Global markets tumbled this week on fears that the United States may be headed for its second recession in four years. Investors threw in the towel following remarks by Fed Chairman Bernanke announcing the specifics of "Operation Twist" and his comment that the US economy was "at serious risk."

For the week, the Dow Jones Industrial Average (DJIA) lost 732 points (-6.41%) closing at 10,771. The S&P 500 lost 80 points (-6.54%), and the Russell 2000 fell 62 points (-8.66%). For the month, the DJIA is now down 7.25%, the S&P 500 is off 6.77%, and the Russell 2000 is down 10.23%. All the major indexes are now solidly down for the year. The DJIA down 6.96%, the S&P 500 is down 9.64%, and the Russell 2000 is off 16.74%.

For yet another week, all 11 of the major economic sectors were negative. Materials, Energy, Financials, and Real Estate were the worst performers significantly underperforming the major US indexes. Utilities, Information Technology, Consumer Staples, and Health Care were the best performing sectors and handily outperformed the same US indexes. For the year, Financials have lost nearly 25% to lead all sectors on the downside; and the Energy sector has severely corrected to move into second worst spot on the list of worst performing sectors. Utilities, Consumer Staples, and Health Care are the year's best performing sectors and still positive.

Europe is a mess. It has been a mess and it will likely remain a mess. The MSCI EAFE index fell 7.33% last week and is now down nearly 20% for 2011. I addressed this subject in detail in my last Weekly Update and my view remains unchanged. Greece is going bankrupt, the European Union (EU) is being pulled down because of its currency and economic ties to Greece, and the EU is too bureaucratic to respond in a timely or effective manner. They may come up with another stop-gap measure to attempt to help, but it will end up not addressing the fundamental issue of member countries buried in insurmountable debt. Overlay all of this with a global economy that is sputtering and you get the type of week we just experienced.

The Euro continued to fall against the US dollar last week losing almost 3 cents (-2.10%) to close at $1.350. I would suggest that the Euro is being propped up by the European Central Bank's (ECB) insistence to hold interest rates at current levels. A drop in interest rates by the ECB would push the Euro down further and actually help European exports.

The price of precious metals tumbled this week with gold losing $154.00 (-8.49%) per ounce to close at $1660.70. Friday's drop of 5.8% was the worst one-day loss in 5 years. The consensus of gold analysts is that the sell-off of gold is being driven by profit taking, not because of a fundamental change in their opinions about gold or a decrease in global uncertainty. Oil followed the rout in commodities last week as the price of WTI Oil fell $7.97 (-9.06%) to close Friday at $79.99. The UBS Commodity index, a broad basket commodity index, fell 9.14% as commodity markets in general reflect growing fears of a second global recession and a subsequent drop in demand for raw materials. The best performing sectors within the commodity space were livestock and grains.

The US bond market, particularly long-term US Treasuries, did well last week as investors threw money at the seemingly last safe-haven for money. The yield on the 10-year Treasury dropped to a low of 1.70% on Friday morning before prices fell pushing the yield up to a close of 1.826% by the end of the day. The 30-year Treasury yield also fell to record lows on Friday morning reaching 2.77% before prices also fell to push the closing yield Friday up to 2.89%. The Federal Reserve's decision to initiate "Operation Twist" (purchasing longer-term Treasuries) was the catalyst to drive interest rates to historical lows, but did not deliver on investor's desire for a third round of quantitative easing. International bonds continued their sell-off over European debt worries and a rising dollar has added to the fall in internationals bond prices. For the year, long-term US Treasuries is the best performing bond sector while high yield, preferreds, and international emerging markets are the worst. The Barclays Aggregate U.S. Bond Index closed the week up 0.74% and is now up 7.55% for the year.

FEAR AND DOUBT ARE IN CONTROL

All eyes will be on the meeting this weekend in Washington of the International Monetary Federation. Expectations are that world leaders will take some type of unified action to stem the loss of confidence in global financial systems and inject liquidity to prevent a repeat of 2008.

The stakes could not be higher. All around the world economic data reflect slowing economies. Here in the United States, weekly first time joblessness data remains fixed above 400,000 and there is little hope that the overall unemployment rate will fall below 9%. The Euro Zone Gross Domestic Product contracted in the 2nd Quarter to 0.7% from a 1st Quarter gain of 3.0%, and in China the preliminary HSBC manufacturing purchasing managers index fell to 49.9 in September (any number below 50 shows contraction).

The question remains whether the key economic players can come to agreement and offer policy actions that will stem this loss of confidence. I remain skeptical. Here in the United States political rifts have never been higher. In Germany, Chancellor Merkel has suffered from an unbroken series of local political defeats, and the European Union is mired in a dysfunctional bureaucratic system that requires separate country votes and potential treaty modifications to act in concert.

Yet this is precisely the environment that demands strong leadership and effective policy actions. Time will tell if the current crop of international leaders can forge sound economic policies and restore investor confidence.

LOOKING AHEAD

As I have often said in previous Weekly Updates, stay focused on what the markets are doing-not on predicting what they will do and act accordingly. So what is going on?

Within the five major asset categories I follow-US stocks, International stocks, Commodities, Currencies, and Bonds, US stocks have actually moved into the number one position of the five and Commodities slipped to the second position on a relative strength basis. Currencies are in the third, Bonds are fourth, and International stocks a very distant fifth. If you throw a cash position into the mix, cash would be fifth and International stocks sixth. Put another way, as bad as the US markets have been, everything else has been worse.

The key indicator of market supply and demand, the New York Stock Exchange Bullish Percent (NYSEBP), has reversed to a column of O's indicating supply is in control and the current reading is a very weak 24.2%. The 2011 low of the NYSEBP occurred on August 8th at 21.4%, and the previous low before that was March 5, 2009, when the NYSEBP dipped to 13.6%. I want to make two key points: first, the NYSEBP has not exceed the previous low from August which remains a positive for now; second, a reversal back up into a column of X's would confirm that the markets are in a protracted bottoming process. Both would be positive signs and an indicator that the opportunity to make a major move back into the equity markets may come sooner rather than later.

