Stock markets posted gains here and around the world last week as investors were buoyed by strong 1st quarter earnings here in the United States and investors shrugged off Standard & Poors revision of the US government's credit rating.

For the week, the Dow Jones Industrial Average (DJIA) gained 164 points (+1.33%) to close at 12,506 and the S&P 500 gained 18 points (+1.34%) to close at 1337. The markets began the week with a 148 point (-1.14%) loss on news that Standard & Poors revised the US government's credit rating from a "Stable" to "Negative" outlook. I will address this in greater detail below. Following Monday's selloff, the markets rallied the next three days in a holiday shortened week. The Russell 2000 added 1.28% for the week. As we complete the first 16 weeks of 2011, the DJIA is up 8.02%, the S&P 500 is up 6.34%, and Russell 2000 is up 7.64%.

Among the broad economic sectors, Technology staged a comeback finishing first followed by Materials and Energy. Telecom, Financials, and Consumer Staples were the bottom three. For the year, Energy, Health Care, and Industrials are the top three (Real Estate is just one hundredth of a percentage pint behind Industrials for the third place position), and Financials, Utilities, and Telecom remain fixed in the bottom for the year The good news is that all of the bottom three sectors are at least positive for the year. To put a slightly different twist in looking at how the broad sectors are performing, if you include the top four US market indexes into the mix, the S&P 500 Equal Weighted Index would be in the 3rd position while the DJIA would be 6th, and the S&P 500 and the NASDAQ would be 9th and 10th. Consumer Staples, Technology, Telecom, Utilities, and Financials all fall below the S&P 500 and NASDAQ so far in 2011.

The MSCI (EAFE) World Index gained 2.02% for the week and is now up 5.92% for the year. Japan's Nikkei Stock Index added a modest 0.95% last week and for the year is down 5.32%. Unfortunately, the economic news coming from Japan is not good as the ramifications following the series of natural disasters are taking their toll on the country. Of the 81 countries and country indexes I follow, Japan now ranks 76th for the year. In case you are curious, the United States ranks 36th just slightly above the middle of the pack. Developed and Emerging European countries continue to dominate the top positions so far in 2011.

European debt concerns moved off the front page of news last week and the Euro continued its gains against the US dollar. The Euro closed the week at $1.455 gaining just over a penny on the US dollar. For the year, the Euro is up nearly 9% against the dollar. The explanation of the Euro's strength is simple: demand is exceeding supply. The Fed's continuing support of an accommodative monetary policy and language that it will continue this policy into the foreseeable future has investors selling US dollars to move money abroad in search of higher interest rates. A weak US dollar is in turn pushing up the price of commodities everywhere.

Commodities, especially oil, all traded higher last week. West Texas Intermediate oil closed Thursday at $112.29 up $2.63 (2.40%) for the week as traders remain concerned about the fragility of the world supply situation in the face of continuing unrest in the Middle East. My personal gage of oil prices, as it is yours, is the price we pay for gasoline at the pump. This week I paid $4.15 a gallon for premium gas representing a nearly 20% increase in just seven weeks. My monthly fuel consumption has increased $40 per month since early March. If you recall in the first half of 2008 oil began the year at $95.98 and climbed steadily until it reached a peak of just over $148 per barrel in mid-July of 2008. By the end of 2008 oil fell over $100 to close at $44.60. The impact of these high prices, while severe, was mitigated by the rapid fall (yet again a reminder about the volatility of commodity prices) of the price of oil. So the question today is how long will these prices last? The answer will determine the eventual impact on the economy.

Gold has reached an all-time high closing last Thursday at $1503.80 reflecting a weekly gain of $17.80 (+1.20%). The explanation for this surge is pretty straight forward-investors are nervous and uncertain about world events and their impact on paper currencies. I also believe that there is a "bubble" mindset contributing to these gains. More and more investors feel like they need to "get in" as they watch prices continue to climb. I believe this is a dangerous reason to invest especially at these high prices. If you are interested in gold, it may be prudent to wait for a correction before stepping in. As much as gold has risen, silver has been quietly rising closing Thursday at $46.08 up 49.22% for the year.

One final thought on commodities. I have noted many times in the past that the weak US dollar is contributing to the general rise of commodities across the board. I continue to believe that this has been a significant part of the increase in prices. Watch the US dollar against international currencies and you will get a sense of how commodity prices may act.

The Barclays Aggregate Bond Index had another up week gaining 0.16% and is now up 1.14% for the year. The US 10-year Treasury yield moved down to 3.402% from the previous week's close of 3.411%. The news of Standard & Poors negative outlook for the US government did not shake bond holders as rates fell last Monday. The traditional relationship of bonds being a "safe haven" when equity markets pull back remains in place this year. Rates fell early last week and then rose as the stock markets rallied on earnings reports moving cash away from bonds and back into stocks. International bonds were the best performing bond sector last week (and this year) followed by preferreds, high yield, and corporates. Treasury Inflation Protection Notes (TIPs) fell slightly last week but remain one of the best performing bond sectors for 2011.

STANDARD & POORS' REVISION OF THE US GOVERNMENT BOND RATING

Last Monday, Standard & Poors released a report in which they maintained the US's AAA rating but revised its outlook from "Stable" to "Negative." In the report they stated that the US has a "one-in-three likelihood that we (Standard & Poors) could lower our long-term rating on the US within two years."

The reasoning behind this very rare move on the US debt rating (the first since just after Pearl Harbor in 1941) stems from the increasing percentage of current tax revenues used to pay interest on the debt, the size of the debt in relation to our Gross Domestic Product (GDP), and the increasing likelihood that Congress and the President are going to be unable to reach a compromise to effectively reduce the current debt levels. The first two issues behind this historic move are simple, straight forward, and based on quantitative figures. The last issue, which is an evaluation on the political struggles, is subjective, but is the most important. If American leadership fails to deal with this debt in a meaningful way, a downgrade to AA is sure to follow. That in turn will exacerbate what is already a bad situation and would have the immediate impact of causing the interest rates the US is required to pay on new debt to increase and will in turn reduce the value of existing Treasuries for all that hold them.

