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

Cumulative Returns since First TimingCube Live Signal () as of

Index	Long Only	Long Only with Margin	Long & Short	Long & Short with Margin	Buy & Hold
Nasdaq 100
Russell 2000
S&P 500

Market Update

Low trading volume characterized this rather uneventful week, in which the major indices moved slightly lower. Renewed hawkish statements by Fed officials about the level of inflation unnerved investors Monday and markets dropped as a result. The major indices recovered Wednesday on positive earnings news. The gains did not last, though, and were entirely erased by week end, as several economic indicators showed that the economy might be weakening faster than expected. For instance, the index of leading indicators dropped 0.6% in May and weekly jobless claims increased by 11,000, a number that was larger than anticipated. Such news again raised fears that the Fed could go too far with its 2-year tightening campaign. On that front, it should be noted that the Fed will hold its next policy meeting on Wednesday, and that most economists expect a 17^th consecutive hike to 5.25% for the funds rate.

The Nasdaq 100 and S&P 500 respectively lost 0.75% and 0.56% on the week. For its part, the Russell 2000 shed 0.42%. All three indices remain located under both their mid-term 50-day and long-term 200-day exponential moving averages (EMAs). There is no change as far as our Model is concerned and our Sell signal remains in effect.

Trend Timing School

Investment vehicle smorgasbord

Over the last couple of years the type and range of investment vehicles available to us investors has increased significantly, and the type of products being introduced seem to fit perfectly with our Trend Timing strategies. It is nice to see timing disciplines we helped develop move, however slowly, from the marginal lunatic fringe category to the ranks of acknowledged, if not yet mainstream. We have kept you apprised of major new developments and offerings as they occurred, and we must admit that by now the information has become quite scattered and hard to find. Today we rectify this and provide you with a complete and concise view of our investment choices. This issue focuses specifically on listing the primary index ETFs and long/short index mutual funds, both domestic and international, to implement our strategies.

The meat of this article is in the tables, so we will keep the words to a minimum. Allow us to highlight a few noteworthy additions.

ProShares. The dawn of short and leveraged ETFs.
You will notice in the "Investing with index ETFs" table below that for the first time there are funds which offer magnified (beta of 2) as well as short exposure to a market index. These revolutionary ETFs are described in more detail in this week's FAQ of the Week below. Not only will these funds allow investors in certain retirement plans to circumvent the ban on shorting and margin investing, but they will allow any investor to bypass the complexities, costs and some of the risks of margin investing (e.g. no margin calls), or long/short index mutual fund investing.

The explosion of international ETFs.
The number of international choices, at least on the long side of the market, has continued to expand. As most world markets continue to be well correlated, our diversification choices abound.

Direxion. A new long/short and leveraged mutual fund contender.
Direxion, ex-Potomac funds, has metamorphosed itself into a serious player in this highly specialized field. As you can see in the "Investing with long/short index mutual funds" table below, Direxion sports the second broadest list of funds - after ProFunds, including highly leveraged (2.5 beta) as well as many international selections.

Explaining beta.
With the onslaught of new funds and the varying levels of leverage they achieve, we are having to evolve our terminology from the simplistic match/double (1x/2x) to a beta coefficient. While not identical to the beta coefficient used to measure volatility, the beta listed in the "Investing with long/short index mutual funds" table below tells you what the daily objective of the fund is. A fund with a beta of 1 attempts to match the daily performance of the index it tracks. A beta of 2 will attempt to double the performance of the index. Conversely, a negative beta in our tables indicates that the daily objective is the inverse of the index. With a beta of -2.5, for example, a Direxion fund attempts to return 2.5 times the inverse of the index. E.g., if the index goes down by 1%, the fund should gains 2.5%.

