Trade Alert - June 18, 2006

Model Portfolio Allocation Changes- This Week

The Market Takes a Bullish Step

The stock market staged a very strong recovery day last Thursday. On strong volume, the market traded back above the key 1245 support level after having broken down below that level earlier in the week. The market's action triggered a bullish response from the Performance Xtender model which is increasing its allocation in Large Cap stocks (see details below).

Possible "Failed Breakdown" Signal: The breakdown and then positive reversal has created a technical signal known as a 'failed' breakdown that, once it is confirmed, strongly suggests the launch of a new bullish trend. We will need to see how the market reacts from here on. We want to see the S&P 500 index continue to hold above the 1245 level, move higher and breakout above the top of the recent minor trading range ... above 1290 in other words. That will provide technical confirmation of this very bullish pattern.

The bullish signal could mark the end of the corrective sequence that began in the market about 5 weeks ago. Or if it fails to be confirmed, it could mark just a temporary bottom before a small counter-trend rally eventually rolls over into another, deeper leg of the correction that could possibly evolve into a real bear market.

Looking For Follow-through: Our longer-term analysis of the market's condition has been increasingly cautious in recent months because of the steady deterioration in a battery of technical indicators that gauge the underlying health of the market. If you have been following this newsletter, you know that we have been concerned about the potential for a new bear market to begin soon. We have recently discussed the importance of the 1245 support level on the S&P 500 index in terms of signaling whether the bull market is still in force or whether a bear market may be beginning. So at this juncture, we will be looking for some follow-through here by the market ... either bullish or bearish ... to provide a stronger signal of the stock market's intermediate direction. If we get strong follow-through to the upside, following the bullish Failed Breakdown signal, we will feel much more confident that a new bullish uptrend is emerging. On the other hand, if we get a strong follow-through of the recent corrective trend that causes a decisive breakdown below 1245, we will be much more concerned that a new bear market could already be in force.

Changes in the Performance Xtender : This model has triggered an increase in the allocation in Large Cap stock funds from 40% to 80% of the portfolio. The remaining 20% stays 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
INCREASE LargeCaps	40%	RYZAX	40%	BLPIX	40%	SPY
Corporate Bonds, or Money Market	Reduce the money market fund allocation to 20%.

New Model Portfolio Allocations	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
LargeCap Stock Fund	80%	RYZAX	80%	BLPIX	80%	SPY
Corporate Bonds, or Money Market	Money Market Funds: 20%

'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.