This outlook is shared by many of the investors in US debt. Earlier this month, China and other emerging markets have been suggesting that it is time to have either a new global reserve currency or to at least begin diversifying their holdings in US debt and further eroding the value of the US dollar. US monetary does matter to the rest of the world.

As I noted last week, the debate in Washington will not have an immediate impact on the markets (and this past week proved that point), however, the consequences of failing to reach substantive and meaningful reductions in the growth and size of the US deficit will have broad and serious consequences to the US economy and the standard of living enjoyed by every American. Federal Reserve Chairman Bernanke will be holding a first-ever press conference following the meeting of the Fed's Board of Governors on Wednesday. It will be very interesting to see what he has to say about issues such as the weakening US dollar, what will follow QE2, and how and when the Fed plans to move out of the current accommodative monetary policy to name just a topics on everyone's minds.

LOOKING AHEAD

My current investing guidance remains unchanged. I favor US stocks and commodities. International stocks also remain attractive, but country or sector selection must be carefully managed. Emerging markets outperformed developed markets slightly last week; however, developed markets in general have a slight advantage in 2011. I see no specific advantage this year between emerging and developed countries, so I support investing in the technically strongest international investments.

I continue to favor equal weighted indexes over capitalization weighted ones. Mid and small cap growth have been the strongest categories in the stock markets and remain over weighted.

I continue to favor Energy, Materials, and Health Care among the broad US sectors, but the narrow gap in performance after Energy and Health Care make most sectors attractive other than Financials.

Commodities and oil in particular, remain attractive in the face of the global uncertainties of supply and the weakening US dollar. Gold and silver remain as a hedge against the unknown both here and abroad.

Bonds remain steady and are providing minimal returns. International bonds have benefited by the flow of capital in search of higher yields, while the more risky bonds have done well in the US. I continue to like preferreds, high yield, floating rates, and corporates. Treasury Inflation Protection Notes continue to offer protection against higher interest rates.

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.

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, 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(R), Member FINRA/SIPC, a Registered Investment Adviser.

Stock markets remained flat yet again this past week as investors search for clarity about inflation concerns, economic strength, renewed European debt concerns, and soaring commodity prices. US bond markets, however, had their best one week performance in 2011.

For the week, the Dow Jones Industrial Average (DJIA) lost 38 points (-0.31%) to close at 12,342 and the S&P 500 lost 8 points (-0.64%) to close at 1320. The markets lack of direction has been in place for the past six weeks. Since March 1st, the DJIA has added just 115 points (+0.94%) while the S&P 500 has lost 8 points (-0.57%). Contrast that to the previous three months (December 1st, 2010 to February 28, 2011) when the DJIA and S&P 500 gained 1220 points (11%) and 115 points (12%) respectively. Pundits and economists can debate the cause of each ebb and flow of the market endlessly, but let me sum it all up for you in one sentence: investors have no idea what to do! In other words, supply (selling pressure) and demand (buying pressure) have been balanced for the last six weeks as investors try to figure out what is going on. I will look at the major issues of the past week which may shed some light on why investors are uncertain about the direction of the markets, but until the buyers or sellers begin to take charge, this pause in the markets will continue.

For the year, the DJIA is up 6.60%, the S&P 500 is up 4.93%, and the Russell 2000 is up 6.55%.

Broad economic sectors reflect the uncertainty of investors. Last week's worst performer, Real Estate, was this week's top performer. Consumer Staples and Health Care remained in the top three. The year's top performer, Energy, was the worst performer along with Materials and Financials. The general sell-off of some commodity and commodity-related stocks hurt the Energy and Materials sectors. For the year, Energy continues to lead all other sectors by a wide margin followed by Health Care and Industrials.

The MSCI (EAFE) World Index lost 1.10% for the week and is now up 3.82% for the year. Japan's Nikkei Stock Index lost 1.81% last week and for the year is down 6.2%. Developed markets out-performed emerging markets and now lead emerging markets slightly for the year. For those of you who read the Update regularly, you are seeing a pattern emerging in the international markets, or should I say a lack of a pattern. There has been no consistent advantage in 2011 to be in either Emerging markets or Developed markets.

The Euro pulled back slightly last week against the US dollar over growing concerns that the European debt crisis may be reemerging. The Euro closed the week at $1.443 losing one-half cent to the US dollar. Concerns grew last week in Europe over Greece's ability to meet debt obligations even after last year's bailout. European Union (EU) leaders are strongly opposed to restructuring Greece's debt (defaulting on existing debt and replacing with new debt that may not make existing bondholders whole); but the German's are floating the idea. The EU wants to avoid restructuring at all costs because their leaders fear that this move would hurt all European bonds. Part of the motivation behind the German's consideration of restructuring is because Chancellor Merkel is facing enormous political pressure at home. Ms. Merkel's Christian Democratic Party has been losing key local elections around the debate over Germany's nuclear energy policies following the destruction of the Japanese reactors, and because German's are growing increasingly discontent about bankrolling countries they believe have been irresponsible in their spending. The yield on Greek 10-year bonds has risen to beyond 13% and, maybe even more worrisome, the cost to insure Spanish debt has been creeping upwards. I will continue to monitor this fluid situation closely.

Except for precious metals, commodities saw a pullback last week. West Texas Intermediate oil closed Friday at $109.66 down $3.16 (2.78%) for the week as traders focused on some generally positive economic news here in the US as the core Consumer Price Index (CPI) rose just 0.1% for the month and consumer confidence was up as well. At the same time, I paid $3.99 for a gallon this week for premium gasoline as gas prices surge across the country. March saw gasoline prices rise 5.6% for an annualized inflation rate of nearly 70% (fuel and food prices are excluded from the core CPI data). Gold prices reached record levels and closed the week at $1486.00 up $11.90 (0.81%) as investors seek protection against the growing uncertainty both here and abroad about inflation levels and currency valuations.

The Barclays Aggregate Bond Index had its largest one week gain in 2011 closing up 0.85%. For the year the Barclays is now up 0.98%. The US 10-year Treasury yield moved down to 3.411% compared to last Friday's close of 3.576%. The core CPI rate strongly influenced bond investors as they believe that real inflation is not a near-term risk. Long maturity treasuries were the best performing bonds last week as would be expected. International bonds continued to perform well as did treasury inflation protection notes (TIPs) and high quality corporate bonds. For the year, international TIPs and treasuries, high-yield, and preferreds have been the best performing bond categories.