For my newer readers, the NYSEBP is calculated by evaluating each stock on the New York Stock Exchange (NYSE) and determining if the stock is in a point and figure buy signal or a sell signal. The total number of buy signal stocks is divided by the total number of stocks on the NYSE to arrive at a percentage (the NYSEBP). Below 30% is considered to be oversold and a lower risk position while a reading over 70% is considered to be overbought and a higher risk position. I will be watching the NYSEBP very closely to see if it continues to fall or in fact establishes a higher bottom than the August low.

Although US stocks are the best performing major asset category, it still fails the cash bogey check meaning that on a relative strength basis, cash has outperformed in the short-term. Therefore, US stocks should remain underweighted. Within the US stock asset category, mid-capitalization growth stocks are currently favored. Among the eleven major sectors, Utilities, Consumer Staples, and Health Care are favored.

Within the other major asset categories, Commodities continues to fail the cash bogey check. Precious metals and agriculture remain the strongest sectors within the Commodity space. A further sell-off of precious metals will undoubtedly place this ranking at jeopardy.

Within the bond asset category, International Bonds and Inflation Protected Bonds continue to be favored.

There is a series of important economic data scheduled to be released this coming week. On Monday is the August New Homes Sales data. Tuesday will be September's Consumer Confidence Index. This will be particularly important because of this index's weighting towards expectations vs. backward looking data. Consensus calls for an increase from last month's reading of 44.5 to 46.5. Wednesday will be the August Durable Goods Orders. Consensus calls for a decrease from July's robust reading of 4.0% to 0.2%. Thursday will be the second revision of the 2nd Quarter US GDP data. Economists are expecting a slight revision upward of 0.2% to 1.2%. With nerves already frayed over last week's sell-off, investors are going to be hoping for any sort of good news. What all of this means is that if you are risk averse you should be favoring cash and bonds.

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 fi nancial 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.

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.

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.

The growing crisis in Europe is shaking investor confidence around the world and helped push US markets to their fourth worst weekly performance in 2011. The US dollar is benefiting from a rush to safety and has just broken a two-year downward trend.

For the week, the Dow Jones Industrial Average (DJIA) lost 248 points (-2.21%) closing at 10,992. The S&P 500 lost 20 points (-1.68%), and the Russell 2000 gave back 9 points (-1.38%). September is proving to be another tough month for the major indexes as the DJIA is now off 5.35%, the S&P 500 is down 5.30%, and the Russell 2000 is off 7.27%. Thirty-five weeks into 2011, the DJIA is off 5.06%, the S&P 500 is off 8.22%, and the Russell 2000 is now down a sharp 14.00%.

No sectors managed a positive return this past week, but Information Technology, Real Estate, Consumer Staples, Health Care, and Utilities were the top five sectors while Telecom, Industrials, and Financials were the worst. For the year, Utilities, Health Care, and Consumer Staples remain in positive territory. Financials continues to be the worst performing sector in 2011 losing more than 20% followed by Industrials (-14%) and Materials (-11%).

The growing uncertainty in Europe caused a sharp sell-off among international stocks reflected by a 5.53% drop of the MSCI EAFE Index. The unexpected departure of German Jürgen Stark from the Executive Committee of the European Central Bank (ECB) Friday seemed to be an exclamation point on a very disconcerting week. Mr. Stark's departure apparently stemmed from his opposition to the ECB's increasing purchases of Spanish and Italian bonds.

The Euro fell sharply against the US dollar last week losing nearly 5 ½ cents (-3.80%) to close at $1.366. The loss is the largest weekly drop in 2011 and pushes the Euro down to levels not seen since February. The sell-off of the Euro is linked directly to the problems with Greece and on speculation that problems may spread throughout the rest of Europe.

The price of gold closed down $2.30 (-0.12%) per ounce at $1867.70 in extremely volatile trading. Market indicators suggest that gold investors are growing more pessimistic as the Federal Reserve continues to remain on the sidelines without any additional quantitative easing. WTI Oil gained $0.36 (0.42%) per barrel to close Friday at $87.01. Oil prices may come under pressure this week as economic fears in Europe translate to slacking demand and a strengthening US dollar.

Bond markets, especially US Treasuries, continued to rally on fears from Europe sending bond investors searching for safety. The 10-year yield briefly dropped below 1.9% before closing Friday at 1.918%. As a result, long-term government US Treasuries continue show strong gains and is the best performing bond sector. International bonds of all types suffered and were down last week. For the year, long-term US Treasuries is the best performing bond sector while high yield is the worst. The Barclays Aggregate U.S. Bond Index closed the week up 0.19% and is now up 7.36% for the year.

TIME IS RUNNING OUT ON EUROPE

At some point, the political leadership in Europe is going to have to come to terms with the flaws of the European Union (EU) and with it, the Euro. The biggest problem the Europeans face is how to have a common currency without a common fiscal authority.

When the governments of the European Union first envisioned the Euro they expected member countries to adhere strictly to a number of important economic benchmarks concerning important areas such as inflation, debt, and long-term interest rates. With the strength of the large European economies like Germany and the Netherlands backing the currency and the expected adherence to the economic benchmarks, weaker governments like Greece were able to borrow money much more cheaply than had it been a stand-alone country. By the time the private sector woke up to Greece's uncontrolled borrowing and spending along with lax enforcement by the other EU members, circumstances rapidly spiraled out of control.

