Stock markets at home and abroad continued to climb higher this past week. Confidence was renewed in Europe as Portugal, Italy, and Spain all had successful bond offerings, gold pulled back as a result, and the US markets shrugged off disappointing news on the jobs and housing fronts.

The Dow Jones Industrial Average (DJIA) gained 113 points (+0.96%) to close Friday at 11,787. The S&P 500 Index gained 22 points (+1.71%) to close the week at 1293. Small capitalization stocks represented by the Russell 2000 Index gained 2.51% for the week. For the year the DJIA is up 1.8%, the S&P 500 is up 2.8%, and the Russell 2000 is up 3.0%.

The top three broad economic sectors last week were Information Technology, Financials and Energy while Telecom, Utilities, and Health Care were at the bottom. As the year gets underway I am seeing a short-term move towards the Technology and Energy sectors but not enough to make a change in the relative strength rankings.

The MSCI (EAFE) World Index gained 2.7% to lead all major indexes. The European debt crisis was seen as subsiding in the wake of the reasonably strong auctions among Portugal, Italy and Spain. Additionally, the President of the European Central Bank (ECB), Jean-Claude Trichet, stated that the ECB would take action against inflation should it be necessary encouraging markets. The Euro rebounded as well last week closing at $1.3376 compared to the previous week's close of $1.3369. This number is slightly deceiving because the Euro fell below $1.30 early in the week. The European Finance Ministers will be meeting in Brussels on Monday and Tuesday to discuss the size and rules surrounding the new European Financial Stability Facility (EFSF), and the bond markets will be watching these discussions closely. In Asia, China announced that it was increasing the debt reserve requirements of banks there yet again late Friday. Requiring another 0.5% of bank reserves to the current 19% will have the effect of pulling cash out of the Chinese economy in an effort to help stem inflation in the country. Asia and Chinese investments have typically pulled back the day following the announcement and I would anticipate the same on Monday.

Gold fell another $7.60 per ounce to close last week at $1360.90. For the year, gold has lost 4.1%. The news from Europe was largely responsible for the continued downward move as investors regain confidence of the Euro. Oil gained $3.63 (4.1%) per barrel last week as investors continue to bet on growing economic expansion both in the United States and elsewhere. The Alaska oil pipeline was reopened during the week after damage at a pumping station closed operations. The pumping station was closed over the weekend for additional repairs, but does not appear to threaten further shipments of crude. Most other commodity prices generally rose following a trend that has been in place for the past few months. Worries are mounting over the increase in clothing, fuel, and food prices as we move into the year.

The 10-year treasury ended the week at 3.3328% declining slightly from the previous week's close of 3.3256% reflecting a slightly improving trend in bonds. The broader bond market, as measured by the Barclays Aggregate Bond Index, gained 0.13%. There was little news to sway the bond markets one way or the other.

TOP STORIES

The successful sale of European bonds was certainly good news last week. I will confess, however, that I remain very cautious about Europe. The meeting this week in Brussels will certainly add further clarity to the direction Euro Zone countries, especially Germany, will move in the future as the ministers wrestle with new EFSF. Germany is a reluctant partner but must find some way to hold all of this together. If last year is any guide, this issue can turn quickly so be alert.

Most domestic news was placed on the back burner last week as the nation mourned the lost souls from the terrible shooting in Tucson. However, some key economic news was not good. First time jobless claims rose 35,000 to 445,000. Consensus expectation was for a number of 410,000. While the trend may be showing a slight improvement, the numbers are nowhere near good enough to put Americans back to work and move the unemployment rate below 9%. The news on housing was not any better. According to Bloomberg, US foreclosures may jump 20% in 2011. The report went on to say that approximately 3 million homes have been repossessed since the boom ended in 2006 and that another 5 million homes may yet be repossessed by 2013. Home prices on average have also fallen around 33% in 20 cities based upon the S&P/Case-Shiller Index. These two factors will continue to weigh on the economy in 2011.

A natural question would be, "Paul, if these two important parts of our economy have a negative outlook, how can the stock market continue to rise?" The answer is simple: supply and demand; but based upon very complex actions within the economy. Those of you who know me well understand that I harp on the fact that all economics can be boiled down to the concept of supply and demand. In this case, the stock market has more buyers than sellers. The question is where is the cash coming from? I believe a lot of it is coming from Mr. Bernanke and the Federal Reserve. The Fed is pumping billions of dollars into the economy through the quantitative easing program. Additionally, the extension of the Bush-era tax cuts and the 2% reduction of the social security tax will begin to adding US dollars into the economy. Also, as the stock market continues to rise, many smaller investors will be compelled to start selling their bonds to buy stocks (this may have contributed to the drop in bond prices in the 4th quarter of 2010). Wherever the cash is coming from, the bottom line is that it is moving to the stock markets.

I will continue this discussion next week about whether or not this trend can continue and for how long.

Looking Ahead

This is earnings season so there will be plenty of news about how some of the biggest companies fared the last three months of 2010. Additionally, investors will hang on every word from the reporting companies to get some insight on how they believe 2011 will shape up. The net result can be market can be volatility so don't be surprised by larger movements in the markets.

The general relationship of stocks, bonds, and cash has not changed. Mid and small capitalization stocks are preferred over large, growth is favored over value, and US and International stocks are preferred over Commodities, Bonds, and Currencies. Commodities, less precious metals, remain strong for now. While the best performing countries abroad last week came from developed Europe, emerging markets continue to be favored over developed. Finally, bonds have stopped falling for now so I am not suggesting selling bonds if they are an important part of your risk and income allocations.