PLAYING CHICKEN WITH INFLATION

The US Consumer Price Index for April showed a rise in core prices of just 0.1% and is up 0.5% on a seasonably adjusted rate. The CPI is up 2.7% on a year-over-year basis which I believe is within the guidelines of what the Federal Reserve would consider acceptable. Even though the core CPI increase was low, energy prices surged 5.6% and food increased 1.1%. While these numbers are excluded from the core rate because of the volatility of commodity prices, they still impact each and every one of us who must consume gas and food each day. Wage growth is flat so extended high energy and food prices will eventually translate into reduced spending by consumers in other sectors.

In Europe and the Far East, inflation is a much bigger immediate concern. At the International Monetary Fund's semi-annual meeting in Washington, DC, this week, the Chinese representative said inflation was his country's number one economic concern. To back up those words, the Chinese just announced a few hours ago that they were going to raise the bank reserve requirement yet again 0.5% to 20.5% in an effort to reduce liquidity in their banking system. This move has been coupled with a series of increases in their short-term federal interest rate.

Also at the IMF conference, a sharp divide has developed between developed and emerging countries over capital flows into emerging markets. Emerging market countries are upset with the United States for its extraordinary accommodative monetary policy which has resulted in a flood of cheap US dollars around the world causing the price of commodities and other goods to skyrocket. This has created inflationary pressures in those countries and places enormous pressure on local governments to fight inflation by raising interest rates curbing economic growth. So it is understandable why emerging market governments are not happy. Emerging market countries blame the US and the Federal Reserve in particular for allowing our own domestic policies to override the importance of having a credible monetary policy for the world's reserve currency. The United States counters this criticism by saying that many countries (China in particular) artificially control their currencies to protect their exports. US Treasury Secretary Geithner said that capital flows between countries would be balanced if currencies were allowed to fluctuate. I believe Mr. Geithner is correct in his belief, however, I also believe that the leaders representing the emerging market countries are also correct in their views that we are keeping our currency cheap by the Federal Reserve's monetary policies (low interest rates and QE2). Because the US dollar is the world's currency reserve, our policies (like it or not) have an enormous influence on the rest of the world. If the US fails to act responsibly, then other countries will look for an alternative to the US dollar as the reserve currency. Whether or not that is practical or even possible is for later debate.

In the meantime, the Federal Reserve is playing a game of chicken with US monetary policy. I strongly believe that much of the stock markets' gains in the past six months have come at the hands of Mr. Bernanke's policies. If he get's it right and stimulates the US economy to growth and prosperity without inducing a spike in inflation, then we will all win. If, however, Mr. Bernanke cannot get the economy on solid footing before the onset of inflation, then we can expect tough economic times ahead. Investors are telling us by the sideways movement of the markets for the past six weeks that they have no idea how this game of chicken will be resolved. I include myself as one of those who has no idea how this will turn out. But I do believe that a degree of caution is warranted and that the relative strength tools I use will help provide answers about Bernanke's success going forward.

LOOKING AHEAD

I am sounding a bit like a broken record in that my basic recommendations have not changed over recent Updates. There simply has been no change to the relationships between stocks and bonds, US and International stocks, or Commodities and Currencies over the past few months.

I continue to favor US stocks and Commodities. I believe that international investments should be closely evaluated and only the strongest technical investments retained. I do not have a heavy bias towards developed or emerging markets; however, emerging European countries have been the strongest performers. Small and mid-capitalization stocks remain favored. Equal-weighted indexes are favored over capitalization-weighted indexes.

I currently favor the Energy, Health Care, and Materials sectors. I will continue to hold onto other sectors that I have bought because their performance has not warranted any changes.

I believe that inflation protection notes should be looked at closely for inclusion into portfolios along with international bonds and corporate bonds.

Commodities are a volatile asset class to invest in so expect wide swings. I prefer energy investments above all others; however, if you chose to invest in other commodity vehicles I would encourage you to invest in a broad basket of commodities rather than try to pick between specific commodities. I still like gold as a hedge against the uncertainties facing investors today. Silver is also performing well and is currently at 30-year highs.

The markets have a lot to digest in the coming weeks. We have begun the earnings reporting season for the 1st quarter and all eyes are on corporate bottom lines. Europe will continue to be interesting and I am anxious to see if there will be any impact of China's move to raise the bank reserve rate on markets. And finally, there is the on-going political debate here about the size of the US debt, tax levels, and government spending. The outcome of these debates will affect all of us, but I do not believe the impacts will be seen in the near term.

One final note. I want to express my sympathies to many of my neighbors in the Hampton Roads community who suffered serious damage last evening after we were hit with some of the most deadly spring storms seen in this region in 20 years. Fortunately, those of us near the ocean front of Virginia Beach were spared from the storm's serious effects.

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.

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, 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(R), Member FINRA/SIPC, a Registered Investment Adviser.

Stock markets were flat in the US this past week while interest rates jumped on growing fears that inflation may be just off the horizon.

The Dow Jones Industrial Average (DJIA) gained 3 points (0.03%) to close at 12,380 and the S&P 500 lost 4 points (-0.32%) to close at 1328. In terms of the average daily point change in closing values of the DJIA, this past week was the second least volatile week of the year coming in at an average daily change of 30.22 points. This is also the third consecutive weekly drop after peaking for the year during the week of March 14th (135.26). For the year the DJIA is up 6.93% and the S&P 500 is up 5.61%. For the week, the Russell 2000 lost 6 points (-0.69%) and for the year is up 7.30%.

Broad economic sectors reflected the mixed returns of the major indexes. Consumer Staples, Health Care and Materials were the top performing sectors and all three outperformed the DJIA. Real Estate, Industrials, and Financials were the bottom three sectors. For the year, Energy leads all other sectors by a wide margin followed by Industrials and Health Care. Health Care has been steadily climbing up the ladder of best performing sectors so far in 2011. The bottom three performing sectors for the year are Utilities, Financials, and Information Technology.

