Equity markets continued to retreat last week as fears grew over Greece's political instability and its possible impact on the European Union, and news that banking stalwart, JP Morgan, has suffered some $2 billion in trading losses with the potential for another $1 billion. Less apparent was Cisco Systems' bad week after announcing relatively low growth projections for the remainder of 2012. The "risk off" trade is in control for now.

The Dow Jones Industrial Average (DJIA) posted its second consecutive worst weekly performance in 2012 losing 1.7% following the previous week's loss of 1.4%. DJIA components Cisco Systems and JP Morgan suffered losses of 13.7% and 11.5% respectively and contributed to much of the DJIA's drop, but they were not alone with 20 of the other 30 companies that comprise the index losing value last week as well. For the year, the DJIA is now up 4.9%. The S&P 500 faired a little better losing 1.2% for the week, while the broader Russell 2000 index posted a loss of just 0.2% and the NASDAQ lost 0.8%. After 19 weeks of trading in 2012 the S&P 500 is up 7.6%, the Russell 2000 is up by 6.6%, and the NASDAQ continues to lead posting a gain of 12.6%.

The European Union (EU) remains under considerable stress as the Greeks appear unable to cobble a coalition together to form a government. Investors worry that the new Greek government will be unable to or unwilling to adhere to austerity measures agreed to with the EU in order to qualify for bailout funds increasing the possibility that Greece may have to exit the EU. France appears, for now, to be transitioning smoothly to a new socialist government; however, Spain is back in the news after the rapid and unexpected nationalization of that country's fourth largest bank. Across the globe, China's economy appears to be slowing and doubts are growing that the Chinese can lift the world economy. For the week, the MSCI EAFE index lost 2.65% with the Asian/Pacific region posting a sharp 4.3% drop. For the year, the MSCI EAFE is now up 2.3% and the Americas region leads all others posting a 7% gain. The Emerging Markets region is up 5.5% as is the Developed Markets region, while the Asia/Pacific region is up 4.4%.

The Euro continued to fall as investors sold Euros and sought safety in the US dollar. The Euro fell nearly two cents (-1.3%) to close Friday at $1.291. The US Dollar Index gained another 1% and is now up 0.15% for the year. Whenever the US dollar has risen over the past year or so, it has generally been accompanied by a falling stock market, falling commodity prices, and falling US interest rates.

Commodities fell again last week over continued worries about the strength of the global recovery and fears of a major setback in the EU pushed the dollar stronger which in turn helps push commodity prices down. The Dow Jones UBS Commodity Index constructed with a broad basket of commodities fell 1.7% following last week's 2.7% drop and the index is now down 4.2% for the year. Gold prices dropped 3.7% and WIT Oil prices fell nearly 3%. Gold's pullback was due in part to the better than expected decline in the Producer Price Index released last Friday helped mostly by falling oil prices. The only bright spots in commodities last week were natural gas, coffee, and cocoa which where were all up around 1%. Metals and agriculture were the weakest commodity sectors for the week.

Bond markets gained for the eighth consecutive week with the Barclays Aggregate Bond Index up a very modest 0.09%. US Treasury yields fell (prices up) last week. The 10-year Treasury interest rate closed Friday at 1.845% to the previous Friday close of 1.876%. The 30-year closed Friday at 3.011% compared to the previous Friday close of 3.071%. Spanish 10-year interest rates pushed over the dangerous 6% level on Friday closing at 6.007%. This is clearly a warning sign that things are not good in Spain today. The French 10-year fell slightly to close Friday at 2.804% suggesting that the credit markets are still waiting to see what newly elected French president, Francois Hollande will actually do. For the week, extended duration US Treasuries and corporate bonds were the best performing bond sector. The worst performing sectors were Emerging market debt and International bonds.


TIME TO SELL?

