Wednesday, April 25, 2012


As the year progresses I find that I am drawn to the word muddle. A number of high profile money managers such as Bob Doll from BlackRock said that he expected the markets to muddle around in 2012. Markets that muddle meander and bump into things, they go up, they go down, they will search for some sort of direction, and will end up somewhere. I have to say that muddle pretty much sums up the past week and the year.

Last week offered some good examples of what I mean. On Monday, April 16th, March retail sales came in much stronger than expected. But then subsequent reports released during the week were less encouraging. March housing starts fell, industrial production was flat, manufacturing production dipped slightly, initial jobless claims jumped sharply for the second week in a row, and the annual rate of home sales pulled back. Ouch. However, US corporate earnings continued to come in strong and that helped offset some of the worries about the lackluster economy.


Then there are the continued fears in Europe about the Spaniards struggling to keep borrowing costs from pushing into the real danger zone, or concerns about what will happen to France if a hard-left socialist is elected next month, or the effect a slowing European economy will have on the rest of the world. The G-20 nations (representing 80% of the world's GDP) took an important step by pledging another $430 million to the International Monetary Fund (IMF) to add to the European Union's (EU) stability fund. This move is meant to placate investor fears of a Spanish debt meltdown.

So muddle onward.

All major US indexes managed to end their two-week losing streak this past week except for the NASDAQ. The Dow Jones Industrial Average (DJIA) gained nearly 180 points (1.4%) to close back above 13,000. The S&P 500 added 0.6%, and the Russell 2000 rose just under 1%. The NASDAQ lost 0.4% principally under the weight of Apple's (AAPL) loss of 5.3% last week. Apple makes up nearly 12% of the index's weighting. For the year, the DJIA is up 6.4%, the S&P 500 is up 9.6%, the Russell 2000 has added 8.5%, and the NASDAQ still leads with a gain of 15.2%.

International markets moved in unison with US markets last week. The MSCI EAFE posted a solid 1.5% gain. Of the major international sectors I follow-Asia/Pacific, the Americas, Developed, and Emerging; only the Asia/Pacific was down losing just over 0.6%. For the year, the MSCI EAFE is up just under 7%. The Emerging Market sector remains the best so far in 2012 with a gain of 12%. The other sectors are up nicely as well. Looking from a broad perspective, there has been little to differentiate US market performance from those abroad.

Commodities were a non-story. The DJ UBS Commodity Index, which represents a broad basket of various commodities, fell for the fifth consecutive week losing 0.9%. WTI oil was virtually unchanged gaining just 0.5% while gold fell 1% to close at $1642.50 per ounce. Brent Oil (primarily produced in the North Sea) posted a 2% decline on hopes that talks between the western nations and Iran that are getting underway will help diffuse the tensions in the Middle East. For the year the DJ UBS Commodity Index is down 1.8%, gold is up 4.8%, and WTI oil is up 4.5%.

Taking their cue from the stock markets, currencies were little moved. The Euro recovered about 1% to close Friday at $1.322 compared to the previous Friday close of $1.308. The US Dollar Index, a basket of foreign currencies measured against the US dollar, fell by roughly 1%. For the year, the Euro is up 2.2% and the US Dollar Index is down 1.3%. Muddling in the currency markets.

More muddling found in the bond markets. The Barclays US Aggregate Bond Index was up for the fifth consecutive week gaining just 0.1%. For the year this broad bond index is up a very modest 1.3%. US Treasury yields fell a little. The 10-year remains under 2% for the second week in a row closing at 1.959%. French 10-year yields jumped by nearly 5% to move from 2.95% of a week earlier to close Friday at 3.091%. I believe this reflects investor worries that this Sunday's first round of the presidential election will ultimately lead to a socialist victory in early May. Among the many bond sectors, municipals, emerging market sovereign debt, and high yield were among the best performing while preferreds and short-duration US Treasury and corporate debt were the weakest. For the year, preferreds, high yield, and emerging market debt are the best performing bond sectors while extended duration US Treasuries and corporates remain the weakest.

WHAT IS RELATIVE STRENGTH?

Throughout my Weekly Updates I frequently mention the term relative strength. I thought I might spend a few moments explaining this extremely important concept in some detail.

Relative strength is how strong something is in relation to something else. We see examples of relative strength all around us every day. Professional football gives us one of the most obvious ways relative strength can be explained (and one I enjoy). At the end of last year's NFL season there were eight division winners, four in the National Football Conference (NFC) and four in the American Football Conference. Looking more closely at the NFC East Division the final standings were:

New York Giants 9 wins 7 losses

Philadelphia Eagles 8 wins 8 losses

Dallas Cowboys 8 wins 8 losses

Washington Redskins 5 wins 11 losses

After 16 games of head-to-head competition within the division and throughout the NFL, the New York Giants was the strongest team within their division. The Giants along with seven other division winners and two additional wild card teams (best records of non-divisional winners) from each conference then went on to another round of head-to-


head competition and so on until a Super Bowl champion was crowned. This is relative strength. Head-to-head competition ultimately determines the winner. Go Giants!

The standings come out each week during the football season. The win-loss records and divisional standings start providing an indication as to which are the strongest teams and which are the weakest. Unfortunately for Washington Redskins fans, it became obvious early in the season that they were not a strong team and their chances of making it to the playoffs was practically nil and that was precisely the way the season ended.

This same concept can be applied to investing. Two stocks can be compared to one another, a stock can be compared to an index such as the S&P 500 to see how that stock is performing in a head-to-head completion with the index, or a stock can be compared against a sector index to evaluate performance against a peer group. Sector indexes can be compared to other sector indexes, or sector indexes can be compared to the S&P 500. The possibility of comparative analysis is virtually endless. All you need is price or index data to set up a head-to-head competition. Computers make this all possible and Dorsey Wright & Associates provides that analysis for me.

So the next time you hear me say for example, growth is favored over value on a relative strength basis, you can understand that I am referring to the head-to-head competition of one or more growth indexes compared to one or more value indexes.

Relative strength is not a perfect predictor. Just remember that the New York Giants won the Super Bowl with a 9 and 7 regular season record while the Green Bay Packers with a 15 and 1 record lost in their first playoff game to the Giants. Based strictly on relative strength the Green Bay Packers should have won the Super Bowl. However, by following the relative strength (won/loss record) analysis you would have still eliminated most teams from consideration (think Washington Redskins) and focused your efforts on the top teams to provide you the greatest opportunity to win. This is precisely what I try to do when advising my clients.

LOOKING AHEAD

The first round of the French elections will have been held by the time this Update is published. The French go to the polls on Sunday and will narrow the field to the two candidates who get the highest vote total. Polls indicate this will be current President Sarkozy and left-wing Socialist Francois Hollande. Polls also indicate that in a head-to-head election on May 6th, Mr. Hollande should defeat Sarkozy. Mr. Hollande worries investors because one of his campaign pledges is to scrap the hard-negotiated European bailout package agreed to by Sarkozy and German Prime Minister Angela Merkel. Adding this new element of uncertainty into an already difficult time could prove challenging for the EU.