The MSCI (EAFE) World Index gained 1.85% for the week and is now up 4.97% for the year. Japan's Nikkei Stock Index continued to rebound gaining 0.61% last week and has cut its yearly loss to 5.1%. Among stock exchanges, emerging markets in general were again the strongest performers of the week and as a group is regaining strength among the various asset classes. Europe, both developed and emerging markets, remain the strongest performers so far in 2011 around the globe.

The Euro surged last week against the US dollar after the European Central Bank announced, as they had been indicating, that it was raising interest rates from 1.00%to 1.25%. The Euro closed the week at $1.448 gaining 2 cents on the US dollar for the week and it is now up 11 cents (8.31%) for the year. This gain came after Portugal officially asked the European Union (EU) and the International Monetary Fund (IMF) for a bailout. This request had been expected and marks the third European country to seek assistance. The size of the Portuguese bailout is estimated to be €80 billion ($115.8 billion), but it is too early to know just how much will be ultimately needed. Pressure will now shift to Spain as potentially the next country in line for a bailout; however, initially it appears that Spain is getting a vote of confidence in the bond markets indicated by a narrowing spread between 10-year Spanish notes and German 10-year Bunds.

Commodities, especially oil, continued to rise dramatically. West Texas Intermediate closed Friday at $112.79 up $4.85 (4.49%) for the week, and is now up $21.57 (23.65%) for the year. Gold closed at $1474.10 up $46.00 (3.22%) and is now up $54.40 (3.83%) for the year. This sudden strength in oil and gold prices reflects the continuing concerns over the unrest in Libya, Syria, and Egypt; and fears of global inflation. While I have continually suggested that gold is primarily a hedge against uncertainty, the uncertainty that seems to be most in focus is that of the effects of high oil prices on the economies of the US and other countries.

The Barclays Aggregate Bond Index was off 0.31% for the week and this broad bond index is now down three weeks in a row. For the year the Barclays is still up 0.13%. The US 10-year Treasury yield closed up to 3.576% compared to last Friday's close of 3.445%. Rising treasury rates indicate that bond investors are now growing more and more concerned about the prospects of real inflation (especially as high oil prices persist), and concerns over the ever growing supply of new US bonds as the federal government continues to fund its current fiscal debt estimated to be $1.6 trillion. Not surprisingly, inflation protected bonds were the best performing bond category last week.

REFLECTIONS ON THE 1st QUARTER

After getting off to a strong start to the year in January and February, the DJIA and S&P 500 have started to trade sideways in March and April. March brought significant volatility within a month that changed little. So far in 2011 there have been 13 days were the market closed 100 points above or below its previous day's close, and 8 (62%) of those days were in March.

The story of the first quarter has to be the surge in oil and other commodity prices. I have discussed this phenomenon in previous Updates as I commented on how the Fed's very accommodative monetary policy (low interest rates, bond buying by the Federal Reserve-QE2) has kept the US dollar very cheap vis-à-vis other currencies and has been a major factor in higher commodity prices worldwide. But in the case of oil, the unrest in the Middle East has caused investors to hedge against the fear of supply disruptions and also contributed to push prices well over $100 per barrel.

The second major story of the quarter has been the strength or weakness in the US economy. The 4th Quarter, 2010, Gross Domestic Product (GDP) reached just over 3%. The unemployment rate has persisted around 9% and home prices continue to fall. Corporate earnings have been the one real bright spot and contributed to the strength in the stock markets (along with the Fed pumping cash into the economy through QE2). I consider the jobless rate to be a key input to the Federal Reserve's decisions surrounding their actions going forward. With high unemployment, the Fed has maintained an extremely accommodative monetary policy and will be slow to tighten as long as unemployment remains high.

Europe has always been on my radar screen as I have commented frequently on the actions of countries like Germany and France as they try to change decades and even centuries of cultural behavior in less fiscally conservative countries. The bailouts of Ireland and Portugal were accompanied by the fall of political governments in those countries as well. The EU continues to struggle on how best to instill discipline in spendthrift countries. Chancellor Merkel of Germany, whose country will ultimately bear the bulk of the bailout costs, is under increasing political pressure at home losing a series of local elections as Germans are losing patience on their country's role as the EU's pocketbook. I follow Europe closely for two reasons. First, the EU is the second largest economic block in the world behind the United States, and problems in Europe impact on the rest of us. Second, it is illustrative to watch political leaders struggle with out of control spending and borrowing, hostile public labor unions, and efforts to change decades of bad habits. While I strongly believe that the United States is not Europe, there are certain parallels that make the positive resolution of their problems important lessons for the US.

Finally, looking at broad asset classes, oil and commodities have been the best performing asset classes followed by mid capitalization stocks, the S&P 500 equal weighted index, the DJIA, and small capitalization stocks. Energy, Industrials, Health Care, and Materials have been the best performing broad economic sectors. Treasury inflation protection bonds, international treasuries, and high yield bonds have been the best performing bond categories.

LOOKING AHEAD

My basic recommendations have not changed over recent Updates. I continue to favor US stocks and Commodities. I believe that international investments should be closely evaluated and only the strongest technical investments retained. I do not have a heavy bias towards developed or emerging markets; however, emerging European countries have been the strongest performers and I am looking for good investments in that space. Small and mid-capitalization stocks remain favored. Equal-weighted indexes are favored over capitalization-weighted indexes.

My favored sectors have changed. I am now favoring Energy, Health Care, and Materials.

I believe that inflation protection notes should be looked at closely for inclusion into portfolios along with international bonds and corporate bonds.

Commodities are a volatile asset class to invest in. I prefer energy investments above all others; however, if you chose to invest in other commodity vehicles I would encourage you to invest in a broad basket of commodities rather than try to pick between specific commodities. I still like gold as a hedge against the uncertainties facing investors today.

Finally, I would like to make the following observations. As I have said before, small and mid-capitalization stocks have been outperforming large caps for quite a period of time. While my indicators still support overweighting the smaller stocks, large caps have been quietly gaining strength and it is certainly worth adding some high quality large cap stocks to portfolios. Along with large cap stocks, health care stocks have also made a strong rebound recently. China has also been quietly making a comeback after underperforming in 2011.