I do believe that success in this market will require constant scrutiny by investors so open your statements, follow your investments, and call me if you have any questions.

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.

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 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.

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.

Sincerely,

Paul Merritt, MBA, AIF(R). CRPC(R) 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. 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(R), Member FINRA/SIPC, a Registered Investment Adviser.

US equity markets completed the first full week of 2011 higher and marks the sixth consecutive week of gains by the major US markets. The Dow Jones Industrial Average (DJIA) gained 97 points (+0.84%) closing the week at 11,674.76. The S&P 500 closed on Friday at 1271.50 adding 14 points (+1.10%). Much is made about looking at the first week of the year as a predictor for the full year and I will share some of the data on this phenomenon below.

The top three broad economic sectors last week were Information Technology, Health Care, and Financials while Consumer Staples, Real Estate, and Materials were all negative for the week. On an absolute relative strength basis, Real Estate, Consumer Discretionary, and Information Technology are the three strongest sectors while Utilities, Health Care, and Financials are the weakest.

The MSCI (EAFE) World Index lost 0.83% for the week on renewed worries over the European debt markets. Developed markets in general posted greater losses than emerging markets maintaining an overall trend that has been in place for the past year. The Far East and Middle East were, in general, the best performing areas of the world while developed Europe and India were the worst performing.

The Euro closed at $1.2916 falling $0.045 (-3.4%) from $1.3369 putting the Euro at its lowest point against the US dollar in the past four months. Europe cannot shrug off the concerns over the on-going debt problems with attention focusing this week on Portugal and Spain.

Gold fell $51.20 (-3.6%) per ounce to close last week at $1368.50 on expectations that the US and global economies were strengthening and investors were less concerned about risk and uncertainty. Oil also fell 3.5% following on the same reasoning. Both of these (and other) commodities are volatile and will trade widely on small changes in perceptions of macroeconomic issues. The gaining technical strength of commodities in general, however, is a good reason to consider including commodities in your portfolios.

The 10-year treasury closed the week at 3.3256% up slightly from the year-end close of 3.2877%. Treasuries and fixed-income in general reflect the same macro trend as commodities as investors are selling bonds in favor of more risky investments following the consensus that equities will outperform bonds in 2011. The Barclays Aggregate Bond Index gained 0.02% for the week giving indicating that the bond market in general was flat last week.

THE JANUARY EFFECT

Stock investors are always looking for "rules of thumb" or an "old wives tale" to help give them some indication of what the stock market might do going ahead. Last week I discussed the general consensus of the pundits and their predictions for 2011 and this week I will follow that up with a brief discussion of the January Effect. The January Effect has several versions, but I will focus on the one that says, "As the First Five Days of January Goes, So Goes January, and So Goes the Year."

According to The Stock Trader's Almanac, the last 38 up "First Five Days" periods were followed by full-year gains 33 times, for an 86.84% accuracy ratio; and the average gain for these 38 years is just under +14%. Of the five years that didn't "work," four related to war, and one (1994) produced a flat year. The year 2002 was the last one that failed to be properly predictive, as January started the year up +1.1%, but ended nastily with a loss of -23.4%. For those first five days of January that start off in negative territory, which have been 23 in all, they have been followed with 12 up years and 11 down years. As a sidebar, the last two years have been winners, in that the first five days showed a gain, as did the entire year.

In pre-presidential election years (of which we are in now), this indicator has a stellar record. In the last 15 pre-presidential election years, twelve full years followed the direction of the "First Five Days." Realize that the January Barometer (the direction for the whole month), has an even better track record, with 14 of the last 15 full years having followed January's direction.

So we will see what happens in 2011.

SHOULD YOU SELL YOUR BONDS?

Some of you may be wondering what is going on with US bonds. The real answer is not much. Bonds are not automatically going to go up every week, month, or year; however, they typically have less volatility (price fluctuations) than equities or commodities. Bonds are held in portfolios because investors desire a stream of income and to help dampen the effects of stock market moves. This past quarter we saw bonds, as measured by the Barclays Aggregate Bond Index, lose value (-1.4%) for the first time in eight quarters (Q3, 2008). So investors who have become accustomed to a steadily rising portfolio of bonds have seen their first setback since 2008.

In general terms, investors tend to move to bonds (or increase their allocations) when they are nervous about the stock market and want to protect their principal. This has clearly been in place for the past couple of years when inflows to bond funds has significantly outpaced stock funds. The Federal Reserve has helped this recent trend by keeping a lid on interest rates (buying bonds in the open markets) and pushing bond valuations higher (price of bonds moves inversely to interest rates). As I pointed out last week, investors are feeling more confident that stocks may outperform bonds in 2011, so bonds are being sold to raise cash to move into the stock markets pushing bonds down.

So to answer the question of selling your bonds, you must ask yourself why you own the bonds. If it was only for protection and you desire more stock-like returns, then you may want to consider moving a greater portion of your bonds into the stock market. If you are holding bonds to preserve your capital and use the interest from your bonds as income, then you probably do not want to make any changes at this time.

One final point. Not all bonds are alike. There are many different types of bonds of which risks will vary. So pay attention to the types of bonds you own.

Looking Ahead

The resurgence of debt fears in Europe is having an impact on global markets. This Wednesday the Portuguese government will offer between €750 million ($971 million) to €1.25 billion ($1.62 billion) of new bonds for sale. How the markets react to this auction will say a great deal about how serious investors perceive Portugal's problems to be. While the Portuguese are emphatic that they do not need aid, time will tell. The Euro remains under pressure for now which may negatively impact developed European stocks.