The US Federal Reserve Open Market Committee (FOMC) will begin meeting Tuesday and the Fed's guidance will be released Wednesday at 2 PM followed by Mr. Bernanke's comments at 2:15 PM. The markets will likely focus closely on Mr. Bernanke's views of the economy and the possibility of another round of quantitative easing. He is also expected to provide confirmation of his commitment to holding interest rates low through 2014.

One third of the S&P 500 companies will release earnings this week. Apple is the most noteworthy company announcing (Tuesday) as well Intel and Johnson & Johnson. So far most companies are meeting or exceeding earnings estimates and that bouyed the market last week.

A number of important economic releases will come again this week. New Housing Starts, the Consumer Confidence Survey, Durable Goods Orders, the FOMC announcement, Initial Jobless Claims, and the initial estimate of the 1st Quarter, 2012, US Gross Domestic Product (GDP) on Friday. All of these reports are important and as has been the case recently, expected to show slightly modest growth. The consensus for the GDP is expected to fall from 3.0% to 2.5%.

For now, my views about the markets developed through the Dorsey Wright & Associates (DWA) relative strength analysis is unchanged. US stocks remains the strongest asset category followed by Commodities, Bonds, International stocks, and Currencies. US stocks retain a very sizable lead over the other categories with the others clustered closely together. Mid-capitalization stocks are favored, growth is favored over value, and equal-weighted indexes are favored over capitalization-weighted ones. On a relative strength basis, DWA puts Consumer Discretionary, Information Technology, and Financials as the three strongest economic sectors. The New York Stock Exchange Bullish Percent fell again slightly last week and remains in a negative trend. However, with a reading of 67.3%, the overall strength in stocks remains even though this important indicator is signaling caution.

On a personal note, I would like to take a moment and recognize my son Patrick's selection as one of the 24 Golden Pencil collegiate award winners recognized by The One Club in New York City for outstanding achievement in Advertising, Design, and Interactive. The competition featured submissions by undergraduate and graduate students from the top advertising and art schools here in the United States as well as around the world. I will be joining my son to receive his award in New York City on May 9th. Congratulations Pat for a job well done!

The NYCE US Dollar Index is a measure that calculates the value of the US dollar through a basket of six currencies, the Euro, the Japanese Yen, the British Pound, the Canadian Dollar, the Swedish Krona, and the Swiss franc. The Euro is the predominant currency making up about 57% of the basket.

Currencies and futures generallyare volatile and are not suitable for all investors. Investment in foreign exchange related products is subject to many factors that contribute to or increase volatility, such as national debt levels and trade deficits, changes in domestic and foreign interest rates, and investors' expectations concerning interest rates, currency exchange rates and global or regional political, economic or financial events and situations.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, including international economic, political and regulatory developments.

Emerging market investments involve higher risks than investments from developed countries and also involve increased risks due to differences in accounting methods, foreign taxation, political instability, and currency fluctuation. The main risks of international investing are currency fluctuations, differences in accounting methods, foreign taxation, economic, political or financial instability, and lack of timely or reliable information or unfavorable political or legal developments.

The Dow Jones UBS Commodities Index is composed of futures contracts on physical commodities. This index aims to provide a broadly diversified representation of commodity markets as an asset class. The index represents 19 commodities which are weighted to account for economic significance and market liquidity. This index cannot be traded directly. The commodities industries can be significantly affected by commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions. Past performance is no guarantee of future results. These investments may not be suitable for all investors, and there is no guarantee that any investment will be able to sell for a profit in the future.

TIPS are U.S. government securities designed to protect investors and the future value of their fixed-income investments from the adverse effects of inflation. Using the Consumer Price Index (CPI) as a guide, the value of the bond's principal is adjusted upward to keep pace with inflation. Increase in real interest rates can cause the price of inflation-protected debt securities to decrease. Interest payments on inflation-protected debt securities can be unpredictable.

As always, if you have any specific questions on your portfolio or wish to talk to me, please do not hesitate to call.

P.S. If you think this type of analysis would be of benefit to anyone you know, please share this communication with them.

Corporate bonds contain elements of both interest rate risk and credit risk. Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest, and if held to maturity, offer a fixed rate of return and fixed principal value. U.S. Treasury bills do not eliminate market risk. The purchase of bonds is subject to availability and market conditions. There is an inverse relationship between the price of bonds and the yield: when price goes up, yield goes down, and vice versa. Market risk is a consideration if sold or redeemed prior to maturity. Some bonds have call features that may affect income.

Sincerely,








Paul Merritt, MBA, AIF ®, CRPC ®
Principal
NTrust Wealth Management

Past performance is not indicative of future results and there is no assurance that any forecasts mentioned in this report will be obtained. Technical analysis is just one form of analysis. You may also want to consider quantitative and fundamental analysis before making any investment decisions.

Information in this update has been obtained from and is based upon sources that NTrust Wealth Management (NTWM) believes to be reliable, however NTWM does not guarantee its accuracy. All opinions and estimates constitute NTWM's judgment as of the date the update was created and are subject to change without notice. This update is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. Any decision to purchase securities must take into account existing public information on such security or any registered prospectus.

The bullish percent indicator (BPI) is a market breath indicator. The indicator is calculated by taking the total number of issues in an index or industry that are generating point and figure buy signals and dividing it by the total number of stocks in that group. The basic rule for using the bullish percent index is that when the BPI is above 70%, the market is overbought, and conversely when the indicator is below 30%, the market is oversold. The most popular BPI is the NYSE Bullish Percent Index, which is the tool of choice for famed point and figure analyst, Thomas Dorsey.

All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poors, this is a market capitalization weighted index, meaning the largest companies in the S&P 500 have a greater weighting than smaller companies. The S&P 500 Equal Weighted Index is determined by giving each of the 500 stocks in the index the same weighting in the index. The Dow Jones Industrial Average is based on the average performance of 30 large U.S. companies monitored by Dow Jones & Company. The Dow Jones Corporate Bond Index is comprised of 96 investment grade issues that are divided into the industrial, financial, and utility/telecom sectors. They are further divided by maturity with each of the sectors represented by 2, 5, 10 and 30-year maturities. The Morgan Stanley Capital International (MSCI) Europe, Australia and Far East (EAFE) Index is a broad-based index composed of non U.S. stocks traded on the major exchanges around the globe. The Russell 2000 Index is comprised of the 2000 smallest companies within the Russell 3000 Index, which is made up of the 3000 biggest companies in the US.

Securities and Advisory Services offered through Commonwealth Financial Network®,Member FINRA/SIPC, a Registered Investment Adviser.





