totally unexpected by Wall Street, the
news from this group has shaken a number of financial
institutions and sent ripples of weakness throughout the
broad market.


How to Position Yourself with Options?

We'll soon get to where we think the market is headed next,
but first I wanted to look at how you can take advantage of
this increased volatility by adding a new level of trading
diversity to your portfolio in the form of options.

There are three important reasons why options are a great
investment vehicle.

1. Limited dollar risk and limited dollar exposure
As an option buyer, you benefit from being able to control
the movement in a stock for just a fraction of the cost of
purchasing that stock. Typically, it will cost you
significantly less to purchase one call contract, versus the
100 shares of the underlying stock that the same call
contract controls. Plus, you can never lose more than this
modest dollar amount. As a result, you can keep the bulk of
your investment dollars in the safety of cash, where it is
immune to the wild and often scary swings in the market.

2. Leverage
You can achieve percentage gains from your successful options
investments that are five, 10, and even 20 times the gains
achieved by stock or mutual-fund investors.

One example would be if you bought a December 125 call on the
Standard & Poor's Depositary Receipts (SPY) on July 18, 2006 -
when the broad market reached a bottom. This call could have
been purchased for around $5 per contract. If you held that
option until expiration, the call would have been worth
roughly $17, allowing you to lock in a profit of more than
200 percent.

3. Profit in Bull and Bear Markets Alike
This is certainly a claim that none of the traditional
mutual-fund families can make, and it is at the heart of why
experienced options traders have profited in volatile
markets. Even if your outlook for the market is bullish, you
can add a new layer of diversity to your portfolio by holding
a few put positions. Puts enable you to achieve leveraged
profits with limited dollar risk when a stock declines in
price.

One of the more popular uses for options is as a hedge
against positions already held in an equity portfolio. If
you're concerned that the market may fall during the next
several months, but don't want to sell the stocks in your
portfolio, you have two choices. First, you can acquire
"portfolio insurance" by purchasing index put options. For
example, a portfolio heavily exposed to technology stocks can
be hedged by purchasing put options on the Nasdaq-100 Trust
(QQQQ). In the simplest terms, put options will rise in value
when the underlying index falls in price. Therefore, some or
all of the losses sustained due to the decline in value of
the stocks in your portfolio are offset (or partially offset)
by the increase in value of the purchased put option.

The second way you can hedge is by purchasing puts against an
individual stock that you already own. This is called buying
a married put. For example, if you don't want to sell a
certain stock, but you think it may fall during the next few
months, you could purchase a put option on that stock. Should
the stock fall, your put option will increase in value and
offset (or partially offset) the decrease in value of your
stock position.

If you would like to learn more about hedging your portfolio
with put positions, including the calculations you would make
for those hedges, please click on the following link to a
page in the Education section of SchaeffersResearch.com.

http://www.schaeffersresearch.com/schaeffersu/options/general/using_options_for_hedging_purposes.asp...


Where Do We Go from Here?

While sitting before your computer screen, watching the Dow
Jones run through triple-digit gyrations on seemingly daily
basis, it's easy to forget that we've been down this road
before. In May 2006, the SPX pulled back roughly eight
percent from peak to trough on concerns very similar to some
of the ones we are seeing today. From that low, the index
went on to rally more than 19 percent before hitting a peak.

Now any investor worth his salt will be quick to remind you
that past performance is no guarantee of future returns, but
there have been a few developments recently worth
highlighting. The snap-back rally in the Dow Jones
Industrial Average (DJIA) on Wednesday, March 14 saw the
blue-chip barometer shift nearly 200 points from its intraday
low (below 12,000) to its above-breakeven close.

It was also very encouraging to see the CBOE Market
Volatility Index (VIX) sprint to a new calendar-year high on
this pullback. This move in the "fear barometer" serves as a
nice contrarian bullish signal.

While the SPX tagged a new pullback low, its intraday nadir
was less than one percent below its March 5 low (1,363 versus
1,373), so the VIX action potentially indicates a new spike
in fear that was far from fully explained by the underlying
price action.

Furthermore, much of Wednesday's action appears to be an
example of the market being punished, not for any new adverse
developments, but for the continuation of developments that
had already been beaten to death in the media.

Overall, traders have responded to the 2007 decline with
overwhelming pessimism. The 10-day moving average of odd-lot
shorting activity has not only taken out its second-quarter
2006 level, but it is now resting at its highest level in
more than six years. This spike in shorting activity comes as
the indices test longer-term support. Such activity might
exaggerate declines, but it also represents future buying
power that can help support an advance.

On the options front, put trading has been extremely heavy.
In looking at the put/call volume ratio for all stock and
exchange-traded fund (ETF) options across the front three
months options, we saw 11 straight trading sessions of
readings above 1.0. This is by far, the longest consecutive
days streak going back to 1999.

Furthermore, the financial media has been filled with
analysts commenting that this pullback is only the start of a
much larger drawdown in the market. By comparison, the end
of the tech bubble in 2000 was matched with unwavering
confidence by both investors and analysts that a bounce back
was just around the corner. As you'll remember, the SPX
continued to decline amid this optimism for roughly two years
before finally reaching a bottom in late 2002. On the other
hand, pessimism is swamping the current market environment
despite a smaller pullback and potential short-term bottom.

We maintain our bullish outlook for the broad market. But we
continue to suggest that you keep a solid 20 percent of your
investment capital in the safety of cash; the return on a
short-term CD is currently about as good as the average
dividend payout across the S&P 500 Index.

We view the current market as a huge opportunity for options
players. In fact, options were made for this very reason.
We think for the reasons outlined above that the market will
move substantially higher from here. However, these are
volatile times and volatile times call for options. If we
are wrong on our market call, options will minimize your
exposure to the market as they are a fraction of the cost of
the stock. If we are right, you can sit back and enjoy the
leverage and returns of 10-20 times your money.

During these volatile times, it is extremely important that
you adhere to strict money management guidelines when making
decisions regarding your portfolio. As a bonus to
subscribers, we have included a link that will take you to
the Money Management chapter of our "10 Days to Successful
Options Trading" home-study program. This chapter explains
key concepts such as diversification, allocation, and setting
appropriate expectations, along with providing other
important information.

http://www.schaeffersresearch.com/moneymgmt/

If you have any questions, please call toll-free