Two weeks ago the markets looked great. The DJIA had reached a recent multi-year high of 13,360 during the day on May 1st but since then the Dow has fallen 4.0%. Not great, but not terrible or unusual either. In fact, markets do this on a regular basis. The S&P 500 has, on average, had three to four 5%+ corrections every year since 1928 (Source: Ned Davis Research/Wells Fargo). What we have seen most recently is known as a buying climax. A buying climax occurs when a stock (or in this case an index) makes a new yearly high, often early in the week (May 1st was a Tuesday) but then declines and closes down for the week as a whole (-1.44%). A "climax" does not mean that a stock or market (index) has finished a long-term move, or that a change in trend is on the horizon, it is simply an indication that a near-term top has been reached. Sometimes such a near-term top turns into something of long-term relevance, but just as often this is not the case and so we should look no further than our headlights (data) can illuminate.

I follow a series of data provided by Dorsey Wright & Associates (DWA). One of the data points I evaluate is where a stock or index is sitting compared to its ten-week trading band. A trading band is simply a statistical bell curve placed over a stock or index's past ten weeks of price history. If a stock or index is trading in the middle of the trading band it is considered to be fairly priced (the ten-week mean). A stock or index can be considered overbought if it is trading well above the middle of the band, and oversold if it is trading toward the bottom of the ten-week band. For those of you who have a background in statistics, the top and bottom of the bands are three standard deviations each. The bands are recalculated weekly. Today the DJIA is trading just below the middle of its ten-week band. In simple English, the market is just slightly oversold at this time. The S&P 500 is also oversold by about the same amount. This is not the time to panic and sell; however, this is not the time to be complacent either. Review individual positions and watch each closely.

I am not trying to sound pollyannaish about the last two weeks, I see what you see. However, I also see the markets within the context of years of market behavior. There is a lot of risk and uncertainty out there and I am not diminishing those risks. I have not liked international stocks for some time, and US stocks continue to have a very wide lead on all the other four major asset categories evaluated by DWA (Commodities, Bonds, International, and Currencies). Commodities have come under stress as global economic growth weakens and the US dollar strengthens, while Bonds have been a very steady investment so far in 2012. Currencies have done little and the US dollar is consolidating with the Euro.

So I believe that now is not the to time sell stocks, but do keep an eye on the markets to see how they continues to shape up.

LOOKING AHEAD

The Europeans are still fighting the political and economic turmoil that has embraced that part of the world. The Greeks will attempt to form a government, but what form that government takes is completely unknown. Indications are that this new government will not be onboard with the German view of the EU. France is also expected to push back against the Germans. The Spanish government and banks will continue to face very tough choices and the Spaniards may have to continue bailing out their banks. The question that Spain must answer is, "where will the government get the money?" I believe that markets will continue to react to any news or economic data that validate any global growth or contraction.

Following a week with little economic data, there are a fairly large number of important reports due out this week. Tuesday kicks off with April Retail Sales and the April Consumer Price Index (CPI). The consensus for retail sales is to pull back from a gain in March of 0.8% to just 0.1% in April. The CPI is expected to be flat after a 0.3% increase in March. Declining energy prices are a major contributor to this consensus number. April Housing Starts and Industrial Production will be released Wednesday along with the Federal Open Market Committee (FOMC) minutes. Housing starts are expected to rise slightly from March and economists are anticipating a moderate jump in industrial production after a flat March. The FOMC minutes will be scrutinized for any indication that the Federal Reserve is considering another round of quantitative easing. Finally, Thursday brings the Initial Jobless Claims report. Consensus calls for a reduction of 2000 first time claims to a level of 365,000.

Even with the moderate sell-off over the past couple of weeks, my views about the markets developed through the DWA relative strength analysis are only slightly changed. US stocks remains the strongest asset category followed by Commodities, Bonds, International stocks, and Currencies. US stocks retain a very sizable lead over the other categories. Commodities have shown considerable weakness, and I am not adding to positions and will look to trim if oil and gold prices continue to pull back. Mid-capitalization stocks are favored, growth is favored over value, and equal-weighted indexes are favored over capitalization-weighted ones. On a relative strength basis, DWA puts Consumer Discretionary, Information Technology, and Financials as the three strongest economic sectors. The New York Stock Exchange Bullish Percent (NYSEBP) fell again last week and remains in an eight week negative trend. The current reading of 59.64 is now just over seven points above the 52.96 level at the start of 2012. Markets remain in a weakening trend with uncertainty abroad increasing.