A reported leak in a pump station on the Alaska pipeline will cause supply disruptions of as much as 95% coming through the pipeline for an undetermined time. While individual oil companies may suffer, I would anticipate an increase in oil prices until repairs are made.

Mid and small capitalization stocks are preferred over large, growth is favored over value, US and International stocks are preferred over Commodities, Bonds, and Currencies. Commodities are showing growing strength and should be considered for portfolios. Bonds are holding their own, so if you own bonds for income or risk reduction, do not make adjustments to your portfolios at this time.

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.

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.

Sincerely,

Paul Merritt, MBA, AIF(R). CRPC(R) 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. 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.

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

Happy 2011!

US equity markets closed the year with a strong December and a good year overall. The Dow Jones Industrial Average (DJIA) ended 2010 at 11,578.72 for a gain of 1151 points (+11.03%) with 487 of those points coming in the month of December alone. The S&P 500 had similar gains closing the year up 143 points at 1257.84 (+12.80%). December's gain of 77 points accounted for half of the S&P 500's gains for the year.

The top three broad economic sectors on an absolute return basis (not accounting for dividends) were Consumer Discretionary, Industrials, and Real Estate while Utilities, Health Care and Consumer Staples showed the smallest gains. Going into 2011 the strongest three sectors on a relative strength basis are Real Estate, Consumer Discretionary, and Materials. The weakest are Utilities, Health Care, and Financials; however, Financials and Health Care are showing some recent improvement among the sectors on a relative strength basis.

The MSCI (EAFE) World Index gained 8.02% for the year and 4.90% in December. International markets have recovered as European markets gained strength as yet another round of debt worries were set aside by investors. For the year, Indonesia, Thailand, and Chile were the top performers of the countries I follow. Not surprising, Spain, Italy, and France underperformed. China posted very pedestrian turns in 2010 as concerns mounted over governmental tightening and inflation worries.

The Euro closed at $1.3369 falling $0.95 (-6.61%) against the US dollar in 2010. The Euro was under stress most of the year as problems surfaced in Greece, Ireland, Portugal, Italy and Spain over sovereign (government) debt sending investors into the US dollar for safety. Over the New Year's holiday weekend the state heads of France (Sarkozy) and Germany (Merkel) publicly pronounced their full support of the Euro and tied their respective country's future to the success of the Euro. As I noted in recent updates, the Germans and other strong European countries must preserve the Euro for their own self-interests so I am not surprised by these endorsements.

Commodities posted strong gains across the board. Gold gained 29.7% closing the year at $1421.40 per troy ounce over uncertainties surrounding paper currencies and inflation worries. Oil ended the year at $91.22 per barrel and OPEC announced earlier in December that they would not increase production and were comfortable with $100 per barrel oil prices. While still not favored over US and International stocks on a relative strength basis, commodities have made a very strong move in the last six months.

The 10-year treasury finished the year at 3.2877% down from 2009's close of 3.835% allowing US treasuries to post solid gains in 2010. The 10-year US treasury yield bottomed on October 6th at 2.393% and climbed steadily until December 15th peaking at 3.517% before staging a rally the last two weeks of the year. The broad-based Barclays Aggregate Bond Index gained 6.53% for the year as all bond categories posted solid gains despite some year-end weakness. US high yield and emerging market bonds posted the best gains for the year while municipal bonds posted the smallest.

GOING INTO 2011

One of my favorite pastimes over the holiday season is reading all of the prognostications for the upcoming year. This year was no different. The airways and internet is inundated with countless pundits making their calls for 2011 and I have said many times that I do not make predictions because it is guesswork at best. I will share with you some general trends that I have read in case you are curious. Then consensus is that 2011 will be another solid year for the markets (low double digit gains much like this year) with US markets out performing international markets. Stocks will out perform bonds. Unemployment will improve but remain stubbornly high, the housing market could take another dip, commodities will continue to do well, and the small investor will return to buying stocks.

Prognostications are interesting, but I will continue to rely on relative strength analysis to direct my investment recommendations. As you know I have said consistently in 2010 that small and mid-capitalization stocks were outperforming and the Russell 2000 index (a small cap index) was up 26% compared to the DJIA which was up 11%. I have also consistently been saying that equal-weighted indexes were preferred over capitalization-weighted indexes. In 2010 the S&P 500 equalweighted index was up 19.8% compared to the S&P 500 cap-weighted index which was up 12.8%. So going into 2011 I will focus on what my technical analysis is telling me and that is:

· Small and mid-capitalization stocks are preferred over large-cap. · Growth is preferred over value investing. · Equal-weighted indexes are preferred over capitalizationweighted indexes. · US and International stocks are preferred over Bonds, Currencies, Commodities, and Cash. Commodities, however, are making a strong positive move and certainly be considered for portfolios if not already included. · Emerging markets are preferred over developed markets · Intermediate-term corporate bonds and emerging market bonds are preferred among bonds. · Real Estate, Consumer Discretionary, and Materials are the favored broad sectors.

Looking Ahead

I have no doubt that 2011 will be full of twists and turns and the unexpected. We live in interesting times, but I will let the pundits try and figure out where we will end 2011. While I will not make predictions, I will continue to make my recommendations on what is actually taking place. Relative strength analysis is not fool proof and I am the first to point out weaknesses such as when the markets were range-bound earlier in the year. But once trends take hold, relative strength analysis makes sure the strongest opportunities are identified and where investment decisions can be directed. I will continue to strive to provide you with up-to-date analysis of current economic news and provide you with sensible commentary.