Friday, April 20, 2012

Markets went a bit wobbly this past week as fears resurfaced in Europe over Spain's rising interest rates, China's slowing economy, and a US jobless report that took some of the air out of bulls' sails.

All major US indexes posted their worst weekly returns out of the 15 weeks of trading so far in 2012. The Dow Jones Industrial Average (DJIA) lost 211 points (-1.61%), the S&P 500 fell 28 points (-1.99%), the volatile Russell 2000 pulled back 2.68%, and the recently strong NASDAQ posted a 2.25% loss. So far in April the DJIA is down 2.74%, the S&P 500 is down 2.71%, the Russell 2000 of off 4.10%, and the NASDAQ is down 2.60%. The year is still reflecting an overall improvement for stocks. The DJIA is up 5.17%, the S&P 500 is up 8.96%, the Russell 2000 is up 7.47%, and the NASDAQ is up a strong 15.59%.

For the second week in a row, every major US economic sector saw declines last week. The Materials sector led along with Real Estate, Consumer Staples, and Consumer Discretionary. Each of the top four sectors outperformed the DJIA. Health Care, Energy, and Financials were the worst performing sectors and each lost more than 2% for the week. Information Technology, Consumer Discretionary, and Financials are the best performing sectors for the year and all are posting double-digit gains. Utilities is the worst sector and is down just over 4% for the year followed by Energy and Telecom. Energy and Telecom are slightly negative for the year now. The banking sector was particularly hard hit last week on disappointing earnings by JP Morgan and Wells Fargo.

International stocks, while down, were not down as much as US equities. The MSCI EAFE index fell 1.20% last week. So far in April the index is down 4.21% and is up about the same as the DJIA for the year. The Asia/Pacific sector and the Emerging Market sector were the best performing international sectors last week losing 1.27% and 1.75% respectively. For the year the Emerging Market sector is the best performing among the broad international sectors gaining 11.73% followed by the Asia/Pacific sector (+9.99%), and the Americas sector (+8.69%). The Developed Markets sector is the weakest but has posted a yearly gain of 7.77%. The news coming from Europe has been disconcerting for investors as they have been watching the yields on Spanish and Italian bonds rise. The greatest fear of international investors over the past year or two has been for the debt crisis to move from the tiny Greek economy into one of the big countries and for now it looks like all eyes are on Spain. Although not as splashy, the slowdown in China's 1st quarter GDP results (8.1% vs. 8.9% in the 4th quarter 2011) affected markets. Investors believe that China's GDP is a barometer of the over health of the global economy and any signs of slowing raises concerns.

The Dow Jones UBS Commodity index posted its fourth weekly decline in a row losing 1.55%. During this four week run, the DJ UBS Commodity index is down 4.6%. For the year, this broad commodity index is down 0.87%. Gold rebounded last week and added $30.10 (1.85%) per ounce to close Friday at $1660.20, but this masks a 1.2% decline on Friday as investors' fears of a global slowdown pushed concerns of currency inflation aside. WTI Oil lost $0.48 (-0.46%) per barrel to close Friday at $102.83. Analysts are suggesting that the recent pullback in oil prices reflects the general belief that the global economy is slowing and reducing demand.

The Euro stopped its decline against the US dollar gaining $0.002 (0.15%), but worries about Spain, interest rates, and the overall Euro Zone economy will, in my opinion, continue to keep pressure on the Euro. There was little movement in general last week among currencies keeping with this broader theme for 2012.

Bond markets continued to rally as US interest rates have fallen over the past several weeks. The Barclays US Aggregate Bond Index was up 0.36% for the week, and is now up 1.18% for the year. The 10-year US Treasury interest rate fell below 2% closing Friday at 1.987%. The 30-year interest rate also fell to 3.134%. Both moves were sizeable and reflect, in my view, reduced confidence in the overall economy. The real concern remains Europe. The Spanish 10-year bond closed just below 6% and this surge in interest rates is disturbing. Equally concerning is the increased borrowing Spanish banks are doing with the ECB. As private investors shy away from Spain, banks there will have greater difficulty in meeting their cash needs. Long-duration bonds were the best performing bond sectors last week while preferreds, floating rates, and short-duration were the weakest. For the year, preferreds international inflation protection, and high yield are the best performing bond sectors while extended duration bond sectors the worst.

MY THREE SIGNALS

I said two weeks ago (April 1, 2012 Weekly Update) that there were three major factors I am watching to gauge the overall health/direction of the markets. Interest rates was one factor. I believe, as I said in that Update, that rising interest rates (up to a point) are a sign of growth and economic expansion and falling rates of contraction. The 10 and 30-year US Treasuries spiked on March 20th and have gone down each week since signaling possible economic weakness. I will caution you about a misconception that I think many investors have, and that is they believe interest rates move in an orderly up or down direction over time. This may be true with the Federal Reserve's overnight lending rate, but the markets determine all other rates and those rates can move swiftly and dramatically. Interest rates in Europe are especially important because whole economies could possibly shut down if interest rates get completely out of control. The European Central Bank soothed the system in December with the Long-term refinancing operation (LTRO), but as fears mount, banks, particularly Spanish banks are becoming more and more dependent on the ECB for cash, not investors. The interest rate gauge is suggesting general economic weakness at this time.

A second factor I believe will weigh on the markets here in the US is Europe. Part of the European story is the interest rate challenge that I have already discussed, but the real issue with Europe is growth and the probability for growth. For now, Europe is slipping into a shallow recession and that is going to have some impact on the global markets. The upcoming elections, unemployment rates, and interest rates will all influence the ability of the Euro Zone going forward. Currently I believe the Euro Zone is in a slight recession and will have a negative impact on global growth for now.

The final factor I discussed was the data analysis from Dorsey Wright & Associates (DWA). For those of you who are not familiar with DWA I prefer to quote the great New York Yankee catcher, Yogi Berra, who said, "you can learn a lot by observing." This is what DWA is all about-watching the market and using a couple of basic concepts like Point and Figure charting, relative strength analysis to develop indicators about the current state of the markets. The New York Stock Exchange Bullish Percent (NYSEBP) is one of the most important tools I follow from DWA. The NYSEBP has risen since early December 2011, but this past week the NYSEBP reversed indicating possible weakness in the market. Alone, this reversal does not suggest selling securities; however, it does create a cautionary tone about the market.

All three issues that I am watching are flashing yellow today. Therefore, I am taking a cautionary view of the markets for the near term.

LOOKING AHEAD

More of the same. Nothing to get excited about, but nothing to be especially fearful of either. To say the economy feels blah pretty much sums it up, and the economic data due out this week will, in my opinion, continue along this direction.

