Trade Alert - December 24, 2006

Recommended Portfolio Allocation Changes- This Week

Models Turn Defensive After Fall Rally

After a fierce 5-month rally with hardly a minor correction, the market is finally showing signs of slowing momentum. The recent leadership of technology and smallcap stocks also broke down as both sectors under-performed largecap stocks in the past week.

There has also been renewed deterioration in most of the technical statistics followed by our models that gauge the underlying demand/supply condition of the market. While this fall's rally succeeded in erasing much of the very serious deterioration we had seen in these statistics earlier this year, some of these measures never fully recovered. And the past few weeks have not been favorable ... enough so that the models have triggered an anticipatory defensive reduction in stock market allocations.

Although our models are primarily trend-following, their logic allows for anticipatory moves under certain conditions. The last time we saw such a move from the models was April 10th of this year when the models ratcheted back allocations 3 weeks in advance of an intermediate high in the market, just preceding a major 3-month correction.

Allocation Changes in the Growth Portfolio: This model is reducing its previous 100% allocation in LargeCap stocks to a more defensive 67%. The remaining 33% of the portfolio will now be invested in an Intermediate Corporate Bond fund. Investors should note that we do not recommend the bond funds offered by Rydex and ProFunds since they are too volatile. We recommend a Fidelity bond fund, ticker symbol FBNDX.

Allocation changes in the Conservative Portfolio: This model is reducing its previous 67% allocation in LargeCap stocks to a more defensive 34%. The Corporate Bond allocation is increasing to 66% of the portfolio. Investors should note that we do not recommend the bond funds offered by Rydex and ProFunds since they are too volatile. We recommend a Fidelity bond fund, ticker symbol FBNDX.

Recommended Portfolio Allocations

Model Portfolio Details

The tables below provide the percentage allocation details and mutual fund ticker symbols for investors following the Model Portfolios by using funds from either of the Rydex Investments or ProFunds mutual fund companies -- or alternatively, investors using exchange traded funds (ETFs).

'Conservative Portfolio'

(A model portfolio that invests selectively in stock market index funds, a bond fund or money market funds, depending on current market trends for each type of investment. The allocation mix is designed to minimize potential losses while capturing most of the upside appreciation during strong, bull market conditions.)

Recommended Changes for this week	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
SELL LargeCap Fund	33%	RYZAX	33%	BLPIX	33%	SPY
Corporate Bonds, or Money Market Funds	Invest sale proceeds in Corporate Bond fund position.

New Recommended Portfolio Allocations	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
LargeCap Stock Fund	34%	RYZAX	34%	BLPIX	34%	SPY
Corporate Bonds, or Money Market Funds	66% Fidelity Investment Grade Intermediate-Term Corporate Bond Fund (ticker symbol FBNDX). ETF investors can use LQD or similar fund.

'Growth Portfolio'

(A model portfolio that invests selectively in stock market index funds, a bond fund or money market funds, depending on current market trends for each type of investment. The allocation mix is designed to avoid significant losses during bear markets and also beat the market during bull markets.)

Recommended Changes for this week	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
SELL LargeCap Fund	33%	RYZAX	33%	BLPIX	33%	SPY
Corporate Bonds, or Money Market Funds	Invest sale proceeds in an Intermediate term Corporate Bond Fund.

New Recommended Portfolio Allocations	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
LargeCap Stock Fund	67%	RYZAX	67%	BLPIX	67%	SPY
Corporate Bonds, or Money Market Funds	33% Fidelity Investment Grade Intermediate-Term Corporate Bond Fund (ticker symbol FBNDX). ETF investors can use LQD or similar fund.