I trust each of you had a wonderful holiday season and that you had a chance to share the season with family and friends. Stacy, Lisa, and our families were treated to the third greatest snowfall in Virginia Beach history and a very rare white Christmas. We came away with many adventures and stories. Travel was treacherous since the primary means of snow removal in Virginia Beach is sunshine and 33 degrees.

All of us at NTrust Wealth Management wish each of you a healthy and prosperous 2011.

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.

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 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.

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.

Sincerely,

Paul Merritt, MBA, AIF(R). CRPC(R) 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. 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(R), Member FINRA/SIPC, a Registered Investment Adviser.

US equity markets continued their recent strength while Europe remains stymied as it sorts out the on-going debt crisis giving strength to the US dollar. US treasuries staged a small rally at the end of the week, and there was little news from China to move the markets.

For the week, the Dow Jones Industrial Average (DJIA) gained 82 points (+0.72%) ending the week at 11,491.91. The S&P 500 gained 4 points (+0.28%) to close Friday at 1243.91. For the year the DJIA is up 10.2% and the S&P 500 is up 11.6%.

Health Care, Consumer Discretionary, and Materials were the best performing broad sectors last week while Financials, Real Estate, and Technology brought up the rear. Year-to-date the top three broad economic sectors are Consumer Discretionary, Industrials, and Materials while Utilities, Health Care, and Financials remain at the bottom. Real Estate has fallen out of the top three broad sectors for the year for the first time in many months (it remains 4th on the list) so I will continue to watch this sector closely.

The MSCI (EAFE) World Index lost 0.1% for the week and is now up 2.6% for the year. Chile, Sweden, and Taiwan were the top performing countries I follow this week while Indonesia, Turkey, and Vietnam were the bottom three. For the year, Thailand, Chile, and Indonesia are the top performing countries and Spain, Italy, and France are the worst. The European debt crisis emerged as the number one financial story this week and I will discuss in greater detail below.

The Euro fell 0.5 cents against the US dollar last week to close Friday at $1.3181 from the previous week's close of $1.3229. The US dollar has posted gains against the Euro for the past five of six weeks as investors shun the Euro over continuing European debt worries and improving US bond yields.

The 10-year treasury closed the week at 3.3376% up from the previous week's close of 3.229%. The bond market's volatility and yields have been rising as investors are eyeing renewed strength and optimism in equities. The long-end of the yield curve (bonds with maturities 20 years and greater) has been hardest hit. All bonds rallied a bit on Thursday and Friday as investors started taking advantage of the recent price declines and news that there was an outside chance that the Build America Bond program could be renewed in the next Congress. Trading in municipal bonds is expected to be light as the year comes to a close.

Overall commodities posted gains for the week. Gold fell slightly closing at $1376.00 Friday from the previous week's close of $1384.90. Oil increased to $88.07 per barrel from the previous week's close of $87.79. Gold continues to be a hedge against uncertainty in global markets and oil's value reflects expectations of coming global growth and demand.

THE COUSIN EDDIE OF FINANCIAL MARKETS

For those of you who do not watch the Vacation movies regularly like I do, you may not be familiar with Cousin Eddie. Cousin Eddie is the uninvited family member who arrives at Chevy Chase's house at the worst possible times and overstays his welcome. The European debt crisis is the Cousin Eddie of global financial markets.

At the heart of this crisis is the realization that this problem is enormous and will not go away without major structural changes. Greek protesters have taken to the streets again, the Irish government fell after accepting the European Union (EU) and International Monetary Fund (IMF) bailout, and Spain is now under increasing pressure from the bond market as fears grow that its banking system cannot survive without massive support (and lots of Spain's debt is also owned by Germany, France and others). In response, the EU's finance ministers just completed the last summit for 2010 and announced an agreement to replace the current emergency rescue fund with a permanent crisis-finance program. The proposals call for greater enforcement powers for the EU and European Central Bank (ECB) to dictate actions to be taken by the bailed-out country and discipline them for not adhering to those guidelines. In other words, the EU is coming to grips with the fatal flaw of having a common currency without a means of controlling the spending and borrowing activities of its member nations. It is the equivalent of giving your Cousin Eddie a credit card with no limit and always being on the hook for paying his bills-eventually you will grow tired of using your own hard earned money to pay for his spendthrift ways. To help control Cousin Eddie you put limits on his spending and require that he start making payments to you.

Brian Carney and Anne Jolis wrote an excellent column titled, "Toward a United States of Europe" in the Wall Street Journal's weekend edition (December 18, 2010) discussing the challenges facing the EU. The article highlights comments from French Finance Minister, Christine Lagarde, who says that for the EU to work, its countries are going to need greater coordination between member countries if the EU is to survive. The individual members of the EU are going to have to answer more and more to the EU and ECB. Also at stake is nothing less than the sovereignty of individual nations. Germany is at the top of the list of countries who do not want to bailout weaker, more undisciplined, member nations. However, an argument can be made that the German's have little choice because failure of the EU would do enormous economic harm to Germany and global financial markets. In the end, the EU could end up like the United States with a strong central/federal government and satellite countries/states. The question remains if independent nations are prepared to give up their sovereignty for the good of the European Union.

The resolution of the European debt crisis is of great importance to all of us. You may be asking why this matter should be a major concern of the United States. It is not our debt, we don't have the Euro as our currency, but the fact is global financial markets are extremely intertwined. This interrelationship of the banks internationally is similar to concept of the Federal Reserve's decision to bailout AIG at the height of the US economic crisis. AIG was perceived, because of its relationship with nearly every major bank and investment firm in the US, as too important to fail. Europe and the United States are intertwined and so what happens in Europe will impact on us here.