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

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

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

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

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

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

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

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

Sincerely,

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



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

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

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

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

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.


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

A disappointing employment report moved stock and commodity markets down sharply on Friday resulting in a disappointing week for investors. The sell-off came after the Dow Jones Industrial Average (DJIA) reached a nearly 5-year high on Monday of 13,360. The official April unemployment rate dropped to 8.1% on an anemic monthly non-farm

jobs gain of 115,000 jobs when consensus was calling for an increase of 165,000. More troublesome was the continued drop in the labor force participation rate. The participation rate is the statistic measuring the number of working-age Americans holding jobs. This number fell by 342,000 to a rate of 63.6%. This is the lowest participation rate since December 1981. In an editorial on May 4th, the Wall Street Journal, pointed to a number of factors contributing to this decline including an increasingly older working population, slow job growth making it harder for the unemployed to find their way back into the labor market, and stagnant wage growth which gives less incentive to the unemployed to go out and work. Whatever the reason, the markets reacted negatively to the poor employment news and the dimming prospects for a stronger recovery.

For the week, the DJIA posted a loss of 190 points (-1.44%) and the S&P 500 lost 2.44%, its worst weekly performance in 2012. The Russell 2000 lost 4.07% and the NASDAQ fell 3.68%, each matching the S&P 500 for the worst weekly performances in 2012. For the year, the DJIA is up 6.7%, the S&P 500 has gained 8.9%, the Russell 2000 is positive by 6.9%, and the NASDAQ is up 13.5%.

All of the major economic sectors were negative last week except for Telecom which was unchanged. In addition to Telecom, the best performing sectors were Utilities and Real Estate both of which were down less than 1%. The worst performing sectors were Energy, Materials, and Information Technology each losing around 3.75%. For the year, Consumer Discretionary, Financials, Information Technology, and Real Estate are the best performing sectors with each posting double digit gains. Utilities, Energy, and Telecom are the weakest sectors with Utilities and Energy posting slightly negative returns.

Europe remains a region under duress. Economic growth is flat to negative, unemployment levels exceed 20% in countries like Spain and Greece, and voter discontent is growing. National elections in Greece and France are expected to toss the incumbents and be replaced with more anti-European Central Bank (ECB)/anti-Germany regimes. NOTE: It appears that Socialist Francois Hollande has defeated President Sarkozy 52% to 48%. The Dutch government is getting bounced after undertaking modest austerity measures. Not surprisingly, the European-heavy MSCI EAFE index dropped another 2.5% last week and is now up just over 5% for the year. It is also why using relative strength analysis tools, Europe and most of their countries rank in the bottom third of my international analysis.

With the bad news coming from Europe last week the Euro fell nearly two cents (-1.36%) against the US dollar to close Friday at $1.308. The US Dollar Index gained 1% and is now down just 0.85% for the year. The currency market has been subdued this year and I believe reflects the general uncertainty of investors about the unending actions by central banks around the world.

Commodities were hit hard last week after economic data both here and abroad raised doubts about the overall strength of economic recovery. The Dow Jones UBS Commodity Index constructed with a broad basket of commodities fell 2.7% last week and is now down 2.5% for the year. Oil prices fell especially hard on the unemployment data with WTI oil falling 4% on Friday alone. For the week, WTI oil fell $6.44 (6.14%) to close Friday at $98.49 breaking below the $100 per barrel mark for the first time since February 7th. Gold prices also fell posting a loss of $19.60 per ounce (-1.18%) to close last week at $1645.20.

