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Trade Alert - November 6, 2005

Recommended Portfolio Allocation Changes- This Week

Strong Recovery Reverses Previous Break-Down

Two weeks ago we sent a Trade Alert that was triggered by the market's break-down through 3 important support levels. We said:

  • "Bottom line, while the break-down increases the odds that the bull market may be finished, the market still has a fighting chance to recover from here and rally one more time."

The market did recover and by last Friday had managed to close above the all-important 1220 level. Last week's sharp rally in prices was accompanied by strong volume and a surge in the technology sector. These are strong signs that the market has at least one more bull market upleg left.

Both model portfolios have responded to the new strength, stepping up exposure to the stock market.

In the Performance Xtender -- This model portfolio is moving to a 100% invested position by taking a 40% allocation out of money market funds and purchasing an Over-the-Counter (OTC) Stock Fund. OTC funds track the Over-the-Counter market as measured by the Nasdaq. Technology stocks and the Nasdaq index are now out-performing other sectors.

In the Max Xtender -- This model has moved back to a leveraged 1.5 to 1 posture by taking the 50% allocation out of money market funds and purchasing an unleveraged Over-the-Counter (OTC) Stock Fund. OTC funds track the Over-the-Counter market as measured by the Nasdaq. Technology stocks and the Nasdaq index are now out-performing other sectors.

Model Portfolio: Performance Xtender

BUY _______ OTC Stock Fund

 

 

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Model Portfolio: Max Xtender

BUY _______ Unlev'd OTC Stock Fund

 

 

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TopRecommended Portfolio Allocations

These are the new generic portfolio allocations, reflecting the changes above ...

Model Portfolio: Performance Xtender

40%        International Stock Fund

20%        Gold Stock Fund

40%        OTC Stock Fund

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Model Portfolio: Max Xtender

50%        Leveraged Mid Cap Fund

50%        Unleveraged OTC Fund

 

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TopModel 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 alternaively, investors using exchange traded funds (ETFs).

'Performance Xtender'


Recommended Changes for this week Rydex Funds ProFunds ETFs
Allocation Ticker Allocation Ticker Allocation Ticker
BUY OTC Stock Fund 40% RYOCX 40% OTPIX 40% QQQQ
Corporate Bonds
Cash
.

New Recommended Portfolio Allocations Rydex Funds ProFunds ETFs
Allocation Ticker Allocation Ticker Allocation Ticker
International Stocks 30% RYEUX 40% UEPIX 40% IEV
Gold Stocks Fund 20% RYPMX 15% PMPIX 20% GLD
OTC Stock Fund 40% RYOCX 40% OTPIX 40% QQQQ
Corporate Bonds
Cash
Money Market Fund: 10% if using Rydex funds; 5% if using ProFunds; or zero if using Exchange Traded Funds.


'Max Xtender'


Recommended Changes for this week Rydex Funds ProFunds ETFs
Allocation Ticker Allocation Ticker Allocation Ticker
BUY Unlev'd OTC 50% RYOCX 50% OTPIX 50% QQQQ
Corporate Bonds
Cash
.

New Recommended Portfolio Allocations Rydex Funds ProFunds ETFs
Allocation Ticker Allocation Ticker Allocation Ticker
Lev'd MidCap Fund 50% RYTNX 50% UMPIX 100% MDY
Unlev'd OTC Fund 50% RYOCX 50% OTPIX 50% QQQQ
Corporate Bonds
Cash
ETF Investors: Note that your MDY position should be leveraged with margin 2 to 1 . The QQQQ position is unleveraged for a total 150% invested position.