Key US economic data releases gets started Monday morning with March Retail Sales which are expected to fall compared to February's sales. If retail sales surprise, I believe the markets to react favorably. Housing Starts and Industrial Production numbers are due out Tuesday morning. The housing market is of particular importance and starts are expected to increase marginally. Initial Jobless Claims, Existing Home Sales, and the Philadelphia Fed Survey will all be released Thursday morning. The initial jobless number will be closely watched by investors after last week's unexpected spike in jobless claims raised doubts about the durability of the current modest economic recovery. Consensus calls for 365,000 new jobless claims, down from last week's 380,000. Existing home sales for March are also expected to improve slightly from an annual rate of 4.59 million homes to 4.62 million homes. Any strength in this key sector is good for the economy.

For now, my views about the markets developed through the Dorsey Wright & Associates (DWA) relative strength analysis are unchanged. US stocks remains the strongest asset category followed by Commodities, Bonds, International stocks, and Currencies. US stocks retain a very sizable lead over the other categories with the others clustered closely together. Mid-capitalization stocks are favored, growth is favored over value, and equal-weighted indexes are favored over capitalization-weighted ones. On a relative strength basis, DWA puts Consumer Discretionary, Information Technology, and Financials as the three strongest economic sectors.

The NYCE US Dollar Index is a measure that calculates the value of the US dollar through a basket of six currencies, the Euro, the Japanese Yen, the British Pound, the Canadian Dollar, the Swedish Krona, and the Swiss franc. The Euro is the predominant currency making up about 57% of the basket.

Currencies and futures generallyare volatile and are not suitable for all investors. Investment in foreign exchange related products is subject to many factors that contribute to or increase volatility, such as national debt levels and trade deficits, changes in domestic and foreign interest rates, and investors' expectations concerning interest rates, currency exchange rates and global or regional political, economic or financial events and situations.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, including international economic, political and regulatory developments.

Emerging market investments involve higher risks than investments from developed countries and also involve increased risks due to differences in accounting methods, foreign taxation, political instability, and currency fluctuation. The main risks of international investing are currency fluctuations, differences in accounting methods, foreign taxation, economic, political or financial instability, and lack of timely or reliable information or unfavorable political or legal developments.

The Dow Jones UBS Commodities Index is composed of futures contracts on physical commodities. This index aims to provide a broadly diversified representation of commodity markets as an asset class. The index represents 19 commodities which are weighted to account for economic significance and market liquidity. This index cannot be traded directly. The commodities industries can be significantly affected by commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions. Past performance is no guarantee of future results. These investments may not be suitable for all investors, and there is no guarantee that any investment will be able to sell for a profit in the future.

TIPS are U.S. government securities designed to protect investors and the future value of their fixed-income investments from the adverse effects of inflation. Using the Consumer Price Index (CPI) as a guide, the value of the bond's principal is adjusted upward to keep pace with inflation. Increase in real interest rates can cause the price of inflation-protected debt securities to decrease. Interest payments on inflation-protected debt securities can be unpredictable.

As always, if you have any specific questions on your portfolio or wish to talk to me, please do not hesitate to call.

P.S. If you think this type of analysis would be of benefit to anyone you know, please share this communication with them.

Corporate bonds contain elements of both interest rate risk and credit risk. Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest, and if held to maturity, offer a fixed rate of return and fixed principal value. U.S. Treasury bills do not eliminate market risk. The purchase of bonds is subject to availability and market conditions. There is an inverse relationship between the price of bonds and the yield: when price goes up, yield goes down, and vice versa. Market risk is a consideration if sold or redeemed prior to maturity. Some bonds have call features that may affect income.

Sincerely,

Paul Merritt, MBA, AIF ®, CRPC ® Principal NTrust Wealth Management

Past performance is not indicative of future results and there is no assurance that any forecasts mentioned in this report will be obtained. Technical analysis is just one form of analysis. You may also want to consider quantitative and fundamental analysis before making any investment decisions.

Information in this update has been obtained from and is based upon sources that NTrust Wealth Management (NTWM) believes to be reliable, however NTWM does not guarantee its accuracy. All opinions and estimates constitute NTWM's judgment as of the date the update was created and are subject to change without notice. This update is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. Any decision to purchase securities must take into account existing public information on such security or any registered prospectus.

The bullish percent indicator (BPI) is a market breath indicator. The indicator is calculated by taking the total number of issues in an index or industry that are generating point and figure buy signals and dividing it by the total number of stocks in that group. The basic rule for using the bullish percent index is that when the BPI is above 70%, the market is overbought, and conversely when the indicator is below 30%, the market is oversold. The most popular BPI is the NYSE Bullish Percent Index, which is the tool of choice for famed point and figure analyst, Thomas Dorsey.

All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poors, this is a market capitalization weighted index, meaning the largest companies in the S&P 500 have a greater weighting than smaller companies. The S&P 500 Equal Weighted Index is determined by giving each of the 500 stocks in the index the same weighting in the index. The Dow Jones Industrial Average is based on the average performance of 30 large U.S. companies monitored by Dow Jones & Company. The Dow Jones Corporate Bond Index is comprised of 96 investment grade issues that are divided into the industrial, financial, and utility/telecom sectors. They are further divided by maturity with each of the sectors represented by 2, 5, 10 and 30-year maturities. The Morgan Stanley Capital International (MSCI) Europe, Australia and Far East (EAFE) Index is a broad-based index composed of non U.S. stocks traded on the major exchanges around the globe. The Russell 2000 Index is comprised of the 2000 smallest companies within the Russell 3000 Index, which is made up of the 3000 biggest companies in the US.

Securities and Advisory Services offered through Commonwealth Financial Network®,Member FINRA/SIPC, a Registered Investment Adviser.

Friday, April 13, 2012

Markets reacted negatively to the release of the minutes from the Federal Reserve's Open Market Committee (FOMC) meeting this past week after the FOMC indicated that it was unlikely to offer another round of quantitative easing (QEIII) in the near term. Also making investors nervous was the weak auction for Spanish debt and the sharp drop in the creation of new jobs announced (121,000 new jobs vs. 201,000 expected) Friday morning by the Department of Labor's Bureau of Labor Statistics. These major news events permeated most markets to some degree last week.

For the week, the Dow Jones Industrial Average (DJIA) lost 152 points (-1.15%), the S&P 500 fell 10 points (-0.74%), and the mid- and small-

capitalization heavy Russell 2000 gave back 1.46% in the holiday-shortened trading week. The NASDAQ outperformed the other major US indexes by losing just 0.36%. The DJIA matched its worst one-week performance in 2012 of just two weeks ago, and the S&P 500's drop was its worst weekly pullback of the year. The drop in the more volatile Russell 2000 was the third worse out of four weekly losses so far in 2012 for this broad index, while the NASDAQ posted only it's second down week this year. For the year the DJIA is up 6.9%, the S&P 500 is up 11.2%, the Russell 2000 has gained 10.4%, and the NASDAQ continues to lead all major indexes with a gain of 18.2%.