Bond markets gained for the seventh consecutive week with the Barclays Aggregate Bond Index adding another 0.33%. US Treasury yields fell (prices up) with the 10-year and 30-year rates closing Friday at 1.876% and 3.071% respectively. All the major European yields also fell and the German 10-year Bund is now trading below 1.6%. There is no rational explanation for an investor purchasing US Treasuries at these prices, especially the 10-year Treasury, while the official inflation rate in the US is 2.65%. This means that the real return (actually yield minus rate of inflation) for investors is now a negative 0.8%. Stated another way, investors are willing to lose nearly 1% per year for the safety of owning a 10-year Treasury bond. For the week, extended duration US Treasuries was the best performing bond sector followed by Emerging Market Debt and Municipal bonds. The worst performing sectors were Short Duration US and International bonds and Inflation-protected bonds.

SELL IN MAY AND GO AWAY AND OTHER THOUGHTS

This old market adage has been around for years. It does have historical basis upon which the adage is based, and over the past couple of years, this has been especially visible. According to research conducted by Dorsey Wright & Associates (DWA), during the seasonably weak periods (May 1st to October 31st) the DJIA was up 1.0% in 2010 and down 6.7% in 2011, while during the seasonably strong periods (November 1st to April 30th) for the same years the DJIA was up 15.2% and 13.3% respectively. Looking back over the past 62 years, the average DJIA return during the weak period was -0.17% while the return was 7.10% during the strong period. Most of us do not have a 62-year holding period, but this relationship certainly warrants consideration when making investment decisions.

Bill Gross of PIMCO writes a monthly commentary and I always look forward to reading his current insights. He

usually delivers his message in a clever context and this month was no different. But stripping the cleverness aside, he makes an important point that I believe should be highlighted. As most of you know, the Federal Reserve has engaged in two rounds of formal quantitative easing (QE) and one informal round (Operation Twist). QE is an accommodative monetary policy in which the Fed encourages economic growth by injecting new money into the economy through Treasury bond purchases in the open market. Operation Twist is a slight derivation of QE where the Fed takes maturing short duration notes and bonds and purchases longer (5-30 year) Treasuries. Bill Gross points out that stock markets lost between 10% -- 15% after QE I and QE II lapsed in March 2010 and June 2011. Operation Twist is scheduled to end June 30th precisely one year following the end of QE II. I do not know if the end of Operation Twist will cause markets to decline yet again, however, investors must remain alert.

Finally, I would like to mention the discussions starting to surface regarding the impact of the potentially massive tax increases on January 1, 2013. I have intentionally avoided the topic because we are still several quarters away from this happening and a lot can change between now and then. However, there is a lot of discussion popping up on both sides by observers who see potential market doom or little impact. All pundits have agenda’s and I think this debate clearly reflects that, so I caution you on being sensitive to these biases. However, I do think that there will be some negative impact on the economy as taxes potentially take away more spending power from consumers. This comes as wage growth struggles to keep up with inflation and workers find their take home pay shrinking.

LOOKING AHEAD

The elections in France and Greece will be endlessly analyzed during the coming week and rightfully so. Changes in political leadership and direction within those countries has the potential to send the European Union back to the

drawing board in an effort to sort out their economic mess creating a new round of anxiety for investors. Here in the US investors will become even more focused on any economic reports that speak to the growth of the US economy. Last week’s numbers left investors struggling to find direction as the economy continues to “muddle.”
The coming week has relatively few key economic reports due out. Thursday’s initial jobless claims are expected to remain unchanged (366,000 vs. last week’s 365,000), and the international trade report is expected to show an modest increase in the trade deficit. The Producer Price Index, a measure of change in prices paid by domestic producers of goods and services, is expected to be unchanged on Friday.

The highlight of the week is Fed Chairman Bernanke’s speech Thursday to a conference in Chicago. Investors will be looking for any hint of the Chairman’s commitment to another round of QE upon the completion of Operation Twist and following recent dissapointments in the Gross Domestic Product and employment growth. As investors become more and more nervous about economic growth, any deviation from consensus or changes of view by Mr. Bernanke, I believe has the potential to push the markets as last Friday’s employment report did.

