SectorVue by David Schultz for March 10th , 2008

Drunken Sailor

The Dow Jones closed down 372 points for the week while the NDX dropped 37 points.
Volatility VIX and Thirty Year interest rates TYX were the only Broad based indices up
for the week. Commodities DJAIG are overbought and slipped a bit in price and Action.
Commodities are running on pure momentum and fumes the last few weeks. If we are
headed for a Worldwide economic slowdown this price action will end soon.

Sector Action for the week was minus 757. The Market Barometer pulled back but is
still above the Jan 22nd low and oversold Buy signal. Our Sector portfolio is up 2% versus
market indices down roughly 15% year to date. Daily price action resembles the random
walk of a drunken sailor.

The mortgage train wreck has been in motion for nearly a year now with peak ARM resets
this Fall. Friday the FOMC tripled the amount available for Term Auction Facility, noted
they will do more if needed AND they are in contact with other Reserve Banks to address
the liquidity problem. At some point this will work as Central Banks print the money.

Rydex Alerts- Bullish NDX and OTC - this is a day to day trade and reversals.

Short term Trading indicator- Oversold. Tradewind is neutral. Positive Market breadth is the key
to a Buy.

INTERMEDIATE TERM TRENDS- Neutral to Bearish.

INTERMEDIATE OSCILLATOR - ‘oversolder’.

Gold XAU- Number one in Sector rank. Pure momentum with negative Action. Beware !

Basic Materials XLB- Overbought and rolling over. If we are in or entering a Recession
these stocks will take a hit. Ultra Short Basic Materials SMN is worth watching.

Ultra ETF’s- Bullish NDX QLD and Financial UYG looking at Short Basic Materials
SMN.

Banks BKX- Bernanke’s number one job is to make sure the Banking system is solvent.
He is welcome to show up anytime now. Our BBT holding is up from the Jan $27
purchase price and I added to it just above $30 last week. BBT owns a bunch of
independent insurance agencies which provides cash flow aside from the broken
mortgage market.

Technology TXX and Semiconductor SOX- Last week I said these Sectors were
showing some signs of life and they managed to rally into the top Sector ranks. Refreshing
to say the least. The Microsoft, Yahoo, Google poker game is mucking up the works a bit.

Broker Dealer XBD- Dead last which is not good for the overall market. On the other
hand they are oversold and Sector Action will alert us to when Wall Street is willing to buy
their own stocks.

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