Trade Alert - June 11, 2006

Model Portfolio Allocation Changes- This Week

Correction Begins in Commodity Related Sectors

Even though Crude Oil is still hovering in the low-$70 range, commodity-related markets globally have suffered a serious break in recent weeks. This was seen not only in commodities themselves, but also in business sectors and emerging market economies that have been driven by the bull market in commodities. It appears we may have seen an intermediate peak in these markets and that a significant correction is setting in that will need to run its course before the bull market in commodities can recover.

The one Model Portfolio affected by this breakdown was the Performance Xtender with its allocations in Gold and Energy stocks. This model has traded in and out of the Energy sector since Sept. 24, 2004 and the Gold sector since Sept. 16, 2005, milking these historic bull markets. But we have been looking for these bull markets to peak, at least on an intermediate basis. When the model triggered a move back into Energy in April, we offered the following reservations:

"Energy stocks have been in a Bull Market since 2002, reflecting strongly rising prices across the entire Energy Complex. We keep thinking that this sector's performance has been somewhat overheated and pushed along by too much speculation. We have been concerned about the potential for a steep correction ... Once again, the model is jumping back in ... However, at some point we expect one of these break-outs to 'fail' and trigger a significant correction."

We could have voiced the same kind of reservations when the model moved back into Gold stocks in March. And now the breakdown has occurred and we have taken some depreciation in the Performance Xtender. The model's "stop loss" logic has been triggered as of this past weekend; and we are now issuing Sell recommendations for both Energy and Gold stocks.

Fortunately, the Performance Xtender has done very well and as of this weekend has still out-performed the S&P 500 index in 2006.

Stock Market Struggles to Keep Bull Trend Intact: You might think that the recent drop in commodities would have helped the stock market. But the reverse has been true so far. Technically, the market was ready for a fall and we have repeatedly warned of the increasing risk levels in the market and the potential for a nasty correction or even onset of a new bear market trend.

Last week's sharp drop in the market broke down briefly below the key 1245 support level we have focused on for months. The market then bounced exactly off of the recent uptrend line (in light blue) and recovered to close at 1252 ... back above the support level at 1245..

The translation ... for the moment, the market has held key support and barely kept its uptrend intact. There is now some potential for a recovery to emerge from here and a launching of stocks into yet another round of the Bull Market.

Potential for a Breakdown: But other technical indicators suggest to us that the downward momentum of this correction is still in force and the potential is strong for a break below the recent uptrend line. If that occurs, our attention will focus on the next lower level of support at 1165 on the S&P 500 that dates back to January of 2004. A breakdown below this level will signal a much steeper correction at the very least.

We will also be watching for a bullish "failed breakdown" signal here which would occur if the market breaks down below the recent uptrend line and stages a strong recovery back above support at 1245 and the 200-day Moving Average (in dark blue). This kind of pattern reliably signals an exhaustion of the correction and the launching of a new uptrend. We have seen this pattern play out several times already in the Bull Market that has been in force since early 2003.

In the Performance Xtender : This model has triggered a sale of the Energy stock fund allocation and the Gold stock fund allocation, as well. Sale proceeds are moved into money market funds, leaving the portfolio with a 40% allocation in Large Cap stocks and 60% in money market funds.

New Model 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).

'Performance Xtender'

(A model portfolio that invests selectively in stock market index funds, plus certain market sectors such as Energy, Gold and Real Estate, and in an Inverse Fund ("Bear Fund"), depending on current market trends for each type of investment. The allocation mix is designed to beat the market significantly during both bull and bear markets with only limited risk of volatility.)

Model Portfolio Changes for this week	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
SELL Gold Fund	20%	RYPMX	15%	PMPIX	20%	GLD
SELL Energy Fund	20%	RYEIX	15%	ENPIX	20%	XLE
Corporate Bonds, or Money Market	Reinvest sale proceeds in Money Market Funds.

New Model Portfolio Allocations	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
LargeCap Stock Fund	40%	RYZAX	40%	BLPIX	40%	SPY
Corporate Bonds, or Money Market	Money Market Funds: 60%

'Max Xtender'

(A model portfolio that invests selectively in stock market index funds and in an Inverse Fund ("Bear Fund"), depending on current market trends for each type of investment. During strong market trends ... either bullish or bearish ... the model uses up to 2-to-1 leverage to magnify returns. The allocation mix is designed to beat the market substantially during both bull and bear markets but results in a relatively high risk of volatility.)

Model Portfolio Changes for this week	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
No Changes	-	-	-	-	-	-
Corporate Bonds, or Money Market	.

New Model Portfolio Allocations	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
Lev'd LargeCap Fund	50%	RYTNX	50%	ULPIX	150%	SPY
UnLev'd LargeCaps	50%	RYZAX	50%	BLPIX	-	-
Corporate Bonds, or Money Market	ETF Investors: Note that the SPY position is margined 1.5 to 1.