Underlying all of this is the financial exposure of banks, primarily in Europe but also around the world, to not only Greek debt but also to Italian debt, Spanish debt, and other weak EU members' debt. The Germans have been trying to push for discipline within member countries as a condition to further bailouts, but it appears that patience is running out. First, you have the Greeks who seem incapable of accepting their current situation. Tens of thousands took to the streets in Greece last week to protest austerity measures the socialist government is attempting to impose leaving the Germans and others to doubt Greece's ability to deliver on promises to reduce spending and debt. Second, German Chancellor Merkel's political party has been losing local election after local election as the German populace expresses its displeasure with Merkel's efforts to help the EU. At some point, these domestic political defeats will force the German leadership to rethink its strategy. This is why an article in Bloomberg.com discussing whether the German's were preparing to throw in the towel over Greece caught my attention. Without German support, the Euro is going to come under increasing pressure and the threat to European banks (exposure to default by Greece) and the international banking system is becoming direr.

This narrative is the underlying story behind the sharp drop in the Euro this past week. Investors are growing increasingly skeptical that the EU is going to find a solution to the Greek problem (and thus the fundamental flaw in the Euro system) and are therefore seeking a safe haven in the US dollar. As I noted at the start of this Update, the US dollar has just broken a two-year downward trend. The longer a trend has been in place, the more important a reversal of that trend may be.

A strengthening US dollar brings with it another set of complications, but one important consideration is the impact on commodity prices.

Historically when the US dollar gains in strength, commodity prices at home drop. The strength of commodities in portfolios has come on the heels of a long-term trend of a weakening US dollar. While commodities may begin to suffer, historically this scenario has contributed to a stronger stock market by reducing the price of oil and other raw materials into the price of goods benefiting consumers and manufacturers alike. Inflation worries also subside. How all of this plays out remains to be seen, but we must watch very closely.

LOOKING AHEAD

Every time it looks like the markets are going to start recovering they pullback. It feels like being trapped under a waterfall. If I can offer a sense of conciliation, it is that the markets appear to be in a classic bottoming process. By that, I mean they go up, down, up again, down again, and each time they do, they seem to rebound at a slightly higher point than the time before. While we are not out of trouble by any stretch, by

watching the technicals closely, you can at least try to discern between all of the negative headlines and general pessimism, and what is actually going on in the markets.

There have been no changes to the relationships between the five major asset classes I follow and their ranking currently remains: Commodities, US Equities, Foreign Currencies, Bonds, and International Equities. Additionally, cash is still out-performing the top two asset classes on a relative strength basis so if you have a low risk tolerance or short time horizon, I suggest you consider underweighting your allocation to stocks.

Within the Commodities asset category, the precious metals and agricultural sectors are favored. Among US equities, equal-weighted indexes rank above capitalization-weighted indexes, and mid-capitalization stocks rank above small- and large-capitalization stocks. Consumer Staples, Real Estate, and Utilities are the strongest relative strength sectors.

Within the bond asset category, International Bonds and Inflation Protected Bonds are favored.

It will be another relatively quiet week concerning economic data. The Producer Price Index and Retail Sales will be released on Wednesday; and Jobless Claims, the Consumer Price Index, the Philadelphia Fed Survey, and Empire State Manufacturing Survey on Thursday. Another point of awareness is that this Friday marks a Triple Witching Week. Triple Witching occurs when stock options, futures and futures options all expire on the same day. Friday, September 17th, will be the third such "triple witching" of 2011; the preceding events coming in March, June, and December each year. Triple Witching Week historically sees increased volatility both up and down, so keep that in the back of your mind if markets jump around this week.

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 fi nancial 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.

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.

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.

The jobs report issued by the Department of Labor on Friday showed no job growth for August and has brought the fear of another recession back into the minds of investors here and abroad.

For the week, the Dow Jones Industrial Average (DJIA) lost 44 points (-0.39%), the S&P 500 lost 3 points (-0.24%), and the Russell 2000 gave back 8 points (-1.22%). These benign statistics hide the fact that in the last two days of the week the DJIA shed 373 points (-3.21%) eliminating all of the gains of the first three days. The month of August produced losses of 4.36% for the DJIA, 5.68% for the S&P 500, and 8.81% for the Russell 2000. For 2011 the DJIA is now down 2.91%, the S&P 500 is down 6.65%, and the Russell 2000 of off 12.80%.

Real Estate, Utilities, and Consumer Staples were the best performing sectors last week while Financials, Telecom, and Information Technology were the worst. Financials continue to lag all sectors for the year followed by Industrials and Materials. Utilities, Consumer Staples, Health Care, and Real Estate lead and remain positive for 2011.

The MSCI EAFE Index gained 2.14% last week, however, international stocks-especially European stocks-were hit hard on today's (September 5, 2011) trading as worries renewed about the European debt crisis and concerns that the United States may be slipping back into another recession. The European Central Bank is calling for much more dramatic action by European leaders to provide immediate additional funding for Greece and even greater unity in fiscal policy. If this sounds all too familiar, it is. To fix Europe in its current form, countries are going to have to give up significant fiscal sovereignty and there is no indication that this will happen especially with German Chancellor Merkel's political party suffering additional losses this past weekend in Germany. German voters appear to be running out of patience with their southern neighbors and the entire bailout process.

The Euro fell slightly against the US dollar last week and fell further today. As of market close on Monday, September 05, 2011, the Euro closed at $1.41 compared to Friday's close of $1.42. The recent weakness in the Euro comes as growth rates for the region drop to two-year lows.

Gold continues to play to investor fears and gained $44.40 (2.43%) per ounce to close Friday at $1870.00. Gold continues to be the safe haven play for many investors around the world. WTI Oil gained $1.15 (1.35%) per barrel to close Friday at $86.65. The price of oil will likely remain dependent on expectations of global demand for now.