Every major US economic sector saw declines last week. Consumer Discretionary bettered all other sectors with a slightly negative return for the week followed by Consumer Staples, Health Care, Information Technology, and Utilities. Energy, Financials, Materials, and Industrials were the bottom four sectors and all returned less that the DJIA. For the year, Information Technology, Financials, Consumer Discretionary are the top three performing sectors and are all ahead of the S&P 500. Utilities, Energy, and Telecom are the bottom three with Utilities the only sector with a negative return so far in 2012.

International stocks underperformed US stocks last week by a wide margin. The European-heavy (two-thirds Europe, one-third Japan) MSCI EAFE index was down 3.05% over renewed debt concerns in Europe. Spain has become especially worrisome following a particularly weak bond offering last week and a corresponding surge in interest rates for its sovereign debt. The yield on Spanish 10-year debt jumped nearly one-half percent to close last week at 5.757%. Italian debt jumped at nearly the same rate, and the French 10-year is now close to breaching the 3% yield hurdle.

The Dow Jones UBS Commodity index posted yet another weekly decline giving back just under 0.2%. This broad commodity index is now down four of the past five weeks and is up just 0.7% for the year. WTI Oil added $0.11 (0.1%) per barrel to close Friday at $103.31. Gold posted its third worst weekly loss for 2012 losing $41.80 (-2.50%) per ounce closing at $1630.10. I believe the price of gold has come to reflect investor fears over the amount of currency in circulation both in the US and abroad. When the news from the FOMC minutes was released last Tuesday saying that the Federal Reserve is likely to sit tight on a third round of quantitative easing for now, gold investors immediately sold because expectations of currency inflation were greatly diminished. My belief is that commodity prices are a proxy on two important issues: supply and demand, and currency valuations. Supply and demand is basic economics. The stronger an economy, the greater the demand, and if commodity production cannot keep up with demand, prices jump. The value of the US Dollar is also driven by supply and demand, but is heavily influenced by the monetary policies of the Federal Reserve, and because most commodity contracts are valued in the US Dollar, a cheaper US Dollar means commodity prices tend to rise and vice versa. There are many factors weighing on the price of commodities and thus commodity prices can be difficult to predict leading to greater volatility as data reaches the markets. I continue to believe, however, that commodities remain a possible hedge against rising inflation.

The Euro had its sharpest one-week pull back this past week on the weakness in the Spanish bond market losing almost three cents (-2.03%) to close Friday at $1.306. Correspondingly, the US Dollar Index, a basket of foreign currencies measured against the US dollar had its best one-week performance for the year gaining 1.36% for the week. The Euro is now up just 0.9% for the year reflecting the great uncertainty and direction of the markets at this time.

Bond markets rebounded nicely last week after QEIII was taken off the table for now. The Barclays US Aggregate Bond Index was up 0.49% for the week, and is up 0.82% for the year. As I noted last week, the bond market is still just drifting along and influenced by the many nuances of the Federal Reserve and its somewhat activist monetary policies. I will discuss some of the issues surrounding QEIII in the next section. The 10- and 30-year US Treasury interest rates both fell with the 10-year yield closing the week at 2.177% compared to the previous Friday's close of 2.214%. The US 30-year yield settled at 3.328% down from the previous week's close of 3.341%. For now, the US Treasury remains the go-to place for "safe haven" investors from around the world. Extended duration US Treasuries were the best performing bond sector for the week while international treasuries was the worst. For the year, preferreds, international inflation protected, and high yield are the best performing bond sectors while extended duration US Treasuries and corporate are the weakest.

TO QE OR NOT TO QE?

William Shakespeare sure had a way with words and here I am liberally quoting from the great English bard some 400 years later. However, unlike Hamlet, I am not contemplating suicide but rather looking at the impact of the Federal Reserve's decision to opt out of QEIII for now (based upon last Tuesday's release of the FOMC meeting minutes), and whether the poor jobs report this past Friday will raise the possibility of QEIII returning to the active policy mix.

Let me begin by saying that I personally believe the markets are overly obsessed with the concept of QEIII. I would like to see the Fed sit on the sidelines for now and let the US economy exist without constant tinkering from the Fed. But Mr. Bernanke's active chairmanship at the Fed forces investors to constantly evaluate his interventions, or possible interventions, in the markets. So whether or not I like it, here I am talking about QEIII. Central bank operations is not the stuff for exciting reading, but I ask that you to bear with me because this is important.

For those of you who may not be entirely familiar with QE let me quickly summarize for you. QE is the Federal Reserve's slightly indirect route to printing more money and putting it into circulation within the economy. The belief is that more money in circulation will help by providing more funds to the banks to lend, give asset prices a boost giving investors more confidence, and will keep interest rates down thus encouraging more borrowing. I would add one additional objective-keeping government borrowing costs low so the impact of borrowing trillions of dollars does not blow up spending budgets with excessive interest payments.

I refer to QE as QEIII today because the Fed has already under taken QEI and QEII, so their next effort will be QEIII. How the Fed puts money into the market varies between QE's but boils down to buying US Treasuries in the open market and getting cash into the economic system. QEI was straight bond buying-create money and buy bonds. QEII, also known as Operation Twist, targeted longer duration (>7 years) bonds for purchase. What makes QEII slightly different is that the Treasury used shorter duration bonds that were maturing as the source of cash to buy the longer duration bonds. The Fed has contended that QEII would have minimum inflationary pressure on the economy because the net supply of money would be unchanged. QEII is expected to conclude by the end of June which helps explain the recent preoccupation with QEIII.

Last week the Fed said it would not implement QEIII and hold steady on monetary policy for now because the economy is improving. The improvement is not as robust as the Fed would like, but it is improving. The Fed also said that it expected the unemployment rate to remain elevated for the time being even as the economy slowly improves. The Fed has been telegraphing this position for some time so I was a little surprised by the immediate and negative impact the release of the minutes had on stock markets Tuesday and Wednesday. The jobs report on Friday was also is in line with the Fed's earlier comments, but the larger than expected drop has caused observers to ask again if the Fed will now consider QEIII?

The constant tinkering by the Fed in the markets is one of the major factors why investing has become so difficult today. You just don't know how and by how much the Fed will enter into the financial markets. I am very skeptical that one poor jobs report will be enough to sway the Fed when it meets again April 24th and 25th. Therefore, I believe that investors will increasingly turn their attention to corporate earnings, inflation data, and economic data for market guidance. I believe the Fed will continue to wait on QEIII for the time being.

LOOKING AHEAD

Last week's economic data reinforced my belief that the US economy resembles a toddler riding a bike on training wheels-unsteady, uncertain, but upright and moving forward. Market data over this past weekend indicates that markets may open to the downside at the very start of the week, but there is much more going on then just a single jobs report that may influence markets for the week. I must remind everyone that the European debt crisis is like a volcano that is rumbling beneath the surface. Rising interest rates in Spain and Italy are especially troubling, but Europe has so much further to go before this region stops being a drag on the world economy. Here in the US, the 1st quarter earnings season is upon us and most stories I have read are raising concerns that corporate earnings will not be as robust as they have been.