Looking Ahead

The momentum behind equities, especially US stocks, has continued to build. With Congress passing a continuation of the Bush-era tax rates, the defeat of the $1.2 trillion omnibus spending package in the Senate, and the release last week of a positive report on the leading economic indicators, there is some basis for this momentum. It is hard to tell how much movement will occur in US stock markets near-term because I believe much of that news is already factored in.

I am not, however, an unconstrained bull. I do believe that we are closing out 2010 on a relatively positive note and I am glad for that. I also believe that continued exposure to stocks is warranted at this time, but I also realize that there continue to be headwinds on the economy that must be watched closely. At the top of my list of concerns are the persistently poor housing market and an unemployment rate that is approaching 10%. So while I continue to invest in stocks, I am looking over my shoulder for any signs of market deterioration. Again, the benefit of following a technical discipline from data provided by Dorsey Wright & Associates is that it helps to strip away the emotion and clutter surrounding the headlines each day.

There were no changes in my overall technical indicators last week. The New York Stock Exchange Bullish Percent (NYSEBP) increased slightly from 77.55 to 77.82. A reading over 70% is an indication that stocks are strongly favored but risk for a correction is present. Stocks are still favored over bonds. Mid and small-cap stocks are preferred over large cap, and growth is favored over value. I prefer emerging markets and recommend staying away from developed Europe. Emerging markets have been showing weakness recently, but it still tops my list of key indicators on a relative strength basis so I will continue recommend these investments in portfolios. I remain committed to maintaining an investment in commodities as a hedge against rising prices.

Bonds improved slightly this week and I maintain that bonds should remain within portfolios at this time. Many bond sectors have performed well this year and I remain committed to bonds in allocations appropriate for varying risk tolerances.

I hope that during this holiday season each of you has the opportunity to gather with your families and friends and share the joys that come from such camaraderie. In the final analysis what we ultimately have is each other and the love and kindness shared together. I again ask that we remember the brave men and women who are not able to be with their families as they defend our shores from those who do not share our values.

Happy Holidays!

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.

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 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.

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.

Sincerely,

Paul Merritt, MBA, AIF(R). CRPC(R) 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. 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.

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

US equity markets continued to show strength in a week that was marked by high drama on Capital Hill and China announced another 0.50% increase in their banking reserve requirements in the face of continued inflation worries. European debt problems fell back into the shadows and commodities took a breather, while Euro fell against the US dollar and US treasuries continued their sell-off.

For the week, the Dow Jones Industrial Average (DJIA) gained 218 points (+1.95%) ending the week at 11,410.32. The S&P 500 gained 16 points (+1.28%) to close Friday at 1240.4. For the year the DJIA is up 9.4% and the S&P 500 is up 11.2%.

Financials, Telecom, and Technology were the best performing broad sectors last week while Real Estate, Utilities, and Energy brought up the rear. Year-to-date the top three broad economic sectors are Consumer Discretionary, Industrials, and Real Estate while Utilities, Health Care, and Financials remain at the bottom.

The MSCI (EAFE) World Index lost 0.9% marking the 5th consecutive week this broad international index has fallen under the heavy burden of debt concerns in Europe. Also hit hard were some of the darlings in international investing this year and past: Turkey, China, and Brazil. Israel, Ireland, and Austria were the best performers last week. China remains the focus of the investment media and most traders. More on that below.

The Euro fell 1.8 cents against the US dollar last week to close Friday at $1.3229 from the previous week's close of $1.3414 and is virtually unchanged for the month. Much of the US dollar's strength continues to come even as the Federal Reserve remains committed to its bond purchase program (QE2). The reasons for the rise of the US dollar in the face of QE2 have several components. First, international investors are buying US dollars to buy treasuries as rising yields make them more attractive. A second, and perhaps dominant reason, is safety. As investors fear what is happening on a global stage-particularly in the Euro Zone, the US dollar continues to be the place park cash. The strength of the US political system trumps other fears like inflation.

Gold gained and oil pulled back last week as commodities in general fell slightly on worries that as the Chinese central bank continues to restrain growth, global demand for commodities will fall as well. The general trend of commodities has certainly been positive and I believe in a growing economic scenario, this trend will continue.

Bond investors continue to see portfolio values fall as interest rates rise. Rates on the benchmark 10-year treasury closed Friday at 3.229% from the previous Friday's close of 3.0167%. The last time rates were at this level was late June of 2010. Municipal bonds continued their pullback primarily on concerns that Congress may not extend the Build America Bond (BAB) Program. BAB's are state and local government issued bonds whose interest payments are partially subsidized by the federal government. The program has been very popular with states that have the greatest debt problems including California, Illinois, New Jersey and New York. The program has come under scrutiny by Republicans over concerns that the program allows states to continue issuing debt for spending they cannot afford and the federal government is incurring additional financial obligations.

CHINA CONCERNS

China released data over the weekend showing inflation for November jumped to 5.1% year-over-year (YOY). This follows October's YOY increase of 4.4% and these increases clearly have the Chinese central government concerned. Over the weekend, China announced that it would raise yet again the bank reserve requirement from 18% to 18.5%. This move is designed to withdraw money from the Chinese economy by reducing the amount of money lent by Chinese banks. The greatest worries about the Chinese economy are focused on real estate development. Depending on who you read, some analysts believe the Chinese have massively over-built and everything from shopping malls to apartment buildings remain empty and unsold. China is not as transparent as Western countries but these concerns about the underpinnings of the Chinese economy must be watched closely.