The Dow Jones UBS Commodity Index, which measures a broad basket of commodities, gained 0.85% last week as gold prices and some agriculture futures increased. This index was up 0.99% for August and is up 0.08% for the year.

Bond markets, especially US Treasuries, continued to rally as interest rates drop to near record lows. The 10-year yield closed Friday at 1.984% its lowest level in history. As a result, long-term government treasuries have shown strong gains and is the second best performing asset class behind gold. Investors are looking to park money in low-risk investments and Treasuries are that place (along with gold). Inflation protection bonds also gained for the week and ranks the as the third strongest asset sector for 2011. The Barclays Aggregate U.S. Bond Index closed the week up 0.88% and is now up 7.15% for the year.

JOBS AND CONSUMER CONFIDENCE

No new net jobs in August. That is what the government reported Friday morning sending markets into a 253-point decline. Without a growing and vibrant work force, the economy will continue to struggle and Gross Domestic Product growth will likely remain dormant. I do not know if the US will slip into a second recession, and frankly do not think that is relevant to investment decisions today. Recessions are not confirmed until well after the fact and I do not expect this time to be any different so speculating about recession/no recession is best left for talking heads and pundits. As I noted in the last Weekly Update, markets are forward looking and, if they follow historical norms, will be on their way to recovery before any recession is confirmed.

Another interesting statistic is the Consumer Confidence Index (CCI) reported monthly by the Conference Board, a non-profit, non-partisan business organization. The August CCI showed a sizeable decline and

confirms that many people are pessimistic about jobs growth, income growth, and business growth. When viewed in historical context, the CCI has been a good indicator of market tops and bottoms and is worthy of inclusion in the data we should monitor. Most recently the CCI reached a near-term high in July 2007 just three months before markets began a steep decline in response to the 2008 credit crisis, and it bottomed in February 2009 just one month prior to when markets began their 2009 rebound.

So coupled with the general Dorsey Wright indicators, the 10-year US Treasury yield, and the price of gold; you now have another tool to help you make educated and unemotional decisions about when you should be emphasizing or de-emphasizing the stock holdings in your portfolios.

LOOKING AHEAD

The start of the week does not look good. A sharp sell-off in Europe Monday does not bode well for the first full week of trading in September. However, I caution everyone to avoid letting their emotions get the better of them in the wake of large daily swings in the markets. Evaluate your allocations and make sure they are consistent with your risk tolerance.

There have been no changes to the relationships between the five major asset classes I follow and their ranking currently remains: Commodities, US Equities, Foreign Currencies, Bonds, and International Equities.

Additionally, cash is still out-performing the top two asset classes on a relative strength basis so if you have a low risk tolerance or short time horizon, I suggest you consider underweighting your allocation to stocks.

Within the Commodities asset category, the precious metals and agricultural sectors are favored. Among US equities, equal-weighted indexes rank above capitalization-weighted indexes, and mid-capitalization stocks rank about small- and large-capitalization stocks. Consumer Staples, Real Estate, and Utilities are the strongest relative strength sectors.

Within the bond asset category, International Bonds and Inflation Protected Bonds are favored.

There are few major economic reports coming this week. Thursday's Initial Jobless Claims report will remain a focus especially in light of the President's speech to Congress Thursday night. I will also be watching the impact on the banking sector following last Friday evening's announcement that the government was suing most major US banks over selling Fannie Mae and Freddie Mac bad home mortgages during the mortgage boom in the 2000's. This action, in my opinion, will continue to restrict bank lending and further dampen the already anemic economic growth prospects for the country.

I mentioned in my last Weekly Update that I would spend time addressing the differences between West Texas Intermediate Oil and Brent; however, the jobs report took precedent and I will come back to my discussion of oil in a future Update.

This is not a time to panic nor is it a time to be complacent. If you have any questions regarding your current portfolios, please give me a call.

On a final note, this Sunday marks the 10-year anniversary of the tragedy known as 9-11. I hope everyone will take a moment to remember those that perished and reaffirm our commitment to stand up to the type of tyranny that swept over our country that horrible day and remains in the shadows today.

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 fi nancial 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.

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.

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.

With the continued overhang of European banking worries and decidedly weak economic data here at home, global markets pulled back with US markets turning in the third worst week so far in 2011.

Early increases in the week gave way to growing pessimism culminating in a 420 point drop in the Dow Jones Industrial Average (DJIA) on Thursday and ended the week down 451 points (-4.01%) to close on Friday at 10,817.65. The S&P 500 and the Russell 2000 mirrored the DJIA losing 4.69% and 6.57% respectively. For the month the DJIA is down 10.92%, the S&P 500 is off 13.06%, and the Russell 2000 has fallen an eye-catching 18.23%. This leaves the DJIA down 6.56% for 2011 while the S&P 500 is off 10.66%, and the Russell 2000 is off 16.84%.

Utilities was the only sector to post a positive return last week (1.5%) while Consumer Staples, Telecom, Health Care, and Real Estate all out performed the DJIA. At the bottom were Information Technology (-8.1%), Industrials, and Materials. For the year, Utilities (2.7%) and Consumer Staples (2.3%) are the only positive sectors. Financials (-21.8%) is the worst performing sector in 2011 followed by Industrials, and Materials.

The MSCI EAFE Index fell 3.50% last week as European policy makers struggle to stay ahead of the growing banking crisis. The summit in Paris between French President Sarkozy and German Chancellor Merkel failed to calm the markets and highlighted the incredibly difficult challenge Europe must overcome-instituting a "federal" economic system over 27 sovereign countries. The United States understood this challenge in 1790 when Alexander Hamilton called for and effected the consolidation of states' debt accumulated by the colonies during the Revolutionary War. The price extracted from the states for converting their individual state debt to federal debt was to give the US federal government greater fiscal authority (Growth in Emerging Countries Slows Significantly, The Wall Street Journal, August 17, 2011).