The real key going forward into the 2nd quarter of 2011 will be the impact of continued high commodity prices on economic growth, growing inflation pressures, and the termination of QE2 (scheduled for the end of June) coupled with the Federal Reserve's ability to navigate the US economy as it reduces stimulative monetary policies. While I applaud the early strength of stock markets so far this year, I remain vigilant to the potential negative impacts facing markets.

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.

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, 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(R), Member FINRA/SIPC, a Registered Investment Adviser.

Major markets both here and abroad had their best weekly performance in 2011. While the range of major issues facing investors has not changed, investor appetite for risk returned.

The Dow Jones Industrial Average (DJIA) gained 362 points (3.06%) to close at 12,221 and the S&P 500 added 35 points (2.7%) to close at 1314. These moves have left the markets down slightly so far for the month of March, but for the year the DJIA is up 5.56% and the S&P 500 is up 4.47%. For the week, the Russell 2000 gained 29 points (3.67%) and for the year is up 5.13%.

Every broad economic sector in the US saw gains last week except for Real Estate which was down slightly. Information Technology, Materials, and Energy were the best performing sectors while Real Estate, Financials, and Utilities were the worst. As a sub-sector, banking continues to lag as bankers and investors try to understand the ramifications stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act Bill (referred to as simply Dodd-Frank) will have on the industry. The emergence of the Consumer Protection Agency and perceived roll in trying to negotiate a $20 billion concession from lenders to give to underwater mortgage borrowers is adding further uncertainty to this sector.

The MSCI (EAFE) World Index gained 3.41% for the week and is now up 2.33% for the year. Japan's Nikkei Stock Index continued to rebound gaining 3.58% last week, however, for the year this important Asian index is down 10.0%. Emerging markets in general were the strongest performers of the week of all key asset classes, but still remains near the bottom for the year. Europe both developed and emerging remains the strongest performers so far in 2011.

The Euro has pulled back from its recent highs against the US dollar losing just over a penny to close at $1.4081. The news coming from Europe this past week was again mostly negative (I will discuss in greater detail in the next section), but the European Central Bank's (ECB) continued support of earlier comments about raising interest rates in the face of growing inflation has held the Euro's strength against the US dollar.

Commodities, especially oil, continued to show strength with broad commodity indexes posting modest gains for the week and remains one of the strongest asset classes in 2011. The news from the Middle East is still dominated by political unrest and the uncertainties surrounding the United State's involvement in Libya. Oil closed Friday at $105.40, up $4.33 (4.28%) from the previous week's close. For the year, West Texas Intermediate is now up 15.54% for the year. Gold closed Friday at $1427.60 up $11.50 for the week and is now up 0.56% for 2011.

The Barclays Aggregate Bond Index was off 0.63% for the week marking only the second down week in the past six weeks. For the year, this broad bond index is up 0.41% for the year. The US 10-year Treasury yield closed up to 3.435% compared to last Friday's close of 3.273% on some generally positive economic news in the US and growing expectations that the Federal Reserve will not immediately launch into another round of quantitative easing after QE2 expires in June.

WHAT'S GOING ON IN EUROPE?

The news from Europe last week was not good. Portugal is getting ever closer to a bailout, and Moody's Investment Services downgraded Spain's banks last Thursday after the rating service cited concerns about the regional banks' ability to raise additional private capital. Additionally, the European Union (EU) failed to reach an agreement on the European Stabilization Fund which is the EU's permanent vehicle to deal with failing member countries.

While the Portuguese Prime Minister said that the country would continue to make efforts to cut spending and take care of existing debts, most outside observers say it is simply a matter of time before the Portuguese take bailout funds. The essential problem is that the Portuguese simply do not have the reserves meet its debt obligations as they come due, and the ever increasing costs of borrowing private money will prevent the country from going out and borrowing new money to cover the old debts. Bailout funds would be provided by the EU to Portugal to meet its current obligations and at interest rates that are more affordable. It is imperative to realize that countries receiving bailouts are simply replacing current debt with new debt at below-market interest rates. The debt will eventually need to be repaid.

The European leaders were quick to point out that they do not believe that Portugal's problems will spill over to Spain, but only time will tell. The Spanish are facing a slightly different problem from Portugal in that the problem in Spain is found in the regional banks which is the backbone of Spain's financial system. The regional banks require additional capital to offset potential loan losses primarily in real estate investments (sound familiar?). The Spanish have been approaching hedge funds and other sovereign (country) funds for investments, but private investors have been critical of the lack of clarity of the debt on the banks' books and the quality of that debt (sound familiar?) making it difficult for private lenders to assess the risk and thus properly price their investments.

I have no doubt that the Europeans will act to meet the needs of member countries, the question will be at what cost? The tie-in to US markets is how much investment has been made by US banks and hedge funds into European debt and the possible losses they are facing. This problem will continue to simmer and we can only hope that it does not come to a boil.

FEDERAL RESERVE SPEAKING OUT

Much has been made of the recent openness by the Federal Reserve as Chairman Bernanke in that he has committed to holding four press conferences each year. Of immediate interest is how the Fed will act in the coming months as QE2 comes to an end and what is the future of monetary easing. The first possible hint of this was given by the St. Louis Federal Reserve President James Bullard this Saturday in Marseilles, France.

Bullard's statements were covered extensively in a Bloomberg.com article where Bullard said that "the economy was looking pretty good," and that it might be possible to evaluate the possibility of terminating QE2 early. Bullard went on to express how he thought the Fed might start withdrawing its stimulus by starting with bond sales (this would pull money out of the economy), then changing the wording of "extended" when describing how long the Fed plans to keep interest rates at near zero, and then actually start raising interest rates. Bullard was very clear that if this was not done, the chances of inflation would be increased.

The fact that the Fed is even talking about ending its simulative policies can be seen as a positive about the US economy. This view was strengthened when the final revision to the 4th Quarter, 2010, GDP figures were revised upwards to 3.1% primarily on the strength of retail sales.

LOOKING AHEAD

I continue to favor US stocks and Commodities. I believe that international investments should be closely evaluated and only the strongest technical investments retained. While I do not make predictions (who can?), I do believe that there is plenty of risk overseas to make me want to be very careful before putting new money to work there.

