Signal Type	Trade Date	Index	Return since issued
		Nasdaq 100
		Russell 2000
		S&P 500

Market Update

Markets suffered heavy losses over the 5-day span, with the Dow Jones Industrial Average posting its worst week in five years. After a quiet Monday, disappointing earnings news from Texas Instruments and American Express combined with renewed concerns over the mortgage industry to send stocks lower the next day. The major indexes were able to move modestly higher Wednesday, but the gain did not last as they succumbed to heavy selling pressure Thursday following news that new-home sales fell 6.6% in June and negative comments from Countrywide Financial on the housing sector. Stocks failed to regain their footing Friday despite a better-than-expected reading for the 2^nd quarter's GDP and instead moved lower again.

For the week, the Nasdaq 100 and S&P 500 respectively lost 3.91% and 4.90%. Still underperforming, the Russell 2000 fared worst, as it shed 7.00% to drop below its 200-day exponential moving average. For its part, the Nasdaq 100 remains above its 50-day EMA and 200-day EMA, while the S&P 500 is located in between its two averages.

Our World Index Ranking portfolio lost 5.40% this week. The portfolio consists of the 5 top-ranked world indexes as of July 20, which marked the beginning of the current 4-week holding period.
Where does this week's selling leave us? To put things in perspective, the Dow Jones and the Nasdaq 100 are only down 5.2% and 4.6% from their recent tops, well within the range of a normal pullback. Also, the drop has been so sudden that it has left the markets very oversold as illustrated by a high put-call ratio and the highest reading for the VIX volatility indicator in four years. In the past, such spikes for the VIX have often coincided with market bottoms, as was the case in July 2006 and early March of this year.

Our Buy signal remains in effect.

Trend Timing School

Broker update

One of the traditions here at TimingCube has been to provide an Annual Broker Review, the last installment of which came a little over a year ago on June 2, 2006, yet with this broker update we are about to undo that tradition. We are not saying that we will never write about brokers again, but because of changes in the industry we now feel that brokers have largely become a non-issue with respect to our Trend Timing investment methodology. The broker selection process has now become a matter of shopping for price versus services, with plenty of information available publicly to make the comparisons easier than ever (see below).

A little history will help understand the shift that has recently occurred. When TimingCube pioneered its Long and Short index investing model in 2001, the investing landscape was very different from today. For many investors, but at least for all of those with money in qualified retirement plans such as IRAs, the only practical way to implement Long/Short and Margin strategies was to use the Rydex bull/bear funds, shortly followed by the ProFunds family, and much later by the Direxion family. Despite drawbacks like high expenses ratios trading at market close only, these funds provided a very convenient way to bypass the Government's "no shorting or borrowing in an IRA" rule. Besides retirement money, the funds also helped many other investors who would rather not deal with the complexities and vagaries of shorting and margin investing.

Anyone deciding to use a particular family of bull/bear mutual funds to implement the Trend Timing strategies has the choice to do it in a regular broker account or to open an account directly with the mutual fund company itself. The primary advantages the mutual fund company has are the absence of any trading fees and the instantaneous exchange from one fund to another (Read Brokerage accounts versus ProFunds or Rydex accounts for comparison). Of course you could also trade these same mutual funds in a broker account, but generally with added commissions and various trading restrictions such as early redemption fees. Most inconvenient for a market timing strategy!

Alas for the mutual fund companies, but for the benefit of investors, another industry changing consequence of short and leveraged ETFs is that they mostly rendered bull/bear mutual funds obsolete for individual investors, and in turn made brokerage firms the obvious place for their accounts. Our article entitled "How do ETFs and mutual funds compare?" clearly shows that since the advent of short and leveraged ETFs, there is no good reason left to use the mutual funds. You can now implement all the long/short and margin strategies from your IRA account at any broker simply by buying and selling ETFs.

If there is no compelling reason left to use the mutual funds, then the entire topic of which brokers are better to implement our Trend Timing strategies disappears, and the only broker selection issues remaining are services and prices.

On the service front you will find everything from the "bare bones" to the "everything but the kitchen sink" varieties. From the long list of features and services you need to decide how much you really need for your brokerage account because ultimately you will pay for them whether you use them or not. The key service areas which differentiate various brokers are:

• Customer service. Want to be able to speak to a live person 24 hours a day and get prompt and satisfactory answers? What about local offices and personal advice?
• Banking services. Do you need your broker to also offer banking services such as check writing, bill payment, credit cards, direct deposit, and ATM cards?
• Investment selection. In addition to ETFs, do you need a full range of securities such as options or futures?
• Tools and research. How much information and guidance are you looking for?

For extensive reviews and comparisons we like some independent publications, such as Barron's highly rated Broker Reviews. We particularly like the simple recommendations offered by Consumer Research:

• Best online broker overall: Fidelity
• Best discount broker: OptionsXpress
• Best no-frills online broker: Scottrade

On the price front, the trends have been clear: broker assisted trading fees are going through the roof, and online trading fees are getting smashed. Where the no-frills broker Scottrade will charge you an already low $7 per trade, there are now many new "even fewer frills" brokers with commissions down to $0! Some examples:

• TradeKing: $4.95
• SogoInvest: $1
• Zecco: $0

To make sure you make your decisions based on accurate information, always get the latest directly from the brokers. And remember that price goes beyond mere commissions but also encompasses minimum account balances, trade minimums, annual administrative costs, margin rates and interest rates on fixed accounts. Read the fine print.

FAQ of the Week

Question: I forgot my User ID and/or Password, can you help?

Surprisingly, this happens a lot more than you would think. One common reason is that some subscribers, knowing that they will receive signal notification via e-mail, do not bother to log in to the site on a regular basis (how they survive without our weekly wisdom is a mystery ).

The next time your memory fails, help is nearby. In fact, right under the User ID and Password fields on the "Log in" page you will find the following small type:

(Forgot your User ID or Password? Get it here)

By following the link you will be asked for some information including the answer to your Security Question. Assuming you enter the answer correctly, the requested User ID or Password will be e-mailed to you immediately. Note that your Security Question and Answer can be checked and updated from your "My Profile" page. But if when it counts your memory also fails to answer your security question, as last resort, you can always send us an e-mail to support@timingcube.com and our staff will bail you out.

Warm wishes and until next week.

The TimingCube Staff