Looking around the globe no one region is outperforming another, with the Middle East qualifying as the worst of the worst. For the month of August, the MSCI EAFE is down 13.91%, and is down 12.79% for the year.

The Euro and US dollar continue to move marginally against each other. For the week, the Euro gained one and one-half cent to the US dollar closing at $1.439. The real action is coming from currencies that are seen as "safe havens" which include the Swiss Franc, the Brazilian Real, and the Japanese Yen. Each of these currencies has seen significant appreciation against the US dollar.

Gold continued to be the story of the week as the price of gold once again reached record levels Friday morning ($1868.40) before closing Friday afternoon at $1852.00 giving gold a weekly gain of $109.40 (6.28%). For the year, gold has now added $432.30 (30.45%) per ounce raising concern that a "gold bubble" may be emerging. As long as investors' fears about the markets and government policies grow, the more gold will continue to rise.

The price of oil continued to pull back over demand concerns losing $2.68 (-3.14%) per barrel of West Texas Intermediate (WTI) closing Friday at $82.70. An interesting divergence is beginning to develop between the price of US-produced oil (WTI) and that of Brent oil, which remains above $108 per barrel. Brent oil is produced in the North Sea and is viewed as a broader indication of oil prices than WTI. I will address this topic in my next Weekly Update.

The Dow Jones UBS Commodity Index, which measures a broad basket of commodities, gained 1.26% last week primarily on the strength gold prices. The index is now down 2.34% for the month and is down 2.09% for the year. Friday saw gains in most commodities other than coffee after earlier pullbacks in the week.

Bond markets continue to show strength. US Treasury yields have reached historic lows with the 10-year yield falling to 2.028% on Thursday morning before closing Friday at 2.066%. The fall in Treasury yields can be attributed to a combination of lousy US economic data and Fed Chairman Bernanke's stance taken the previous week where he said that the Fed would keep short-term interest rates at near 0% for the next two years. Long-term bonds of all types are leading current bond category performance along with some international bonds. For the week, the Barclays US Aggregate Bond Index rose 0.39% and is now up 6.86% for the year.

WHICH WAY SHOULD I LOOK?

One of the great paradoxes of investing is that most data and commentary is backward looking while markets look forward.

Key economic data such as housing starts, jobless claims, unemployment rates, consumer sentiment, and Gross Domestic Product (GDP) data are all backward looking. Telling us what has happened, not what is going to happen. One of the reasons the markets reacted so negatively on Thursday when the Philadelphia Federal Reserve released its survey of industrial production was because this report is forward-looking by about three weeks and is forecasting a significant contraction in industrial output--especially when compared to recent data.

A not very scientific indicator of investor sentiment can be found on the covers of magazines. For example, this August 6th cover of The Economist can only be described as fearful and designed to sow doubt into the minds of readers about the future of economic growth. Dorsey Wright & Associates has done an interesting study that shows that more times than not, the gloomier magazine covers are, the closer we are to completing a downturn.

An indication of how investors are reacting to headlines like the one from the cover of The Economist comes from a story in the Personal Finance section of The Wall Street Journal this weekend titled, "Portrait of the Angry Investor." This story states that, "people seem to feel like bystanders in their own financial lives-almost as if they were spectators at a racetrack equally incapable of stopping an impending car crash and of tearing their eyes away from it," and even though most people were spending at least an hour each day following financial news, "...51% of the investors said they hadn't even checked the performance of their own portfolios." I believe the answer to why people are not acting is they simply do not know what action to take. They do not know because they are inundated by conflicting stories and prognostications, which are likely to be based on opinion and the author's personal agenda.

I believe the key to successful investing is to stay focused on what we do know, and I believe the best indication of what the markets are telling us is through the price movements of securities and the changes that can be seen in broader relationships. Relative strength analysis helps to do just that and is the foundation of my Looking Ahead section each week. With that said, let's look at what the data is showing this weekend.

LOOKING AHEAD

Following the upheaval in the markets this past month there have been notable changes to the major market indicators that I follow. First, the market is on defense. I know this because the New York Stock Exchange Bullish Percent (NYSEBP) is now retreating and at the very depressed level of 21.41%. For my long-term readers you know that any level below 30% is considered less risky for investors. Think of the example of crossing a narrow beam 4 feet off the ground compared to 40 feet. If you fall from a very low level, the risk of serious injury is much less. Today we are 4 feet off the ground. However, the chart is still retreating (in a column of O's), so it is not necessarily the time to increase stock exposure now.

Looking at the five major asset categories, Commodities is first, followed by US Stocks, Foreign Currency, Fixed Income, and International Stocks. I focus my investment activity on the top two asset categories; however, both Commodities and US Stocks fail the Cash bogey check meaning, historically, Cash has outperformed in the near-term. Therefore, I have used this signal to suggest that investors consider trimming their stock and commodity holdings by retaining only the strongest relative strength investments. Currencies have pushed up from last place in the last two weeks and the Swiss Franc, Japanese Yen, and Brazilian Real have risen rapidly. Fixed Income has always been part of my portfolio recommendations and this asset class continues to hold steady for now. With the International Stock asset category falling to last place, I generally do not favor much exposure to this asset category, but if you do, Emerging Asian-Pacific is now the strongest international sector on a relative strength basis.

Within the Commodity asset class, Precious Metals and Agriculture sectors are the strongest. Among US Stocks, middle capitalization stocks have replaced small capitalization stocks as the favored market cap segment, while growth and equal-weighted indexes continue to maintain their relative strength. There are no sectors that are favored for over-weighting; however, I maintain my position that US Financials should be avoided. Within Fixed Income, the US corporate bond sector was just replaced by the Inflation Protection sector, and International Bonds continue to remain the other favored bond sector.