For now, my views about the markets developed through the Dorsey Wright & Associates (DWA) relative strength analysis is unchanged. US stocks remains the strongest asset category followed by Commodities, Bonds, International stocks, and Currencies. US stocks retain a very sizable lead over the other categories with the others clustered closely together. Mid-capitalization stocks are favored, growth is favored over value, and equal-weighted indexes are favored over capitalization-weighted ones. On a relative strength basis, DWA puts Consumer Discretionary, Information Technology, and Financials as the three strongest economic sectors.

Key US economic data releases this coming week will be focused on inflation with the International Trade and Producer Price Index reports coming Thursday morning and the Consumer Price Index report on Friday morning. All three of these reports are expecting very modest improvements. Following last Friday's Employment Situation report, investors will be very interested in Thursday morning's Initial Jobless Claims report. Consensus is calling for a slight uptick from first time jobless claims of 357,000 last week to 359,000 this week.

Finally, last Friday was an exciting day here in Virginia Beach. As I am sure most of you have heard, a Navy F-18 Super Hornet jet crashed shortly after takeoff into an apartment complex. The pilots survived as did everyone on the ground. Each of us in our own way has much to be thankful for and I will be forever grateful that Esther survived without a scratch. Tough times lay ahead as the families try to recover their property losses.

The NYCE US Dollar Index is a measure that calculates the value of the US dollar through a basket of six currencies, the Euro, the Japanese Yen, the British Pound, the Canadian Dollar, the Swedish Krona, and the Swiss franc. The Euro is the predominant currency making up about 57% of the basket.

Currencies and futures generallyare volatile and are not suitable for all investors. Investment in foreign exchange related products is subject to many factors that contribute to or increase volatility, such as national debt levels and trade deficits, changes in domestic and foreign interest rates, and investors' expectations concerning interest rates, currency exchange rates and global or regional political, economic or financial events and situations.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, including international economic, political and regulatory developments.

Emerging market investments involve higher risks than investments from developed countries and also involve increased risks due to differences in accounting methods, foreign taxation, political instability, and currency fluctuation. The main risks of international investing are currency fluctuations, differences in accounting methods, foreign taxation, economic, political or financial instability, and lack of timely or reliable information or unfavorable political or legal developments.

The Dow Jones UBS Commodities Index is composed of futures contracts on physical commodities. This index aims to provide a broadly diversified representation of commodity markets as an asset class. The index represents 19 commodities which are weighted to account for economic significance and market liquidity. This index cannot be traded directly. The commodities industries can be significantly affected by commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions. Past performance is no guarantee of future results. These investments may not be suitable for all investors, and there is no guarantee that any investment will be able to sell for a profit in the future.

TIPS are U.S. government securities designed to protect investors and the future value of their fixed-income investments from the adverse effects of inflation. Using the Consumer Price Index (CPI) as a guide, the value of the bond's principal is adjusted upward to keep pace with inflation. Increase in real interest rates can cause the price of inflation-protected debt securities to decrease. Interest payments on inflation-protected debt securities can be unpredictable.

As always, if you have any specific questions on your portfolio or wish to talk to me, please do not hesitate to call.

P.S. If you think this type of analysis would be of benefit to anyone you know, please share this communication with them.

Corporate bonds contain elements of both interest rate risk and credit risk. Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest, and if held to maturity, offer a fixed rate of return and fixed principal value. U.S. Treasury bills do not eliminate market risk. The purchase of bonds is subject to availability and market conditions. There is an inverse relationship between the price of bonds and the yield: when price goes up, yield goes down, and vice versa. Market risk is a consideration if sold or redeemed prior to maturity. Some bonds have call features that may affect income.

Sincerely,

Paul Merritt, MBA, AIF ®, CRPC ® Principal NTrust Wealth Management

Past performance is not indicative of future results and there is no assurance that any forecasts mentioned in this report will be obtained. Technical analysis is just one form of analysis. You may also want to consider quantitative and fundamental analysis before making any investment decisions.

Information in this update has been obtained from and is based upon sources that NTrust Wealth Management (NTWM) believes to be reliable, however NTWM does not guarantee its accuracy. All opinions and estimates constitute NTWM's judgment as of the date the update was created and are subject to change without notice. This update is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. Any decision to purchase securities must take into account existing public information on such security or any registered prospectus.

The bullish percent indicator (BPI) is a market breath indicator. The indicator is calculated by taking the total number of issues in an index or industry that are generating point and figure buy signals and dividing it by the total number of stocks in that group. The basic rule for using the bullish percent index is that when the BPI is above 70%, the market is overbought, and conversely when the indicator is below 30%, the market is oversold. The most popular BPI is the NYSE Bullish Percent Index, which is the tool of choice for famed point and figure analyst, Thomas Dorsey.

All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poors, this is a market capitalization weighted index, meaning the largest companies in the S&P 500 have a greater weighting than smaller companies. The S&P 500 Equal Weighted Index is determined by giving each of the 500 stocks in the index the same weighting in the index. The Dow Jones Industrial Average is based on the average performance of 30 large U.S. companies monitored by Dow Jones & Company. The Dow Jones Corporate Bond Index is comprised of 96 investment grade issues that are divided into the industrial, financial, and utility/telecom sectors. They are further divided by maturity with each of the sectors represented by 2, 5, 10 and 30-year maturities. The Morgan Stanley Capital International (MSCI) Europe, Australia and Far East (EAFE) Index is a broad-based index composed of non U.S. stocks traded on the major exchanges around the globe. The Russell 2000 Index is comprised of the 2000 smallest companies within the Russell 3000 Index, which is made up of the 3000 biggest companies in the US.

Securities and Advisory Services offered through Commonwealth Financial Network®,Member FINRA/SIPC, a Registered Investment Adviser.

Wednesday, April 4, 2012

US and global stock markets posted excellent returns for the first quarter of 2012 ending March 30th. The Dow Jones Industrial Average (DJIA) added 995 points (8.14%) since the beginning of the year, the S&P 500 added 12.0%, the mid, and smaller capitalization weighted Russell 2000 gained 12.1%, and the tech-heavy NASDAQ was up a strong 18.7%. European markets also posted solid gains with the European-heavy MSCI EAFE up 10.0%. Within the international sector, emerging markets led all international sectors with gains so far of 13.7%. Commodities and bonds have underperformed so far in 2012 as the global economic outlook remains uncertain and as bond holders trim holdings, especially long-duration bonds, and shifting into stocks.