Small and mid-capitalization stocks remain favored. Equal-weighted indexes are favored over capitalization-weighted indexes. While International stocks are no longer among the emphasized categories, the European Emerging markets are showing the greatest relative strength in the international area.

My favored broad sectors are Energy, Materials, and Technology.

I continue to believe that bonds will return bond-like returns; I am revising my views on high-yield bonds and am now suggesting a reduction in allocations to high yield bonds. The extra risk is not justified by higher yields at this time in my view. Corporate intermediate bonds and international bonds especially have been the strongest in 2011. I also continue to like senior bank loan investments also known as floating rate bonds.

Commodities are volatile. I continue to believe that oil prices are clearly sensitive to the uncertainty in the Middle East and any threats to supplies in any of the oil producing countries can cause a sharp increase in prices. A falling US dollar will also contribute to an increase in commodity prices in general. I believe that if you own gold, keep it. Gold remains a hedge against the global uncertainties.

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.

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, 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(R), Member FINRA/SIPC, a Registered Investment Adviser.

We have closed the book on another dramatic week as the world watched the Japanese people struggle to recover from a centuries-powerful earthquake, devastating tsunami, and an on-going fight to gain control of several nuclear reactors that were damaged during this unprecedented natural disaster. Additionally, the UN Security Council passed a resolution late on Friday authorizing UN forces to enforce a no-fly zone over Libya in an effort to prevent further human suffering, China announced that they were yet again raising the bank reserve requirement to help stem inflation, and the US Congress passed another three-week continuing resolution on the 2011 budget as larger fights over spending loom.

Major stock indexes jumped dramatically up and down during the week with 3 of the 5 trading days seeing moves greater than 1% from the pervious day's close. When the dust settled on the week, the Dow Jones Industrial Average (DJIA) lost 186 points (-1.54%) to close at 11,859 and the S&P 500 gave back 22 points (-1.71%) to close at 1279. For the year, the DJIA is up 2.43% and the S&P 500 is up 1.71%. The Russell 2000 lost 8 points (-1.02%) and for the year is up 1.40%.

Within the broad economic sectors here in the US, only Energy and Materials posted modest gains followed closely by Telecom. The bottom three sectors were Utilities, Information Technology, and Consumer Discretionary. These bottom sectors are clearly being impacted by events in Japan. The nuclear energy sub-sector was especially hard hit driving returns down across the entire utility sector. Information Technology and Consumer Discretionary stocks are being impacted by the potential for disruption of manufactured products and parts that may cause serious shortages for manufacturers and retailers here in the US.

The MSCI (EAFE) World Index lost 2.67% for the week and is now down 1.04% for the year. Japan's Nikkei Stock Index, not surprisingly, saw incredible volatility leading to a weekly drop of 9.55%. The MSCI (EAFE) is influenced by Japan with about 22% exposure to that country and helps explain this index's current under-performance. No one region of the world consistently outperformed others last week as Turkey, Greece, the UAE, Slovakia, and Qatar were the best performers while Japan, Australia, Sri Lanka, Peru and Argentina were the worst. Significantly, international stocks as a major asset category have been dropped from the top two emphasized categories on a relative strength basis. I will discuss the ramifications in greater detail below.

The Euro gained against the US dollar adding nearly three cents to close Friday at $1.4182. While economic news was not especially upbeat from Europe last week, I believe the strength of the Euro and the weakness of the US dollar against most currencies is attributable to the Federal Reserve's continued commitment to low interest rates at a time when many central bankers abroad have hinted at possible interest rate hikes to combat growing fears of inflation. For the year, the Euro is now up 8 cents (6.1%) against the US dollar.

Commodities continued to show strength with broad commodity indexes posting modest gains for the week and are among the best performing categories so far in 2011. Gold closed Friday at $1416.10 which is the same price of the previous Friday. Gold sold off sharply on Tuesday but managed to regain those losses by week's end. For the year, gold is essentially flat with a net change of -$3.60 (-0.25%) for the year.

Oil prices added $1.64 last week with West Texas Intermediate (WTI) crude closing at $101.07. The news from the Middle East, particularly Libya and Bahrain, is changing minute-by-minute and fluctuations in oil prices will likely match developments as traders try to make bets on what has become a very chaotic situation. As I have said many times before, the weakening US dollar will continue to foster general commodity inflation in the coming months.

Investors continued to put money in bonds last week as a shelter from the volatility in the equity markets. The 10-year Treasury yield closed Friday at 3.273% down from the previous week's close of 3.397%. The Barclays Aggregate Bond Index was up 0.41% for the week and for the year is now up 1.05%. The fear factor driving investors into bonds has overcome concerns about a growing perception of rising prices and inflation.

"JUST THE PRICES, MA'AM"

There are five "asset categories" that I track on a relative strength basis to help guide my investment recommendations. These categories are US stocks, International stocks, Fixed-income (bonds), Commodities, and Currencies. Using relative strength to determine the rankings reduces personal opinions, gut feelings, or predictions upon which to make investment decisions. To modify a famous quote from Sgt. Joe Friday of Dragnet fame, "Just the prices, ma 'am," clearly illustrates the unemotional basis that guides my recommendations.

Since last summer (August 2nd) International stocks have been one of the two emphasized asset categories (US stocks is currently the other). To arrive at the favored two categories, Dorsey Wright & Associates uses a proprietary mix of indexes from each of the five categories and evaluates each bundle of indexes against the others to see which two are the strongest. Think of it as the football standings in any conference or league. The top two teams in the standings are favored or emphasized over the others. As a final evaluation tool, the emphasized asset categories must also be outperforming cash. This is to protect principal as much as possible. It is important to keep in mind that these relative strength tools are not especially sensitive. It would be counter-productive for the emphasized asset categories to change every couple of days or even weeks.

After last week's market actions, International stocks category fell to third place and was replaced by Commodities. Does this mean that you should run out and sell all of your international investments? No. What it does suggest is that you should begin to trim holdings and reduce your exposure to this category. I look at the technical data of each investment to guide my pruning efforts. The weakest get jettisoned and the strongest can be retained. If you have some questions about the technical strength of your international holdings or about what commodity investments are available, please give me a call.