I want to conclude with a couple of additional comments. First, if you are not comfortable with the markets, consider moving some of your assets to cash. As I said last week, the worst thing that may happen is that you might miss part of the rebound should that happen, but if the markets continue to fall; you may not be any worse off. Second, I am exploring selective purchases of several large, dividend-yielding companies.

Notable economic data releases for the coming week include new home sales Tuesday, durable goods orders on Wednesday, the regular Thursday morning release of initial jobless claims, and the first revision of the 2nd Quarter GDP data on Friday. The GDP number will be especially important to investors.

Finally, because each investor is uniquely different in their goals, risk tolerance, and economic status, I always prefer to have a one-on-one conversation to address your unique characteristics so please give me a call if you have any questions or comments.

Please note that I will be traveling next weekend and will not publish a Weekly Update.

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 fi nancial 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.

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.

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.

Markets were subjected to historic volatility this past week as investors reacted to every piece of news crossing the wire.

Following the historic downgrading of the US credit rating by Standard & Poor's, the Dow Jones Industrial Average (DJIA) experienced a first-ever four consecutive days of 400+ point moves leaving the DJIA down 1.53% for the week closing Friday at 11,269.02. The S&P 500 lost 21 points (-1.72%) to finish at 1178.81, and the Russell 2000 gave back another 17 points (-2.40%) closing at 697.50. For the first two weeks of August the DJIA is down 7.20%, the S&P 500 is down 8.78%, and the Russell 2000 is down 12.49%. This same order holds for the year as the DJIA is off 2.66%, the S&P 500 is down 6.27%, and the Russell 2000 is down 10.99%.

Real Estate and Materials were both positive last week while Utilities, Health Care, and Information Technology were down less than 1% and easily outperformed the major indexes. The Financials sector was clearly the worst performing sector losing over 4%. For the year, Consumer Staples, Utilities, Health Care, Real Estate, and Energy have all outperformed the DJIA, with the top three sectors holding onto positive returns for the year. With last week's performance, Financials are now down over 18% for the year and this sector has distanced itself from the next two worst performers (Industrials and Materials) by nearly 8% and 10% respectively.

The MSCI EAFE Index fell a modest 0.97% last week buoyed slightly by news that the European Central Bank (ECB) began purchasing Spanish and Italian bonds to help stabilize European bond markets. This move is akin to the US Federal Reserve buying Treasuries and helped strengthen European bonds. US investors would recognize this effort by the ECB as a variation of our own Quantitative Easing (QE). This move has drawn sharp criticism by many in Europe who see the ECB's role strictly as an inflation fighter. It also underscores how serious the problems within the European credit markets are. Compounding this worry is the general slowdown of European economies which has mirrored our slowdown here.

The Euro has continued moving incrementally up and down against the US dollar. Last week it fell just four-tenths of a cent to close at $1.424. With both the US and Europe sharing its own sets of concerns, investors are not voting one way or the other in favor of either currency.

Gold surged to a record high mid-day on Thursday (August 11th) when the price of gold briefly exceeded $1817 per ounce before pulling back to close on Friday at $1742.60 up $90.80 (5.5%) for the week. Gold is now up $322.90 (22.74%) for the year and is clearly outperforming all other assets so far in 2011. This surge in gold prices clearly signals that investors are looking for safety in an increasingly uncertain world as politicians struggle to counter the growing lack of confidence of leadership the world over (I will discuss this issue further in the next section). Oil prices continued to fall as investors worried about weakening global economies resulting in a drop of $1.50 (-1.73%) per barrel of West Texas Intermediate. WTI Oil closed Friday at $85.38 per barrel.

The Dow Jones UBS Commodity Index, which measures a broad basket of commodities, gained 0.56% last week on the back of surging gold prices. The index is now down 3.55% for the month and is down 3.30% for the year. Grains were given a boost on Friday when the US Agriculture Department cut forecasts for corn production by 4% due to the pervasive heat wave in the Midwest. Volatility is a common aspect of commodity investing and recent gyrations are more typical than not.

Bond markets generally posted gains again last week as US interest rates continued to fall. The 10-year US Treasury rate fell to 2.249% from the previous week's close of 2.798%. For the second week in a row, US Treasuries, including Treasury Inflation Protection Notes (TIPs), extended gains and was the best performing sector in the bond market. High yield bonds continued to sell-off and is now the worst performing sector in the bond market. As investors grow concerned about the economy they tend to withdraw investments in less creditworthy companies pushing down prices and increasing yields which help explains the poor performance of high yield bonds.

STOP THE WORLD--I WANT TO GET OFF!

While most of you probably do not recall the 1961 musical from which this section takes its title, I would guess that after the past three weeks in the markets you have probably had thoughts along this line.

It is easy to be caught up in the moment because recently the moments have been more dramatic than any time since the market crash of 2008, but I want to step back and look at the bigger picture and try to assess why the markets have entered into this period of hyper-volatility.

There are many, many different factors that enter into the investment equation today: European banking problems, Greece, slowing Gross Domestic Product (GDP) growth here and abroad, political gridlock in Washington, debt ceiling debates, the housing crisis, unemployment, and on and on. I believe that many of these issues are really a byproduct of what lies at the heart of the matter and that is the US and global economies have reached their borrowing limits and they are beginning to deleverage. Deleverage is just a fancy way of saying we have too much debt and we have to start paying that debt down. Think about what happens in your household when it is time to pay off some bills. You stop or reduce your discretionary spending so you can free up cash to tackle the bills. When this scenario is repeated in other households around the country, you get economic slowdown. Besides households, governments have also reached the breaking point of too much debt and you are seeing austerity measures being implemented by many governments, especially in Europe, causing growth rates to slow dramatically.