Investing with Index ETFs
Index Ticker	Index type	Index name	Long ETF Ticker	Short ETF Ticker
^DJI	Large Cap Dow Jones 30	Dow Jones Industrials	DIA DDM (2x)	DOG
^DWC	Wilshire 5000	Dow Jones Wilshire 5000	VTI	---
^NDX	Large Cap Nasdaq 100	Nasdaq 100	QQQQ QLD (2x)	PSQ
^IXIC	Entire Nasdaq	Nasdaq Composite	ONEQ	---
^RUT	Small Cap Russell 2000	Russell 2000	IWM	---
^MID	Mid Cap S&P 400	S&P 400	MDY MVV (2x)	MYY
^GSPC	Large Cap S&P 500	S&P 500	SPY IVV SSO (2x)	SH
^AORD	Australia	All Ordinaries	EWA	---
^ATX	Austria	ATX	EWO	---
^BVSP	Brazil	Bovespa	EWZ	---
^GSPTSE	Canada	S&P/TSX Composite	EWC	---
^FCHI	France	CAC 40	EWQ	---
^GDAXI	Germany	DAX	EWG	---
^HSI	Hong Kong	Hang Seng	EWH	---
^BSESN	India	BSE 30	IFN	---
^MIBTEL	Italy	MIBTeL	EWI	---
^N225	Japan	NIKKEI 225	EWJ	---
^KLSE	Malaysia	KLSE Composite	EWM	---
^MXX	Mexico	IPC	EWW	---
^STI	Singapore	Straits Times Index	EWS	---
^KS11	South Korea	Seoul Composite	EWY	---
^OMXSPI	Sweden	Stockholm General	EWD	---
^SSMI	Switzerland	SMI	EWL	---
^TWII	Taiwan	TSEC weighted index	EWT	---
^FTSE	UK	FTSE 100	EWU	---

Investing with long/short index mutual funds
Index		Direxion		ProFunds		Rydex
Tcker / Geography	Index Name	Fund Name	Beta	Fund Name	Beta	Fund Name	Beta
^DJI	Dow Jones Industrials	PDOWX	1.25	UDPIX UWPIX	2.0 -2.0	RYCVX RYCWX	2.0 -2.0
^NDX	Nasdaq 100	POTCX DXQLX DXQSX	1.25 2.5 -2.5	OTPIX SOPIX UOPIX USPIX	1.0 -1.0 2.0 -2.0	RYOCX RYAIX RYVYX RYVNX	1.0 -1.0 2.0 -2.0
^RUT	Russell 2000	DXRLX DXRSX	2.5 -2.5	SLPIX SHPIX UAPIX UCPIX	1.0 -1.0 2.0 -2.0	RYMKX RYSHX RYRSX RYIRX	1.5 -1.0 2.0 -2.0
^MID	S&P 400	DXMLX	2.5	MDPIX UMPIX UIPIX	1.0 2.0 -2.0	RYMDX RYMHX	1.5 -1.0
^GSPC	S&P 500	PSPSX DXSLX DXSSX	-1.0 2.5 -2.5	BLPIX BRPIX ULPIX URPIX	1.0 -1.0 2.0 -2.0	RYNVX RYURX RYTNX RYTPX	1.5 -1.0 2.0 -2.0
Developed Markets	MSCI EAFE	DXDLX DXDSX	2.0 -2.0	UNPIX UXPIX	2.0 -2.0	---	---
Emerging Markets	Various	DXELX DXESX	2.0 -2.0	UUPIX UVPIX	2.0 -2.0	---	---
Japan	Various	DXJLX	2.0	UJPIX UKPIX	2.0 -2.0	RYJPX	1.25

FAQ of the Week

Question: What are ProShares ETFs?

When we reported that ProFunds had won SEC approval for 12 inverse and leveraged ETFs (see FAQ of the Week in the May 26, 2006 Weekly Update), we promised to update you on their availability. Well, they have arrived! Eight ProShares funds started trading on the American Stock Exchange (Amex) on Wednesday June 21, 2006.

ProShares Advisors LLC, managers of the funds and part of the ProFunds group, have released the first 8 members of a family of ETFs that are sure to revolutionize the industry. They are the first examples of inverse and leveraged ETFs which make it easier for investors to get short and magnified exposure to a market index. In particular, these funds now make it possible to implement most of the TimingCube strategies within retirement accounts like IRAs without resorting to the long/short and leveraged mutual funds. As we have seen in recent trading, eliminating the one day lag associated with the mutual funds, as well as lower costs, better index tracking should make them welcome additions to our investment choices.

Four short ProShares funds:

• Short QQQ ProShares (PSQ), inverse of the Nasdaq 100 Index
• Short S&P 500 ProShares (SH), inverse of the S&P 500 Index
• Short MidCap 400 ProShares (MYY), inverse of the S&P MidCap 400 Index
• Short Dow 30 ProShares (DOG), inverse of the Dow Jones Industrial Average

Four leveraged ProShares funds:

• Ultra QQQ ProShares (QLD), double the Nasdaq 100 Index
• Ultra S&P 500 ProShares (SSO), double the S&P 500 Index
• Ultra MidCap 400 ProShares (MVV), double the S&P MidCap 400 Index
• Ultra Dow 30 ProShares (DDM), double the Dow Jones Industrial Average

What about the 4 missing funds? We understand that there are 4 double inverse funds (short and leveraged) of the same indices which should follow shortly. As always, we will be sure to keep you informed.

Warm wishes and until next week.

The TimingCube Staff