Because nothing is all one way or the other, November export data for China showed a 34.9% YOY increase in exports and can be interpreted as a clear positive for US and European demand which bodes well for bulls. This is a great example of the general tug-of-war that currently exists between pro-growth bulls and cautious outlook of the bears.

The pause in commodity prices this past week can also be attributed to fears of a slowdown within China. If demand, or expectation of demand, goes up; commodity prices will likely follow.

Looking Ahead

At a recent conference I attended, Bob Doll (Vice Chairman of BlackRock) said that there are times when the economy and stock market do not necessarily move in tandem. Times like this are a good example of this view. The jobs report released on December 3rd showed unemployment jumping up to 9.8% and many pundits say 10% is not far behind. Home prices remain stuck or decreasing. I read a report in Bloomberg which said that nearly 24% of all homes in the US are currently worth less than their mortgages. Yet the stock market is showing renewed strength.

The cross currents in the global economy are impacting the markets with the equity markets winning out recently. The two major issues facing investors are the fears related to excessive borrowing by the developed economies and the sustainability of the economic recovery. The bears fear mounting debt will stifle economic growth, while the bulls see the world economy rebounding and growth rates returning to more normal levels. It appears that the headline of the day drives market returns.

The stock market is also watching the debates in Washington over the tax rates and other fiscal policy issues in Congress. Do not underestimate the importance the markets are placing on a satisfactory resolution of the compromise reached by the President and the Republicans.

When there is so much uncertainty about how the economy is going, the value of the technical research I use with Dorsey Wright and Associates is even more important. Looking at the current market technicals, the New York Stock Exchange Bullish Percent (NYSEBP) closed last Friday and a very strong 77.55. A score over 70 indicates an overbought status of US stocks and that risk levels are high, but does not indicate when a major sell-off may occur. Stocks are favored over bonds. Mid and small-cap stocks are preferred over large cap, and growth is favored over value. Another change occurred in the Dorsey Wright Dynamic Asset Level Indicators (DALI) where Real Estate fell out as one of the favored sectors. This adjustment is not a reason to sell real estate investments; rather it is more a move to place these investments under greater scrutiny. International stocks continue to be favored. I prefer emerging markets and recommend staying away from developed Europe. Equal weighted indexes are preferred over capitalization weighted indexes.

I remain committed to maintaining an investment within commodities as a hedge against rising prices. If manufacturing remains strong in China, commodity prices are likely to continue rising.

US bonds continue to pull back as interest rates rise. I will repeat my view that bonds should remain within portfolios at this time and December can be a difficult time as inventories can get skewed. Bonds have pulled back from an overbought status to an oversold status, but for the most part have not violated support lines and should therefore be retained in portfolios. Like real estate, this pullback warrants close scrutiny.

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.

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 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.

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.

Sincerely,

Paul Merritt, MBA, AIF(R). CRPC(R) 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. 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.

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

US markets were relatively calm compared to International markets which were hit hard by North Korean aggression on South Korea and the on-going Irish bailout. The Euro continued to pull back against the US dollar and US treasuries rallied on the uncertainty abroad.

For the week, the Dow Jones Industrial Average (DJIA) lost 112 points (-1.0%) ending the week at 11,092.00. The S&P 500 lost 10 points (-0.9%) to close Friday at 1189.4. For the year the DJIA is up 6.4% and the S&P 500 is up 6.7%.

Real Estate, Consumer Discretionary, and Technology were the best performing broad sectors last week while Financials, Energy, and Health Care brought up the rear. Year-to-date the top three broad economic sectors are Consumer Discretionary, Real Estate, and Industrials while Health Care, Utilities, and Financials remain at the bottom.

The MSCI (EAFE) World Index lost 3.5% on fears that Portugal and Spain were not far behind Ireland. The cost of the Irish bailout increased last week from an estimated €50 billion ($68 billion) to €67.5 billion ($89 billion). The worst performing countries last week were Spain, Ireland, Turkey, and Italy. All but Turkey are at the center of the European debt crisis. While emerging markets were also hit, developed international markets were hit harder. Other than Turkey, the other non-European country hit hardest last week was, not surprisingly, South Korea. China fell again, but not as severely as those already mentioned. Peru, Canada, and Chile were the strongest countries of those I followed last week.

The Euro fell 4.5 cents (-3.27%) against the US dollar last week to close Friday at $1.3238 from the previous week's close of $1.3686. The month long rise in the US dollar reflects investor fears of debt and war worries. These same worries sent US treasuries higher as the 10-year yield fell to 2.8699% from last week's close of 2.8750%. Gold rallied $10.60 (0.78%) to close the week at $1364.00. Investors are seeking security right now in both the equity, bond, and precious metal markets.

Oil prices rallied $2.16 per barrel closing at $83.76. Oil analysts are somewhat bearish on their outlook, however, as the rising dollar slows purchases (everyone buying oil in other currencies must pay more) and concerns that Chinese rate tightening will curtail that country's demand going forward.

THE WORLD IS A BIT MESSY

The news that North Korea launched an hour-long artillery barrage against a small island town in disputed waters just of the coast of both countries reminded investors that there are other worries beyond the impact of QE2 on world economies. Yet, when the dust settled, US markets were again relatively neutral in price movements. I believe this is attributable to a series of regularly (albeit minimally) improving US economic numbers on jobs, manufacturing, and retail sales.