The trouble is that even though you are doing the right thing economically and for the long-term, you are creating problems today. These are the problems that make the headlines today like high unemployment, slowing GDPs, and an unresponsive housing market. Now this is where it gets dicey. We expect our political leaders to help get us through this cycle of deleveraging with the least amount of pain possible. But are they up to the task? Do we have the confidence that these politicians and government officials, both here and abroad, will be able to create sound monetary and fiscal policies that work, which are coordinated with the rest of the major global economies, and prevent a second economic crisis from returning with potentially greater economic harm? Answering this question correctly will direct your investment decisions for now and into the months ahead.

LOOKING AHEAD

I continue to stress the importance of paying attention to two key indicators: the yield on the 10-year US Treasury note and the price of gold to help look for answers. The 10-year yield tells you the general consensus that investors have on the strength of the US economy, while the price of gold indicates investor confidence in our political leaders to solve and evolve a restructured economic future. Right now the votes are negative in both cases.

Buyers did re-enter the markets on Thursday and Friday offering some hope that investors still have confidence in selected areas within markets, and I am certainly looking for bargains as well. But I believe you must be focused on what you are buying and recognize that risk in the market remains. Because of that risk, I will repeat last week's observation that if you are not comfortable with the volatility and uncertainty in the market, you can increase your allocation to cash and be patient. The worst aspect of holding cash in the near-term is that you may miss some of the upside if the market does rebound; but if the markets resume their downward fall, you will preserve your assets.

Among the five major asset classes I follow: US Equities, International Equities, Bonds, Foreign Currencies, and Commodities; International Equities has fallen from third to fifth place reinforcing my opinion that International Equities should be avoided or trimmed from portfolios. The rise in Foreign Currencies to third place is a noteworthy trend since this asset category has been in the fifth and last position for several years. I will be carefully evaluating this category and may offer some investment ideas next week if I find some compelling opportunities. While Commodities and US Equities still hold the first and second positions, they fail what I call the cash bogey check. When an investment fails the cash bogey check it means that cash has a stronger relative strength ranking than the asset category sending me a clear signal to increase cash in my portfolios.

With the recent market sensitivity to news stories, there are a couple of key things to watch for in the coming week:

French President Sarkozy will meet with German Chancellor Merkel in Paris on Tuesday to discuss the deepening concern that debt problems may be spreading to Italy. As the leader of the Euro Zones strongest economy, Merkel is under tremendous pressure to work out a solution without committing German taxpayers to subsidizing all of southern Europe's free-spending governments. Compounding the challenges, France's economic growth was 0% in the second quarter and industrial output is falling across Europe.

On Tuesday morning, Housing Starts and Industrial Production data will be released followed by Thursday morning's releases which will include weekly first time Jobless Claims, the Consumer Price Index, and Existing Home Sales. All eyes will be focused on indications of economic growth or further slowdowns.

The tug of war between bulls and bears will likely continue this week but it is hard to imagine that the extreme swings we observed in the market last week will be repeated. Please reach out to me if you have any questions or comments about your portfolios or the markets in general.

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 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.

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.

US and global stock markets saw a second consecutive week of sell-offs as investors digested the details of the debt ceiling compromise, poor economic data, and Europe's continued struggles to contain Greece's debt crisis. All major stock indexes are now trading in negative territory for the year. Additionally, there have been major changes to the technical indicators I follow.

After markets closed on Friday, Standard & Poor's downgraded the US's AAA rating to AA+. This may have serious consequences for investors in the coming weeks.

The Dow Jones Industrial Average (DJIA) lost 699 points (-5.75%), the S&P 500 shed 93 points (-7.19%), and the Russell 2000 lost 82 points (-10.34%). These losses surpassed last week's year-worst data and then some. Thursday's major sell-off was the worst one-day drop by the S&P 500 (-4.78%) since April 29, 2009's 4.32% drop. For the year, the DJIA is now down 1.15 %, the S&P 500 is down 4.63%, and the Russell 2000 is down 8.81%.

Every sector was down again last week. Consumer Staples was the best performing sector losing just under 3% followed by Utilities and Telecom. Real Estate, Energy and Materials were the worst all losing between 10% and 12%. For the year, Consumer Staples, Utilities, Health Care, and Energy are top performing sectors and remain positive for 2011.

International markets followed US markets with significant sell-offs. The MSCI EAFE Index dropped 9.92% and is now down 8.75% for the year. No region of the world was spared the sell-off, but Europe was by far the poorest regional performer with losses averaging around 11%. It is not certain that the European Union will in fact contain Greece's debt crisis and prevent its spread to Spain and Italy.

The Euro has been moving in incrementally up and down against the US dollar. Last week it fell just over a penny to close at $1.428 and is up nine cents for the year. The real action has been the Japanese Yen which has risen to the point that the Japanese government sold Yen to keep that currency from rising too much and hurting that countries critical export trade. I am not terribly impressed with most of the world's major currencies as they have all been moving down more or less together.

Gold continued to be the investment of last resort as it posted a $20.80 (1.28%) gain to close the week at $1651.80, and this precious metal is now up 16.35% for the year. Oil pulled back dramatically losing $8.98 (-9.367%) per barrel reflecting serious concerns over the strength of the global economy. Oil investors are worried about the strength of the global economy pushing demand down, and as the US dollar has strengthened recently, this has added an additional headwind to this and other commodities.

The Dow Jones UBS Commodity Index, which measures a broad basket of equities, fell 4.09% last week and is now down 3.84% for the year. This index is heavily weighted in energy and precious metals with oil being the primary cause of the pullback, however, other economically sensitive commodities such as copper will also feel the pressures of a weakening global market cycle.