For the week, the DJIA gained 131 points (1.00%), the S&P 500 added 11 points (0.81%), and the Russell 2000 was once again flat adding just 0.03% for the week. The NASDAQ continued its positive ways adding another 0.77% for the week. US markets shrugged off a discouraging report indicating that home prices had continued to fall taking encouragement by the slowing pace of decline. Additionally, other housing data suggested that the housing market may be finding a bottom, and a report on consumer spending released on Friday boosted markets because it showed consumers were spending at the highest rate in seven months.

Health Care, Real Estate, and Consumer Staples led the eleven major economic sectors I follow. Only Telecom and Energy were negative for the week. For the quarter, Information Technology, Financials, and Consumer Discretionary were the best performing sectors notching gains greater than 16%. Materials, Industrials, and Health Care also notched double-digit growth. Utilities, Energy and Telecom were the bottom three. Utilities remains, as it has for most of the year, the only sector with a negative return. When dividends are factored in, the Utilities sector is down less than 2% for the quarter.

International stocks were generally flat last week. The MSCI EAFE was down 0.21% while the Americas sector led all other international sectors gaining 0.52%. Emerging markets gave back 4% of its 2012 gain in March putting a negative tone to what has otherwise been an outstanding start to the year.

The Dow Jones UBS Commodity index posted a second consecutive weekly decline giving back another 1.50% for the week. This broad commodity index is now down three of the past four weeks. WTI Oil lost $3.67 (-3.43%) per barrel to close Friday at $103.2. For the quarter, WTI Oil gained 4.4% but remains well below the weekly close of $109.62 on February 24th. The price of oil has been strongly influenced by the tensions in the Middle East with Iran, the fluctuations in the US dollar, and the global economic outlook. Gold posted its second weekly gain adding another $9.50 (0.57%) per ounce closing at $1671.9. Gold investors are watching European leaders and their most recent agreement to increase the size of the European bailout fund (more commitment equals the need for more Euros), as well as the US Federal Reserve for any indications that the Fed will come forth with another round of quantitative easing. In short, the more governments print money, the more I believe investors will push the price of gold higher. Among the specific commodity sectors I follow, cotton, coffee, and tin were the best performing sectors last week while natural gas, energy, and oil were the worst last week. For the year, tin and gasoline are the best performing sectors with natural gas, energy, and livestock the worst.

The Euro continued to gain slightly against the US dollar adding less than a penny to close Friday at $1.333. The US Dollar Index, a basket of foreign currencies measured against the US dollar also fell slightly losing 0.43% for the week. The Euro is now up 3.01% for the year while the US dollar index is down 1.46%. I believe the general lack of direction in the currency markets reflects the lack of consensus among investors about the true direction of not only the US economy, but most other national economies as well.

Bond markets have been very stable during the first quarter and this past week was more of the same. The Barclays US Aggregate Bond Index was up 0.27% for the week, down 0.58% for the month, and is up 0.33% for the year. Drifting along would be a more apt description. The notable exception would be the extended duration US Treasury sector which has seen a sell-off so far in 2012. Interest rates on the 30-year have moved from 3.014% to 3.341%. A jump of about one-half of one percent in the yield may not sound like much, but represents a 15.7% increase in the yield and has driven the price of 30-year Treasuries downward. The US 10-year has seen an even larger percentage change in yield with an 18.3% uptick from 1.871% to Friday's close of 2.214%. It is also notable that 13% of the year's gain in the 10-year Treasury yield came in just one week reminding us that interest rates can move decisively at times. The gainers for the quarter have been preferreds, high-yield, and emerging market bonds.

SO WHAT ABOUT NEXT QUARTER?

Going into the second quarter of 2012, stocks have rallied, Europe remains a mess, the US economy looks like a toddler riding a bike with training wheels, bond and currency traders are an uncertain lot, China is slowing down, and the world remains a dangerous place. So what else is new?

I am drawn back to my January 22, 2012, Weekly Update where I discussed the "Certainty of Uncertainty." I said then "Today is no different from yesterday. Yesterday is no different from last year, and last year no different from last century," but that "the uncertainty is the same." My view remains in place. We are always dealing with challenging times and we must be diligent and focused on the opportunities and risk that we see today and into the near future within the context of our individual situations and risk tolerance.

As most of you know, I rarely make predictions. Predictions are an exercise of futility over the long run. No one pundit ever gets it right on a regular basis. There is no shame in that because it is simply impossible to predict the future. Barron's magazine published an article July 29, 1991, which simply stated, "The future course of prices or market returns is...unknowable, for it is subject to the arrival of new, unpredictable information." I think we all understand this on a most intuitive, fundamental basis, and acknowledging this fact is the main reason I use Dorsey Wright & Associates (DWA). DWA gives me the tools I need to help analyze what the markets are actually doing. So, no predictions about the rest of the year, but here are the things I am going to be looking at as we start the second quarter.

Interest Rates. Many ferocious battles take place, often out of sight, in the world of bond traders. Huge fortunes can be made or lost with the small, incremental changes in interest rates. Investors in Long-Term Capital Management in the late 1990's and MF Global more recently were victims of interest rate/bond interest rate bets gone wrong. But beyond this point, what do interest rates tell us?

Rising yields/falling bond values suggests:

There are more net bond sellers than buyers (more supply than demand) because investors-

-perceive better investments elsewhere (such as stocks)

-greater confidence in the economy (less fear, less need for safety)

-increasing fear of inflation (demand higher interest rates to offset higher prices of goods and services)

The converse is generally true when yields fall and bond values rise.

Therefore, in a very general sense, rising interest rates can signal greater economic activity, optimism about the future, and general economic confidence. However, too much of an increase and we could see the economy hampered as borrowing and lending dry up. I use interest rates as a general barometer of broad consensus of confidence and expectations in the markets. After all, bond investors are making 10, 20, and 30-year bets on the direction of interest rates and inflation.

DWA Statistics: I am always looking at the data provided by Dorsey Wright. Among the most important statistics is the New York Stock Exchange Bullish Percent (NYSEBP). I have discussed this particular statistic in numerous Updates in the past, and will not go into great detail here other to say that when the NYSEBP is rising and above 70% that is a very positive indicator of the strength of the stock market. During the first quarter of 2012, the NYSEBP increased from 53% to 74%. During March, the NYSEBP fell slightly but remains solidly positive. Should the NYSEBP fall below 70% it would signal a possible change in the general tenor of the markets and would be the first sign of caution.

I also watch the position and relative strength relationship of the five major asset categories tracked by DWA: US stocks, International stocks, Bonds, Commodities, and Currencies. How these five categories rank, how they are moving, and how fast they are moving, tell me a great deal about the underlying strength of the markets. As we start the second quarter, the US stocks category is solidly in first place followed by Commodities, Bonds, International stocks, and Currencies. The trend strength of Commodities and Bonds has been weakening recently so these major categories must be watched very closely to see if the trend further weakens or strengthens in the weeks and months ahead.