CROSS CURRENTS

There continues to be mixed signals from the economic news surrounding world events. While the unemployment and jobs report and corporate earnings reports in the US have shown some strengthening of our economy, other signals are less bullish. The rising inflation threat is quickly being seized upon by many central banks and these bankers are either raising rates now like India and Brazil, or suggesting rate hikes are coming like the European Central Bank, or they are taking measures to curb liquidity in their countries like China's third announcement this year to raise bank reserve requirements. Here in the US, food prices rose 3.9% in February, the largest increase since All in the Family and Sanford and Son were the two most popular shows on TV (1974).

Housing starts in the United States fell in February at the fastest rate since 1984 to reach the second lowest level since this statistic was created after World War II. The lowest level was April 2009 at the height of the fiscal crisis. According to the Commerce Department, new home construction fell 22.5% to an annualized rate of 479,000 homes. These numbers are not adequate to help economic growth and are likely to persist until the foreclosure and short sale homes have finally cleared through the market. How long this will take is anyone's guess at this time.

I will continue to watch events unfold in the Middle East, the European Union's efforts to prop up weak countries, and the efforts of the Japanese to overcome their terrible calamity. I will also monitor the effects on US equity markets in the weeks ahead as the Federal Reserve ends Quantitative Easing 2 (QE2). There is a significant belief by some economists that much of the gains in the US stock markets are attributable to the large amount of liquidity injected into the economy by the Federal Reserve via QE2. What the net impact all of these events will have on financial markets is anyone's guess beyond what we have recently seen.

More than ever, the value of technical analysis such as provided by Point and Figure charts and relative strength analysis is coming to the forefront. With so much uncertainty swirling around investors, these tools offer an unbiased and unfiltered way in which to see the world and react accordingly. The methodology is not perfect by any means, but it certainly helps give insights as to what investors are doing with their money, not what we think they are likely to do. This process is also not short-term based, rather, it is a marathon; just like the difference between speculation and investing.

LOOKING AHEAD

US stocks continue to remain as an emphasized asset category along with Commodities. I generally like to invest in well diversified commodity indexes to dilute the fluctuations of any given commodity sector.

I fully expect the heightened volatility to remain in the markets for now. This is a result of the greater uncertainty induced by the many events rocking the world and by potential leadership changes in the markets which often accompany such volatility.

Small and mid-capitalization stocks remain favored. Equal-weighted indexes are favored over capitalization-weighted indexes. While International stocks are no longer among the emphasized categories, the European Emerging markets are showing the greatest relative strength in the international area.

My favored sectors are Energy, Materials, and Technology (watching technology carefully).

My views of bonds have changed. While I continue to believe that bonds will return bond-like returns, I am revising my views on high-yield bonds and am now suggesting a reduction in allocations to high yield bonds. The extra risk is not justified by higher yields at this time in my view. Corporate intermediate bonds and international bonds have been the strongest in 2011. I also continue to like senior bank loan investments also known as floating rate bonds.

Commodities are volatile. I continue to believe that oil prices are clearly sensitive to the uncertainty in the Middle East and any threats to supplies in any of the oil producing countries can cause a sharp increase in prices. A falling US dollar will also contribute to an increase in commodity prices in general. Gold is trying to get even for the year. I believe that if you own gold, keep it. Gold remains a hedge against the global uncertainties. I see no reason at this time to sell any commodities in portfolios; however, this does not mean we forget about these positions.

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.

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, 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(R), Member FINRA/SIPC, a Registered Investment Adviser.

Market uncertainty reached a crescendo Wednesday night and Thursday last week prompting market pullbacks around the world. Friday we woke up to the horrible news of the tragedy in Japan but US markets managed to rally.

The volatility that has gripped the markets the past few weeks continued. The Dow Jones Industrial Average (DJIA) lost 125 points (-1.03%) to close the week at 12,044 and the S&P 500 gave back 17 points (-1.28%) to close at 1304. For the year, the DJIA is up 4.03% and the S&P 500 is up 3.71%. The Russell 2000 lost 22 points (-2.69%) and for the year is up 2.45%. All major indexes have given short-term sell signals.

Looking at the broad economic sectors the week brought about what could best be described as roll reversals. By that I mean the best performing sectors so far this year took the brunt of the sell-off (I will discuss this phenomena in greater detail shortly). Energy, which had been up double digits was the biggest loser followed by Materials and Technology. Utilities, Consumer Staples, and Telecom were the winners. For the year, Energy still remains #1 up nearly 10% followed by Industrials and Health Care. Telecom, Materials, and Consumer Staples are the bottom three.

The MSCI (EAFE) World Index lost 3.42% for the week and is now up 1.68% for the year. From a country and regional basis, the Middle East as a group is underperforming for the year, while European countries continue to lead. So far in March, the best performing countries are rotating over to the Pacific-Asian region while the Middle East continues to underperform. Peru is the one exception to the regional biases as it remains near the bottom for March and 2011. Another important observation that I have seen from a technical standpoint is that average technical scores of emerging and developed markets that I track have essentially become equal and have started tracking together recently.

The Euro fell slightly against the US dollar losing -0.55% closing at $1.3910 compared to the previous week's close of $1.3987. The weakness of the Euro follows downgrades by Fitch of Greece and Spain by Moody's. These downgrades continue to remind investors that the debt crisis in Europe has not been resolved and that more bailouts may be coming. The Europeans are working on a self-imposed deadline of March 25th to complete work on the new bailout provisions. In meeting this past week, the Europeans did make some tweaks leading into the final summit in two weeks, but the European Central Bank head came away disappointed. I will devote more to this subject after the final meeting.

Gold closed Friday at $1416.10 down $12.30 (-0.86%) for the week and for the year gold is off $3.60 (-0.25%). Gold prices started climbing on Friday as investors reacted to the magnitude of the Japanese disaster and the associated uncertainty.