For now, my views about the markets developed through the DWA relative strenght analysis is unchanged. US stocks remains the strongest asset category followed by Commodities, International stocks, Bonds, and Currencies. US stocks retain a very sizable lead over the other categories. International stocks and Bonds have moved into a tie with a slight nod to International stocks. Mid-capitalization stocks are favored, growth is favored over value, and equal-weighted indexes are favored over capitalization-weighted ones. On a relative strength basis, DWA puts Consumer Discretionary, Information Technology, and Financials as the three strongest economic sectors. The New York Stock Exchange Bullish Percent (NYSEBP) fell again last week and remains in a seven week negative trend. The current reading of 64.84 is down from the high of 76.04 reached on February 17th. Even as the DJIA was reaching new heights last Monday, the broader market continues to lose strength.

Sincerely,

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

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

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.

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. The Dow Jones UBS Commodities Index is composed of futures contracts on physical commodities. This index aims to provide a broadly diversified representation of commodity markets as an asset class. The index represents 19 commodities which are weighted to account for economic significance and market liquidity. This index cannot be traded directly.

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

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

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

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.

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 and is a capitalization-weighted index meaning the larger companies have a larger weighting of the index. The S&P 500 Equal Weighted Index is determined by giving each company in the index an equal weighting to each of the 500 companies that comprise 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 Russell 2000 Index Is comprised of the 2000 smallest companies of the Russell 3000 Index, which is comprised of the 3000 biggest companies in the US. The NASDAQ Composite Index (NASDAQ) is an index representing the securities traded on the NASDAQ stock market and is comprised of over 3000 issues. It has a heavy bias towards technology and growth stocks.

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

Markets here at home moved up nicely last week on continued good earnings news. Through the end of last week, 300 companies of the S&P 500 have reported earnings and 70% came in ahead of estimates. However, the Department of Commerce's initial estimate of the 1st Quarter Gross Domestic Product (GDP) came in at a disappointing 2.2% declining from last quarter's 3.0% and missing the consensus expectation of 2.5%. A drop in government spending contributed to much of the decline as did a pullback in business investing. Consumer spending was a bright spot, but with incomes advancing slowly, economists are concerned about whether consumers can continue to maintain spending at this pace. Initial jobless claims also came in higher than anticipated at 388,000 and marks the second straight week of growing first time jobless claims. All of this had Fed Chairman Bernanke stating yet again that he would take action (quantitative easing) if the economy slowdown worsened, but he did not think that action would be necessary now.

With just one trading day left in April, the Dow Jones Industrial Average (DJIA) was up 199 points (1.53%) for the week and has managed to move positive for the month (0.12%), and is now up 8.27% for the year. The S&P 500 gained 1.80% for the week and is now up 11.59% for the year. The Russell 2000 added 2.66% for the week and the tech-heavy NASDAQ gained 2.29%. For the year the Russell 2000 is up 11.41% and the NASDAQ is up 17.81%.

All the major economic sectors were positive last week led by Energy, Consumer Discretionary, Real Estate, and Information Technology. Consumer Staples, Health Care, and Materials were the bottom three sectors, but as I said, all posted positive gains for the week.

Europe remains a major concern. Standard & Poor's downgraded Spain's debt two notches raising concern through European markets. Great Britain is in a mild recession and Spain is expected to release their GDP figures showing that country is again in recession. Spain's unemployment has also reached a staggering 24.4%. The French election is just over a week away and the Socialist Francois Hollande is expected to displace current president Nicolas Sarkozy. Mr. Hollande's stated agenda will place a great deal of strain on French and German relations. Not surprisingly, the European-heavy MSCI EAFE index lagged the US markets by gaining just 0.68% for the week. For the month of April this index is down 2.07% and is up a modest 7.70% so far this year.

