Signal Type	Trade Date	Return since issued
		World	U.S.
			Nasdaq 100 (QQQQ) Russell 2000 (IWM) S&P 500 (SPY)

Market Update

The main indexes continued their losing streak this week. Once again, stocks plunged Monday, sending the S&P 500 4.7% lower. Ongoing concerns about the financial sector helped trigger the losses, after insurance giant AIG reported a staggering $62 billion quarterly loss, forcing the government to provide the company with an additional $30 billion in emergency funding. After closing almost flat Tuesday, the major averages staged a solid rally during the next session on hopes that China will expand its $586 billion stimulus plan and will therefore provide a much-needed boost to the worldwide economy. The Nasdaq Composite rebounded 2.5% on the day. The gains quickly evaporated, however, as stocks skidded again Thursday after General Motors said that it may face bankruptcy if it is unable to get new loans from the government. More bad news came from the financial sector, as several major banks such as Wells Fargo and JPMorgan Chase may face a downgrade by Moody's because of insufficient capital levels. The barrage of negative news resulted in a 4.3% daily loss for the S&P 500. Friday saw the release of the February employment report. 651,000 nonfarm payrolls were lost last month, in line with expectations, while the unemployment rate reached 8.1%, marking a 25-year high. Relieved that the figures were not worse, investors bid stocks higher at the open, but the main averages quickly reversed course to spend most of the day in the red before a late-session rally pushed them back into positive territory, the Dow Jones Industrial Average finishing the day 0.49% higher.

The Nasdaq 100 (QQQQ), S&P 500 (SPY) and Russell 2000 (IWM) respectively lost 4.47%, 6.78% and 10.09% on the week. All 3 ETFs remain located below both their 50-day and 200-day exponential moving averages (EMAs). It is interesting to note that, despite the negative action of the past three weeks, the Nasdaq 100 is still trading above its November lows.

For its part, our World portfolio posted a 4.43% loss this week. The portfolio consists of the 5 top-ranked world ETFs as of February 27, which marked the beginning of the current 4-week holding period. Please note that since we now have an active Cash signal, the World approach calls for selling your holdings if you follow the "Long Only" or "Long and Short" strategy. Only if you follow the "Buy and Rebalance" strategy should you remain invested in the top 5 ETFs, as the strategy calls for staying invested at all times. Please go to the "Our Service" page for all the details.

Our current Cash signal remains in effect.

Trend Timing School

Fundamental and technical analysis

The TimingCube Model does not use any fundamental or economic data. Instead it relies exclusively on technical analysis and several proprietary indicators using the Nasdaq
Composite as the data source. To further illustrate the point, we want to review the two main schools of thought when it comes to investing: fundamental analysis and technical analysis.

Analyzing company fundamentals has been the bread and butter for generations of Buy and Hold stock pickers selecting the companies that represent the best value and probability of increasing shareholder equity. Reams of company data such as earnings per share (EPS) and price/earning ratios (P/E) are compared with that of peers, competitors and industry averages to identify the best stocks to buy. We are big believers of this approach when it comes to choosing individual stocks. Great investors such as Warren Buffett or Peter Lynch have proven time and again that a lot of money can be made if you are able to pick the right stocks based on their fundamental strength. However, our view is that the approach is flawed when applied to the market as a whole and cannot effectively help determine the underlying trend. One issue is that when the market suffers a significant drop, the stock of over 2/3^rd of all companies goes down, regardless of their fundamentals. The other problem is that economists and market strategists apply fundamental analysis on a macro scale to determine the future direction of the market or that of specific sub-segments. Broad measures such as employment levels, inventories, the money supply, interest rates and currency fluctuations can all be indicators or even catalysts for stock market movements. All this data is of course widely subject to interpretation: ask 10 economists where they think the market is headed next and you will get 10 different answers! The stated intent of such flawed trend forecasting activity is to shift portfolio weighing from one industry group to another or to re-allocate assets among equities, bonds and cash. This is nothing more than a form of market timing! The main issue with applying fundamental analysis to the market as a whole is that what you get is no more than the opinion of some so-called expert. It is almost certain that unexpected factors such as news and investor psychology will ultimately move the markets in such a way that the prediction will turn out to be plain wrong.

Over the past several years technical analysis has become a popular method of evaluating securities and markets. Instead of attempting to measure a market or a security's intrinsic value, technical analysis strictly looks at past and present market data, such as price and volume, and attempts to identify patterns that suggest future activity. The primary tools of the trade are various types of charts, moving averages, relative strength indexes and support/resistance zones. While many favor complex statistical analysis tools and the recognition of patterns such as head and shoulder, cup and handle or double bottom formations, we try to keep it simple. While our Model does look at various indicators such as moving averages it leans most heavily on the relationship between price and volume action.

Since there is no fundamental analysis involved in the TimingCube Model, do we use it elsewhere? The answer is yes. The TradeGuru GuruFolio approach is based exclusively on fundamental analysis. The idea is to select a basket of stocks that is likely to outperform over the coming months. Whereas TimingCube relies on technical analysis to time the broad market using index-based ETFs and mutual funds, TradeGuru GuruFolios are invested at all times and are made of individual stocks selected with fundamental analysis. The two systems both outperform over the long-term, but because of their different characteristics, they complement each other very nicely and we therefore believe that they belong to any portfolio. Under the TradeGuru service, we currently offer two GuruFolios, Folio A and Folio B, consisting of ten positions each. To determine which stocks go into each GuruFolio, we screen the universe of all U.S. equities, using fundamental analysis to find stocks with the best value characteristics. The stocks must also meet specific liquidity requirements. For instance, we only recommend stocks of companies with at least $200M in market cap. Whereas Folio B is strictly value-based, the stocks in Folio A must meet specific value and growth criteria simultaneously. We want to buy stocks that have good growth potential but are still reasonably priced. If you are familiar with the concept of "Growth At Reasonable Price" or GARP, it is basically what Folio A is all about.

The TradeGuru GuruFolio service is an easy-to-use and low maintenance system. It was started in 2006 and backtested to 2002. What about performance? Both GuruFolios sport an annualized return of over 33% since January 2002. They have outperformed the S&P 500 every single year since then. Sure enough, the GuruFolios suffered significant losses last year as no equity sector was spared during the market's precipitous fall. Yet, both managed to beat the S&P 500 again in 2008 and, because they are always 100% invested, they are poised to benefit from any market rebound. Please refer to the table below for detailed performance figures. It will hopefully convince you that there is also room for strategies based on fundamental analysis in anyone's portfolio.

TradeGuru Returns from 1/4/02 to 2/20/09
	Folio A	Folio B	S&P 500
Annualized	33.5%	38.5%	-2.8%
Cumulative	454.2%	688.3%	-25.4%

TradeGuru Yearly Returns
	Folio A	Folio B	S&P 500
2008	-25.6%	-33.1%	-40.7%
2007	41.9%	37.5%	4.3%
2006	29.9%	24.5%	13.4%
2005	40.7%	67.8%	3.0%
2004	50.4%	56.1%	9.2%
2003	92.8%	80.0%	23.8%
2002	23.5%	58.7%	-21.5%

FAQ of the Week

Question: How do I update my personal information and preferences?

After you log in, go to the "My Profile" page where your personal data and preferences reside. You can update any of the information such as changing your password, your credit card number or expiration date, or adding a new e-mail address. Whenever you make changes or add information make sure to save them by clicking the "Update" button at the bottom of the page.

Please note that the "My Profile" page also allows you to check your subscription status. To do so, just click the corresponding button located at the top of the page.

Warm wishes and until next week.

The TimingCube Staff