Oil prices fell last week with West Texas Intermediate (WTI) crude closing at $100.70 falling $4.02 (-3.84%) for the week. This has not slowed the increase of gasoline at the pump and I experienced another ten cent increase paying $3.79 per gallon for premium this weekend. The lack of truly disruptive protests in Saudi Arabia and expected drop in demand from the Japanese as they cope with the earthquake are the two principal reasons for the week's drop. I also believe that Gadhafi will regain control of Libya as the US, the UN, and NATO debate on how to deal with the uprising there. I further suspect that Libyan oil will be bought as normal in the world's markets even after the brutal crackdown in the country. The real story will continue to be the uninterrupted flow of oil to Europe and the US. Disruptions will trigger an economic upheaval and impact negatively on markets worldwide. Other commodities pulled back significantly last week as investors worry about the impact of the earthquake on imports of commodities by the Japanese.

Bonds continued their rally as investors shifted money away from stocks and into bonds. The 10-year Treasury yield closed Friday at 3.397% down from the previous week's close of 3.488%. The Barclays Aggregate Bond Index was up 0.46% for the week and has now been up three of the past four weeks. For the year the Barclays is up 0.63%. The spread between the 10-year Treasury and the 30-year Treasury has narrowed recently as the longer maturity bond shows greater sensitivity to market dynamics (in this case a positive boost in price).

A LOT GOING ON LAST WEEK

The crescendo of market noise seemed to roll over investors late last week spooking the markets and prompting a greater than 2% pull back on Thursday. While the stock markets rallied on Friday to close up slightly, commodity markets continued to fall over worries of curtailed demand in oil and agriculture products from Japan. Before the earthquake dominated the news Friday, five major news stories were dominating the headlines:

• Unrest in Saudi Arabia • The escalation of Libyan violence • A reported monthly trade deficit by China • First time unemployment claims in the US jobs market increase 26,000 compared to a consensus of a 7000 increase • Spain's credit rating was downgraded by Moody's following Fitch's downgrade of Greece earlier in the week

All of these stories together signal a less than vibrant global economy. Whether the impacts are felt immediately or over then next few months or years, the news made investors question the strength of recoveries and challenge beliefs that countries are effectively moving past previous problems. The rally on Friday calmed some fears that an all-out route was not underway, but an unmistakable signal was sent to investors-the continued rally in stocks may be slowing or coming to an end for now.

THE NEW YORK STOCK EXCHANGE BULLISH PERCENT REVERSED

I have been discussing the New York Stock Exchange Bullish Percent (NYSEBP) extensively in recent weeks. Remember that it is an indicator of risk in the market, not a predictor of market performance. I think we all remember the crash of 2008 and we are influenced by our most recent experiences (particularly painful experiences) but we must keep in mind that circumstances are very different in 2011. So while I cannot predict if this is the start of a major correction or a slight pause before resuming growth, what I do know and understand is that after being in a column of X's (demand in control) since September 15, 2010, the NYSEBP is now in a column of O's (supply in control) and that a more defensive posture must be taken. For me this translates to evaluating holdings in all portfolios, raising cash in the weaker holdings, and taking more conservative strategies. In other words, our focus should now be on wealth preservation rather than wealth creation.

The sell-off last week caused particular pain in the energy sector, some parts of the technology sector, and among small and mid capitalization stocks. A quick check of recent performance shows that all of these stocks show that all of these sectors have significantly outperformed the broader market, in other words, these investments have been exceptionally strong on a relative strength basis. So when investors start selling, the first place they look to are investments with gains. Once profits have been taken, they tend to gain more rapidly when pessimism turns to optimism. Just ask yourself, if I were going to sell something because the markets are making me nervous, would you sell an investment with a 20% gain or one that is flat or with a slight loss? This emotion helped guide selling last week and may help you better understand why some of your best investments have been hit harder than the broad market-that role reversal I mentioned earlier.

What do the Point and Figure charts of the DJIA and S&P 500 tell me about support levels? The DJIA and S&P 500 both broke their first support levels of 12,000 and 1300 respectively. They have since rebounded to just above those levels, but they were breached none-the-less. The next intermediate support levels for each index are 11,800 for the DJIA and 1270 for the S&P 500. Both of these support levels are between 2% and 3% below current market levels. While significant, the real support for the markets comes at 11,100 for the DJIA and 1180 for the S&P 500. Breach of either of these levels would break long-term support of these indexes that have been in place since August of 2010.

One final observation. When I examine the Point and Figure Charts of most of my major investments, I do not see a breakdown in those charts. The indicators tell me that most holdings have become "fairly" valued when compared to their prices over the past ten weeks. This is a normal and acceptable market action. If breakdowns do occur, then they must be dealt with at that time.

LOOKING AHEAD

I recognize that a drop in account value is never pleasant and we always prefer to see markets rise. Reality is that the ride is not a smooth one and we will experience pullbacks and corrections periodically. Last week was certainly an example of this. What is important to recognize is not to let you be unduly influenced by recent market actions and remain focused on the process of investing in technically strong investments and sectors.

Small and mid-capitalization stocks remain favored. Equal-weighted indexes over capitalization-weighted indexes. US and International stocks are favored over Commodities, Bonds, and Foreign Currencies. Emerging Markets remain preferred over Developed Markets (although this has essentially become a tie).

My favored sectors are Energy, Consumer Discretionary, and Industrials.

My views of bonds have not changed. Bonds will return bond-like returns. Nothing spectacular. On a relative strength basis, High Yield, Preferred, and Floating-Rate bonds are favored. Intermediate-term corporates continue to perform well.

Commodities are volatile. I continue to believe that oil prices are clearly sensitive to the uncertainty in the Middle East and any threats to supplies in any of the oil producing countries can cause a sharp increase in prices. A falling US dollar will also contribute to an increase in commodity prices in general. Gold is trying to get even for the year. I believe that if you own gold, keep it. Gold remains a hedge against the global uncertainties. I see no reason at this time to sell any commodities in portfolios; however, this does not mean we forget about these positions.

Take a few minutes and review your portfolios. If you feel like raising cash, do so. If you are trying to decide between stocks or bonds, bonds may be attractive for now. If you want to get into the stock market, consider doing so on a step-by-step basis rather than going all in. As this market continues to go forward in 2011, I am getting the sense that sector rotation will be important to watch and take advantage of.

I want to conclude this Update by asking each of you to remember the victims and survivors of the disasters that have struck Japan. The people of Japan have suffered, and continue to suffer, from one of the worst disasters in that country's history. Let us hope and pray that the recovery will be swift and further suffering minimized.

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.

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, 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.

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