The Euro was virtually unchanged against the US Dollar adding just 0.30% to close at $1.326. The broader US Dollar Index which measures the US Dollar against a basket of six currencies (mostly European and heavily weighted towards the Euro) fell 0.55% and is down 1.83% for the year. Currencies in general have moved little if at all recently reflecting the great uncertainty about central bank activities. Much like interest rates, currencies today have grown increasingly dependent on the actions of central bankers and less on more traditional economic principals such as trade imbalances.

Gold and WTI oil were up 1.36% and 1.56% respectively last week, and the Dow Jones UBS Commodity Index (a broad basket of commodities) gained 1.98% marking its first gain in six weeks. Gold rallied primarily on the weaker US economic data (raising the probability of additional quantitative easing by the US Federal Reserve), and oil gained on speculation that the global supply of oil would not be artificially impacted by releases of the strategic oil reserve to help hold down prices.

Bond markets continued to move slowly upwards (pushing interest rates down) as economic data remained neutral to weak. I read a number of stories over the weekend of a major migration of investment dollars from the equity markets to the bond markets. This represents fear on the part of most investors, but also provides gains for bonds. The Barclays Aggregate US Bond Index was up for the sixth straight week adding 0.13%. So far in April the Barclays has added 1.09% and 1.42% for the year. The yields on US Treasuries have also fallen for the past six weeks and the 10-year yield stands at 1.931%. German, French, Italian, and even Spanish yields also fell. The German 10-year yield closed Friday at 1.699% and the Spanish 10-year at 5.881%. For the week, international bonds, preferreds, and high yield were the best performing of the bond sectors while the short duration and mortgage-backed bond sectors were the weakest. For the year, preferreds, international inflation, and municipal high yield lead all major bond sectors while extended duration US Treasuries and corporates are the weakest.


THE GROWTH VS. AUSTERITY CONUNDRUM

The European debt crisis has become an ongoing drama unfolding before us in Berlin, Paris, Brussels, Madrid, Athens, and Lisbon. European leaders have managed to stave off the most serious and immediate problems allowing the debate to now focus on how best to improve the economic growth prospects of the EU. The challenge, I believe, is that the patience of most European voters will be insufficient to see through the necessary structural reforms that will fix the real problem-national economies overly dependent on government spending which have been funding an unsustainable lifestyle.

The upcoming French election illustrates this problem. President Sarkozy has worked closely with German Chancellor Merkel to force austerity measures on the most guilty of EU countries like Greece, Spain, Portugal, Ireland, and to a lesser extent--France. The austerity measures, which are really cuts in government spending, have been painful in every country. Private unemployment in Europe has always been poor relative to the United States, and now government unemployment is surging. GDP's of most European countries have fallen and Spain has become the latest victim as Standard & Poor's cut the country's debt rating and has downgrade or placed on negative watch 16 major Spanish banks. Now the French look like they are going to throw restraint aside and elect a president who has called for the highest tax rate to be raised to 75%, a renegotiation of the current, but not ratified, EU treaty, and who wants the European Central Bank (ECB) to begin issuing Euro Bonds which the Germans and ECB strongly oppose. In other words, the French want a return to the good ole days of high government spending. The French also do not like that the prescription being pushed on the EU emanates from Berlin and not Paris. It is hard to undo hundreds of years of contentious relations!

What Mr. Hollande is proposing is to maintain the status quo of heavy government spending to subsidize the nearly 50% of French who work for the government, and apparently the French electorate has warmed to this idea. This will be confirmed next Sunday when the French vote for their president. What is lost in all of the rhetoric of Sarkozy and Hollande is economic reality. Regardless of who is elected, there will be little or no private money coming to France's or Spain's or Greece's government coffers to fund this modern European lifestyle. I believe Hollande understands this, which is why he is calling on the ECB to start up the printing presses and issue Euro bonds. The Germans have no appetite for the Euro bond concept because they will be on the hook for much of the new debt issued by the ECB.