Europe remains embroiled in the fallout over debt levels of the weaker European Union (EU) members and ultimately the viability of the Euro currency for some of these countries. European leaders have been working furiously to complete the Irish bailout agreement. As of early Monday morning (November 29th), the EU finance ministers agreed on a the terms of the bailout and a compromise regarding a demand by German Chancellor, Angela Merkel, that bond holders would share the cost of potential sovereign debt restructuring beginning in 2013 with tax payers. The final agreement has been modified to state that bond investors will be asked on a "case-by-case" basis to accept losses on their bond investments. Concerns by some of the weaker countries like Ireland and Italy were that if Merkel's demand for mandatory private-sector write-downs were included in the new European-wide bailout fund, then borrowing costs would escalate and greatly weaken already fragile government balance sheets. To sound, yet again, like a broken record, all that has been accomplished in Ireland (as it was in Greece) is to kick the debt can down the road for a few more years in hopes that an improving economy and government austerity programs will allow these governments to get onto sound economic footing. If this does not happen, I believe it will be hard for the Euro to remain the common currency for all current members.

Expectations are that China will continue to take steps to hold down inflation. The central bank of China has already announced that reserve requirements will increase from 17.5% to 18%, but beyond that, there remains uncertainty on exactly what form further tightening will take. Fed Chairman Bernanke has led US calls for China to let the yuan trade freely (as opposed to being artificially pegged to the US dollar) which would have an immediate impact of raising the cost of Chinese exports and an immediate slowing of the Chinese economy. While this debate goes on, investors believe some slowing will come. The falling price of commodities and sell-offs in Asian markets indicate that investors believe the Chinese economy will slow in the months ahead.

Finally, the North Korean problem continues to threaten peace on the Korean peninsula. Senior Chinese diplomatic officials visited Seoul over the weekend seeking South Korea's support of renewed talks with North Korea, Japan, Russia, China, the US and both Koreas. This suggestion was not well received as the South Koreans (as well as the US) believe these talks reward North Korea's behavior. The US and South Korea began joint naval exercises in the region to signal the US's support for Korea. China, as North Korea's benefactor, holds the key to getting North Korea to step back from its provocations with the South. You may be wondering why North Korea (with China's tacit support) would take such dramatic action against South Korea, and the answer is actually quite simple-resources. The history of the US and its allies has been to negotiate with North Korea and provide them all sorts of economic benefits. These benefits reduce the amount of support the Chinese have to provide its ally. It remains to be seen if this tactic will work one more time.

Looking Ahead

As a result of the turmoil abroad, the US dollar continues to strengthen. As I have noted previously, this near-term rally would help US equities across the board. The fairly sizable out-performance of US equities over international stocks and bonds last week reflects this dynamic. I continue to believe that the US dollar/Euro relationship is a key indicator towards global growth and strong equity performance.

The New York Stock Exchange Bullish Percent (NYSEBP) increased slightly last week to 73.93 from the previous close of 73.71. A score over 70 indicates an overbought status of US stocks and that risk levels are high, but does not indicate when a major sell-off may occur.

The most notable change in the Dorsey Wright Dynamic Asset Level Indicators (DALI) was mid-capitalization stocks have become favored replacing small cap stocks as the preferred capitalization weighting. Small cap stocks had been favored since April 2009, so this is a relatively important signal. At the broadest level, US and International stocks continue to favored. One or two sub-par weeks in the markets are not enough action to force international stocks out of its favored status. Commodities remain strong but have also come under some stress over the China inflation issue. US bonds strengthened last week. Longer-term treasuries and municipals rallied after falling the past few weeks while international debt pulled back in concert with international equities.

Mid-capitalization and small-cap stocks continue to be favored over large caps. Equal-weighted indexes (which will include more mid cap stocks) remain favored over capitalization-weighted indexes. Emerging markets remain favored over developed markets.

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.

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.

Sincerely,

Paul Merritt, MBA, AIF(R). CRPC(R) 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. 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.

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

US and global equity markets lurched to and fro this past week to close essentially flat.Ireland appears to be warming to a European sponsored relief package, China announced an increase in the bank reserve requirement, and Fed Chairman Bernanke aggressively defended his second round of quantitative easing (QE2) policy.

For the week, the Dow Jones Industrial Average (DJIA) gained 11 points (+0.10%)ending the week at 11,203.55. The S&P 500 gained just under 1 point (+0.04%) to close Friday at 1199.73. For the year the DJIA is up 7.4% and the S&P 500 is up 7.6%.

Industrials, Energy, and Consumer Discretionary were the best performing broad sectors last week while Real Estate, Health Care, and Financials brought up the rear. Year-to-date the top three broad economic sectors are Consumer Discretionary, Real Estate, and Industrials while Utilities, Health Care, and Financials remain at the bottom.

The MSCI (EAFE) World Index gained 0.6% on news that Ireland was moving towards accepting aid from the European Union (EU). Latest reports indicate that aid could be in the €50 billion ($68 billion) range. Concerns are mounting that Irish banks are facing ever-growing losses from real estate related debt. China announced, not unexpectedly, on Friday that it was increasing the bank reserve requirement from 17.5% to 18% in an effort to pull money out of their economy to stem rising inflation. China and India were the worst performing countries last week with Ireland, Israel, and Austria the best. For the year, Thailand, Peru, and Indonesia remain the strongest performers while Spain, Ireland, and Italy continue to be the weakest.

The Euro fell slightly last week to $1.3686 from the previous Friday's close of $1.3692. The US dollar's recent strength may come as a surprise to many in light of the Fed's QE2 policy, but it reflects concerns over the longer-term issues surrounding European debt problems. I will discuss this issue in greater detail below.

Oil prices fell $0.40 per barrel closing at $81.60. Gold continued its recent weakness falling another $16 per ounce (-1.2%) to close at $1353.40. Like equities, commodities in general ended the week flat.