The bond markets gained last week as investors looked for a place to hide as stock markets sold off. This is an important and positive sign because the bond market is functioning normally as compared to 2008. The Barclays Aggregate US Bond Index gained a solid 0.82% following last week's gain of 0.71%. For the year, the Barclays is up 5.52%. The 10-year US Treasury yield fell substantially to 2.566% at close on Friday which marks the lowest close since early November 2010. The real question will be what will happen to bond yields in light of S&P's US debt downgrade. The best performing bonds were the more volatile longer-term maturities while high yield and preferreds were the worst.

THE MARKETS ARE IN CORRECTION MODE

Following the past two weeks, virtually every stock market is now in corrective mode (greater than a 10% drop from recent highs). The reasons for this are numerous and I have discussed all of these issues in detail over the past weeks and months. At the core of all of this is a US economy

that simply is not growing. Overlay this with the debate in Washington about the growing US debt burden and Europe's turmoil as it struggles with fears that Spain and Italy are now at risk with bond investors, and you have a real mess. As if this is not enough to worry investors, Standard & Poor's announced on Friday evening that they were cutting the US debt rating one notch from the coveted AAA to AA+ (same as Spain and China).

Beyond the highly visible and significant selloff in markets, there has been a major change to my technical indicators. As I begin this discussion of the technicals, please keep in mind that these technicals are price-based and I assume that every bit of critical information about a stock or a market is reflected in the price. There are five major asset classes which I follow: US stocks, International stocks, Commodities, Bonds, and Currencies. I rank these asset categories from top to bottom and then evaluate each category with its relative performance against cash. The current order of the asset classes is: Commodities, US stocks, International stocks, Currencies, and Bonds. This order has not changed recently, however, last week each of the top three categories are now failing the relative strength test against cash.

What this means to you is that if you are risk adverse, meaning that you are very uncomfortable losing money, you should consider selling or reducing your stock holdings in these top three categories. If you are risk tolerant, you may consider maintaining your investments for now. Each investor is different and you should make decisions based on your individual risk tolerance and other factors such as tax gains or losses.

LOOKING AHEAD

The talking heads are all a-twitter with the current turmoil in the markets. If you are watching or reading the many stories in the media you are probably shaking your head about how so many people can have so many different opinions about why the markets are selling off and what you should do with your money. Let me begin this Looking Ahead segment saying as I have many times: I do not know what the markets are going to do tomorrow or this week, or even next month. What I do know is what my technical indicators are seeing in the markets' behavior.

Let me use an example to help explain why I look at my technical data to interpret what is happening in the markets and why I consider the opinions of others to be of secondary importance. One of the greatest American physicists, Richard Feynmen once said, "The first principle is that you must not fool yourself, and you are the easiest person to fool." He was admonishing his fellow scientists to not permit their personal expectations/biases from influencing their interpretations of data resulting in incorrect conclusions. This personal bias is also referred to as cognitive bias-when we look for evidence that confirms our existing opinion, and tend to ignore, dismiss, or refuse to look for evidence that would contradict what we already believe. Personal bias can also be heavily influenced by recent events-think 2008. Market prices provide great insight into the underlying reality. If markets are not doing what you think they should, the market is probably right and you are probably letting confirmation bias fool you. (Prices reflect the current expectations around a situation-not necessarily the correct expectations. If circumstances cause expectations to change, you can expect that market prices could have quite an adjustment too.)

With a lot of smart people wagering significant sums of money on outcomes, prices are often our best guide to the probable future. Prices are going to reflect reality as best it can be determined. So my focus is always on the price movements of stocks, bonds, and asset categories, not what some talking head is saying in the media.

As I prepare this Weekly Update late on Sunday evening (August 7th) Asian markets have opened to the downside and US stock futures are reflecting a lower opening. It is impossible to tell what will actually happen this coming week. It does not look good for the start of the week, but it is hard to say if this selling pressure will continue or abate. My techncials suggest that risk is high and caution is appropriate at this point in time.

Gold prices are soaring to nearly $1700 an ounce indicating the level of uncertainty in the markets. Through Friday, the 10-year US Treasury yield was pushing down to near record lows. Unemployment numbers remain unacceptable and there are signs that consumer spending is weakening. Taken together, this data is suggesting that the economy is in for a continued rough patch. I believe the real wild card here could be the intervention by the Federal Reserve. The Fed's Open Market Committee meets this coming week and they could follow that with some sort of an announcement that might move markets. The Chairman, Mr. Bernanke, is also speaking at the Fed's annual Jackson Hole conference where he could suggest new policies much as he did last year when he unveiled Quantitative Easing II (QE II) that gave the markets a shot in the arm. Unfortunately, there are fewer options available to Mr. Bernanke than last year.

So if you have not reviewed your portfolio do so with a critical eye. If you are uncomfortable, make some adjustments.

I continue to prefer Commodities and US stocks with an understanding that cash is outperforming on a relative strength basis in the near-term. I am avoiding international stocks except for the strongest technical positions. I continue to like US corporate and international bonds, and commodities are outperforming most other investments on a relative basis. With US Treasury yields continuing at record lows, this suggests that the US Treasury market is not going to suddenly sell-off even in light of the S&P downgrade.

Volatility is likely to continue into this week. This is the sign of markets that are uncertain about what is happening.

These continue to be challenging times. The markets are very concerned about many issues with outcomes undetermined. Looking back in history, it is akin to the weeks following Pearl Harbor...the news was terrible, there was no strategy in place to deal with all the events happening around the world, and Americans were realizing that there would be many sacrifices ahead before normality would return. Today we need a coherent strategy. We need to look at events and figure out how to deal with how we go forward, not playing blame games on why we are here. And we need leadership from the White House, Congress, and business to come together to get this economy going.

Whatever happens, you must take action and have a strategy to invest in these difficult times even if our national leaders do not. I believe that following the tenets of point and figure charting and relative strength analysis give you the tools necessary to develop that coherent strategy necessary to move forward if you are not already using them with me.

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 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.

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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