Europe: I believe that the problems in Europe are far from being resolved. The London-based Centre for Economic Policy recently announced that they believe the Euro zone fourth quarter 2011 GDP declined 0.3% and that trend was continuing into the first quarter (Wall Street Journal, March 30, 2012). The authors of the study cited austerity measures as a primary contributor to the contraction. A recession in Europe, even a slight recession, may negatively affect the region's major trading partners--the US and China. Investors will also be watching closely key elections scheduled for France and Greece in late April and early May. The existing leadership in both countries may be voted out to be replaced by candidates who have publicly challenged current agreements reached by both countries. This could jeopardize the fragile agreements in place and toss the region back into turmoil.

LOOKING AHEAD

As I previously noted, the US economy reminds me of watching a toddler riding a bicycle with training wheels-it is wobbly and uncertain, but moving generally forward. I believe this is precisely where we are today. Economic data is up, down, and everywhere in between. Time magazine's cover this past week is a perfect illustration of this point. Investors know that employment is improving, that the stock market is up, and housing may in fact be nearing a bottom, but why does it not feel better? I believe it is because unemployment remains high, political uncertainty creates stress, the mounting US debt appears to be unstoppable, gasoline prices are hurting families, and we are bombarded with negativity by a relentless 24-hour news cycle. Yet, the markets have been up and economic news is gradually improving. However, investors will continue to watch each economic data release to see if the economy is continuing to grow or running out of gas.

There are six important US economic data releases set this coming week. The most important is the March Employment Situation that will be released on Friday morning. Consensus calls for the overall unemployment rate to remain unchanged at 8.3% and a slight drop in the number of jobs created compared to February. This report is key because it signifies to many the general strength of the US economic recovery.

There have been no major changes to the relative strength analysis from Dorsey Wright (DWA). US stocks remains the strongest asset category followed by Commodities, Bonds, International stocks, and Currencies. US stocks retain a very sizable lead over the other categories with the others clustered closely together. The International stocks category remains the most improved by overall score change so far in 2012. There has also been no changes within the sectors of the major asset categories from previous weeks. Please refer to last week's Update for specific comments.

I will conclude this week's Update by reminding everyone of the importance of having a portfolio that meets your individual needs and risk tolerance. Investing is necessary for insuring your long-term financial health and well-being. Investing within your own circumstances is necessary to meet those long-term needs and the rate of return of your own portfolios are relevant in the context of your life, not someone else's.

The NYCE US Dollar Index is a measure that calculates the value of the US dollar through a basket of six currencies, the Euro, the Japanese Yen, the British Pound, the Canadian Dollar, the Swedish Krona, and the Swiss franc. The Euro is the predominant currency making up about 57% of the basket.

Currencies and futures generallyare volatile and are not suitable for all investors. Investment in foreign exchange related products is subject to many factors that contribute to or increase volatility, such as national debt levels and trade deficits, changes in domestic and foreign interest rates, and investors' expectations concerning interest rates, currency exchange rates and global or regional political, economic or financial events and situations.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, including international economic, political and regulatory developments.

Emerging market investments involve higher risks than investments from developed countries and also involve increased risks due to differences in accounting methods, foreign taxation, political instability, and currency fluctuation. The main risks of international investing are currency fluctuations, differences in accounting methods, foreign taxation, economic, political or financial instability, and lack of timely or reliable information or unfavorable political or legal developments.

The Dow Jones UBS Commodities Index is composed of futures contracts on physical commodities. This index aims to provide a broadly diversified representation of commodity markets as an asset class. The index represents 19 commodities which are weighted to account for economic significance and market liquidity. This index cannot be traded directly. The commodities industries can be significantly affected by commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions. Past performance is no guarantee of future results. These investments may not be suitable for all investors, and there is no guarantee that any investment will be able to sell for a profit in the future.

TIPS are U.S. government securities designed to protect investors and the future value of their fixed-income investments from the adverse effects of inflation. Using the Consumer Price Index (CPI) as a guide, the value of the bond's principal is adjusted upward to keep pace with inflation. Increase in real interest rates can cause the price of inflation-protected debt securities to decrease. Interest payments on inflation-protected debt securities can be unpredictable.

As always, if you have any specific questions on your portfolio or wish to talk to me, please do not hesitate to call.

P.S. If you think this type of analysis would be of benefit to anyone you know, please share this communication with them.

Corporate bonds contain elements of both interest rate risk and credit risk. Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest, and if held to maturity, offer a fixed rate of return and fixed principal value. U.S. Treasury bills do not eliminate market risk. The purchase of bonds is subject to availability and market conditions. There is an inverse relationship between the price of bonds and the yield: when price goes up, yield goes down, and vice versa. Market risk is a consideration if sold or redeemed prior to maturity. Some bonds have call features that may affect income.

Sincerely,

Paul Merritt, MBA, AIF ®, CRPC ® Principal NTrust Wealth Management

Past performance is not indicative of future results and there is no assurance that any forecasts mentioned in this report will be obtained. Technical analysis is just one form of analysis. You may also want to consider quantitative and fundamental analysis before making any investment decisions.

Information in this update has been obtained from and is based upon sources that NTrust Wealth Management (NTWM) believes to be reliable, however NTWM does not guarantee its accuracy. All opinions and estimates constitute NTWM's judgment as of the date the update was created and are subject to change without notice. This update is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. Any decision to purchase securities must take into account existing public information on such security or any registered prospectus.

The bullish percent indicator (BPI) is a market breath indicator. The indicator is calculated by taking the total number of issues in an index or industry that are generating point and figure buy signals and dividing it by the total number of stocks in that group. The basic rule for using the bullish percent index is that when the BPI is above 70%, the market is overbought, and conversely when the indicator is below 30%, the market is oversold. The most popular BPI is the NYSE Bullish Percent Index, which is the tool of choice for famed point and figure analyst, Thomas Dorsey.

All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poors, this is a market capitalization weighted index, meaning the largest companies in the S&P 500 have a greater weighting than smaller companies. The S&P 500 Equal Weighted Index is determined by giving each of the 500 stocks in the index the same weighting in the index. The Dow Jones Industrial Average is based on the average performance of 30 large U.S. companies monitored by Dow Jones & Company. The Dow Jones Corporate Bond Index is comprised of 96 investment grade issues that are divided into the industrial, financial, and utility/telecom sectors. They are further divided by maturity with each of the sectors represented by 2, 5, 10 and 30-year maturities. The Morgan Stanley Capital International (MSCI) Europe, Australia and Far East (EAFE) Index is a broad-based index composed of non U.S. stocks traded on the major exchanges around the globe. The Russell 2000 Index is comprised of the 2000 smallest companies within the Russell 3000 Index, which is made up of the 3000 biggest companies in the US.

Securities and Advisory Services offered through Commonwealth Financial Network®,Member FINRA/SIPC, a Registered Investment Adviser.