European economies are contracting on the withdrawal of government spending. They have to. The short-term pain is terrible, especially for those most affected. But the lack of structural reform is keeping a lid on growth. Structural reform is another way of saying the Europeans must radically change labor and business laws. Labor laws in Europe are, in many cases, very rigid and uncompromising. Workers cannot be fired, minimum wages are extremely high, weekly work hours constrained well below 40 hours, and vacations are overly generous to name just a few examples. Regulations to start new businesses are excessive and complex designed to prevent new competition to existing companies. The Germans recognized that these issues were holding back their economy a decade ago and voluntarily implemented many pro-growth structural changes that has made Germany the economic powerhouse it has become. Now it is time for the rest of Europe to step forward and do the same. Unfortunately, if the French elections are to be any indication, it looks like the Europeans are opting to delay the inevitable.

LOOKING AHEAD

The French presidential vote is May 6th and I believe the Socialist, Francois Hollande, will be elected. I also believe that this may lead to another round of instability in Europe. I say "may" because the financial markets could step in and derail much of Mr. Hollande's desired reforms before they can be undertaken. This mess is one of the principal reasons why the International asset category remains fourth of the five I follow on a relative strength basis, and why I have been recommending very limited exposure to this asset category.

The announcement of the 1st Quarter GDP numbers disappointed and indicates the the US economy is slowing. Investors will be watching the economic reports this week for confirmation of this slowing. Personal Income and Outlays will be released on Monday morning, the ISM Manufacturing Index on Tuesday, the regular Initial Jobless Claims on Thursday, and the all important April Employment Situation on Friday morning. Consensus calls for personal income to rise slightly, manufacturing to contract very modestly, initial jobless claims to fall by 10,000 but still remain at

a high 378,000 level, and for non-farm payroll jobs to grow from last month's growth of 120,000 to 165,000. The unemployment rate is also expected to remain at 8.2%. Surprises either way can possibly impact the stock markets. Otherwise, I believe we will continue to muddle along.

For now, my views about the markets developed through the Dorsey Wright & Associates (DWA) relative strength analysis is unchanged. US stocks remains the strongest asset category followed by Commodities, Bonds, International stocks, and Currencies. US stocks retain a very sizable lead over the other categories with the others clustered closely together. Mid-capitalization stocks are favored, growth is favored over value, and equal-weighted indexes are favored over capitalization-weighted ones. On a relative strength basis, DWA puts Consumer Discretionary, Information Technology, and Financials as the three strongest economic sectors. The New York Stock Exchange Bullish Percent (NYSEBP) fell again last week and remains in a six week negative trend. The current reading of 66.09 is down from the high of 76.04 reached on February 17th.

I fundamentally believe that US equity markets today are the strongest place to be invested in for those who own stocks. I am cautious, however, because the NYSEBP has started to contract and this has been reflected in a sluggish stock market in April. If the DJIA closes below 13,212 on Monday it will be the first negative month for the DJIA since October 2011. Even if the DJIA manages to close above 13,212 it is unlikely to be a stellar month. Markets never travel in one direction for long and this may just be a pause, but diligence is called for.


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

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

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

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

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

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

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 ®, CRPC ®
Principal
NTrust Wealth Management



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

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

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

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

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

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

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

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

So muddle onward.

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

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

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

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

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

WHAT IS RELATIVE STRENGTH?

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

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

New York Giants 9 wins 7 losses

Philadelphia Eagles 8 wins 8 losses

Dallas Cowboys 8 wins 8 losses

Washington Redskins 5 wins 11 losses

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

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

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

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

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

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

LOOKING AHEAD

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sincerely,

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

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

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

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

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

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

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

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

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

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

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

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

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

MY THREE SIGNALS

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

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

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

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

LOOKING AHEAD

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

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

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

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

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

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

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

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

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

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

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

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

Sincerely,

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

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

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

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

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

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