A Possible Sea Change

Wall Street Sector Selector Review

Sector Selector Update July 20, 2008   Sector Selector Standard Current Positions:   Entry Date:    Positions:       Entry Price               P/L%       5/26/08:            Pos#1:             $41.61                 +1.06% 6/9/08:              Pos#2F:           $97.75                  +0.14% 6/16/08:            Pos#3:          $41.50 -7.6% stopped out      6/30/08:            Pos#4;             $91.89                  +2.48% 6/30/08:            Pos#5:             $58.63                  +1.04%    Year To Date:   Wall Street Sector Selector:      +11.03% S&P 500:                                        -14.1%   All profit/loss figures include realized/unrealized gains/losses and do not include taxes, commissions, dividends or compounding. Stopped out of DBA @ $38.36 on 7/16/2008 for -7.6% loss

Sector Selector Ultra Current Positions:   7/13/08:   Cash 7/13/08:   Cash 7/ 13/08:  Cash 7/13/08:   Cash 7/13/08:   Cash

Greed and Fear Index    Yellow flag flying.  We expect volatility with bias towards upside.

Possible Sea Change  As we mentioned last week, the markets were vastly oversold and due for a bounce which came this week with the Dow up +3.6%, tne S&P 500 up +1.7% and the NASDAQ up +2.0%.   The rally was led by the decline in oil prices and better than expected numbers from the financial sector.   Our portfolio was down as we were stopped out of DBA and had pullbacks in our commodities positions.   How long this rally will last is unknown but we will reposition accordingly.   When we closed our oil position last month for a profit of 15+%, I had a lot of questions about “why” but I’m happy now that we did with oil down about 6% from where we exited.   Also, we closed SKF, the double inverse financial at 150.92 for a 33% gain on 6/30 and today that ETF stands at 138.0 and so I’m happy to be out of that market, as well.   Volatility remains the name of the game, and we won’t always be right but we will work at being right enough.   The View from 35,000 Feet    Oil fell for four straight sessions this week and suffered its biggest weekly loss ever as US gasoline consumption was down 2.1% year over year.   Second Quarter earnings shift into high gear this week with widely anticipated reports from Bank of America, American Express and Wachovia.      This will be a heavy week for earnings and those reports along with oil prices will drive the market.  The technical bounce we expected is happening and appears to be gathering steam.     The Week Ahead  More economic reports coming up this week that could be market movers:    Monday: June Leading Economic Indicators   Tuesday: May Housing Prices   Wednesday: Fed Beige Book   Thursday: Existing Home Sales    Friday: Durable Goods Orders, New Home Sales, Consumer Sentiment     Sector Spotlight   Weekly Leaders:   Home Construction, Financials, Regional Banks   Weekly Laggards: Oil, Commodities, Agriculture   This weekend my young son went up to a beautiful lake just an hour from Bend, Lake Paulina, which turns out to be in the Newberry National Volcano Monument.  We had some great father and son time camping in our RV and fishing, floating in the raft and going for a 12 mile bike ride which told me I need to get in better shape.   It’s funny how you never play in your own backyard.  We’ve lived here 11 years and I’m embarrassed to say it was our first trip to Paulina, but it definitely won’t be our last. Wishing you a great weekend wherever you may be.   Your partner in prosperity, John John Nyaradi Publisher Wall Street Sector Selector

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