Trade Alert - July 29, 2007

Model Portfolio Allocation Changes- This Week

A "Failed Breakout" Triggers Sharp Reversal

The market's breakout to new highs two weeks ago has failed and a reversal of trend was confirmed as the S&P 500 index broke down through multiple levels of technical support.

The reversal of trend could usher in either a sideways consolidation in the markets accompanied by volatile ups and downs, or a clear new downtrend.

The breakdown in the market was massive and widespread, taking down almost all sectors, asset classes and country indexes. It was very similar to the "global liquidation" of securities that occurred in February of this year. Almost nothing was spared except high quality bonds and the US Dollar which shot up in value from a worldwide "flight to quality" among investors.

After two massive episodes of global liquidation, the markets seem to be telling us that something new is in the offing. Only time will tell what that "something new" is. It does seem fairly likely though that we are at or near a major inflection point in the progress of the markets.

To help discriminate whether the market's new direction is sideways or down, keep an eye on the 200-day moving average of the Dow or S&P 500. Major investors watch this simple indicator as a gauge of whether the market's direction is up or down. If the market can hold above the 200-day moving average (which it still is), it is possible that this is only a correction and a new leg of the bull market will take hold soon. However, if the market "breaks support" at the moving average, many investors will take this as a sign that the new trend direction is down.

In response to the market action, our two model portfolios are making some adjustments:

Portfolio Changes in the Performance Xtender: The model is selling its 10% allocation in an International Stock fund and placing the proceeds in money market funds.

Portfolio Changes in the Max Xtender: This model is selling its Leveraged Large Cap stock fund and purchasing an unleveraged Large Cap stock fund. The effect of this transaction is to reduce the overall leverage factor of the model portfolio to 1.5 to 1.

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 International	10%	RYEUX	10%	UEPIX	10%	IEV
Corporate Bonds, or Money Market	Place proceeds of sale in money market funds.

New Model Portfolio Allocations	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
Large Cap Stock Fund	30%	RYZAX	30%	BLPIX	30%	SPY
OTC Stock Fund	30%	RYOCX	30%	OTPIX	30%	QQQQ
Energy Stock Fund	20%	RYEIX	14%	ENPIX	20%	XLE
Gold Stock Fund	10%	RYPMX	7%	PMPIX	10%	GLD
Corporate Bonds, or Money Market	10% Money Market Funds. ProFunds investors only should have a remaining 19% allocation in money market funds .

'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
SELL Lev'd Largecap	50%	RYTNX	50%	ULPIX	50%	SPY
BUY UnLev Largecap	50%	RYZAX	50%	BLPIX	-	-
Corporate Bonds, or Money Market	.

New Model Portfolio Allocations	Rydex Funds		ProFunds		ETFs
	Allocation	Ticker	Allocation	Ticker	Allocation	Ticker
LargeCap Fund	50%	RYZAX	50%	BLPIX	50%	SPY
Lev'd OTC Fund	50%	RYVYX	50%	UOPIX	100%	QQQQ
Corporate Bonds, or Money Market	ETF Investors: Note that both positions are margined 1.5 to 1.