US treasury yields fell (bond prices increased) Friday after Mr. Bernanke's remarks defending QE2, but in general bond prices continue to be weak. On Friday the 10-year yields closed at 2.8750%, up from the previous week's close of 2.7889%. Many pundits are scratching their heads over the recent surge in interest rates following the Fed's announcement on November 3rd of additional bond purchases in the open market. But the fact is, rates are rising. Especially hard hit have been municipal bonds and emerging market debt. A number of bond managers I follow have recently commented on the deteriorating muni bond market and their consensus is that the problems are supply-driven and not credit quality related. State and local governments are rushing supply into the market to take advantage of historically low rates, to issue bonds under the Build America Bond program which ends at the end of the year, and because the two-year moratorium permitting AMT tax-free private activity bonds is also expiring at year's end. This supply imbalance is forcing issuers to offer higher interest to attract sufficient buyers. I remain skeptical of this view and believe that there are a lot of states that have serious debt issues including Illinois and California. Emerging market bonds have been hurt by a rising US dollar.

THE US DOLLAR, EURO, AND IMPACT ON INVESTORS

The recent strength of the US dollar is confounding economists. Like all other goods currencies are in essence a good to be bought and sold on the open market), when demand for a particular good increases, so does its price. Investors around the world have been buying US dollars at a greater rate than the Euro and most other currencies.From a technical standpoint, my indicators are suggesting that this relationship can continue for the short-term. However, the longer-term outlook is not as strong.Economists are correct in their concern for the strength of the dollar as the Fed continues to print money to buy our debt. Mr. Bernanke made it very clear on Friday that his overall objective is to help a weak US economy recover and to spur employment. He did acknowledge that a weaker US dollar could result, but he places the blame for much of the US dollar's weakness on countries like China that are manipulating their currencies to keep them artificially low.

While the Fed's monetary policy may contribute to a weaker US dollar, I continue to see problems in Europe as the main determinant in the strength of the US dollar. Ireland will be forced to take aid to stem its banking crisis. I mentioned that the aid package could total $68 billion; however, European financial leaders are uncertain about the final amount. Fallout from Ireland has forced other weak EU countries to pay more for their debt. Spain had a successful bond offering this past week, but at rates higher than they would have preferred. Greece is still a mess, Italy is a mess, and Portugal is a mess. Higher rates put more and more pressure on the solvency of these governments, and the long-term outcome could be insolvency and restructuring. Bankruptcy for short. The situation in Europe reminds me of the tale of the little Dutch boy who averts a crisis by sticking his finger in the dyke to stem the flow of water while awaiting help. In the tale help comes just in time to prevent a catastrophe, the question now is whether or not enough help can arrive to stem the leaks currently flowing from the European debt dyke. Should the worse-case scenario play out, it will be a huge global economic mess. While I do not see this happening in the next couple of years, and it may not happen at all, it must be watched along with the Euro/US dollar relationship.

To the investor, a rising US dollar favorably impacts on US stocks (small and mid caps outperforming large caps), US bonds, and growth stocks. A falling dollar favors non-US stocks, commodities, gold, international bonds, and value stocks.

The technical indicators I follow help provide insight as to what is happening and I will certainly keep all of you apprised of this important issue.

Looking Ahead

A news story that is certain to draw attention in the coming weeks follows an announcement by Federal investigators late Friday that they are nearing the completion of a 3-year insider-trading investigation that, according to an article by the Wall Street Journal, "could eclipse the impact on the financial industry of any previous such investigation." The article states that the investigation centers on more than 30 investment banks, hedge-funds, and expert-network firms. Expert-network firms specialize in providing institutional clients the most up-to-date information about a specific industry and potential deals within that industry. The most well-known name mentioned in the Wall Street Journal article was Goldman Sachs who is under investigation about Abbott Laboratories' take over of Advanced Medical Devices in January 2009. It is doubtful that the market will react broadly on Monday to this news because the investigation focuses primarily on mergers and takeovers from 2007 to 2009; however, individual companies may be hurt and there could be erosion of investor confidence which is already weak. This will be a story I will be following with great interest.

It is too early to say that the recent correction in equity markets is anything more than the normal ebb and flow of the markets. Nearly all of my technical indicators had most stocks, bonds, and commodities in an overbought status. As of the market's close on Friday, many indicators have returned to more normal levels.

The New York Stock Exchange Bullish Percent (NYSEBP) fell last week to 73.71 down from the previous week's close of 75.58. I continue to watch this critical indicator closely for signs of a breakdown. A score over 70 indicates an overbought status of US stocks and that risk levels are high, but does not indicate when a major sell-off may occur. US and International stocks are favored. Commodities remain strong. Bonds appear to be under continued pressure going into next week, but not to the point of reducing current bond allocations at this time. Longer-term municipals and international debt are showing the greatest weakness right now.

Small and mid-capitalization stocks continue to be favored over large caps. Equal-weighted indexes (which will include more mid cap stocks) remain favored over capitalization-weighted indexes. Emerging markets remain favored over developed. China must be watched carefully as investors shy away while the Chinese government takes steps to slow the overall economy in an effort to curb inflation.

This week is a shortened trading week. The markets are closed on Thursday in celebration of Thanksgiving and will close at 1 PM on Friday. As we gather with family and friends this Thanksgiving, I want to extend my sincere hope that you are able to share this holiday with those you love and hold close. I ask that we all take a moment and remember those great soldiers, sailors, marines, and airmen that are unable to be home with their families as they defend each and every one of us.

Happy Thanksgiving!

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.

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.

Sincerely,

Paul Merritt, MBA, AIF(R). CRPC(R) 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. 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.

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