Week of 8-16-2009

Timing Model = 1.0

70% long, 30% cash

Global allocation of long positions

MSCI EAFE Index 30%

MCCI Emerging Markets Index 40%

Russell 3000 Index - U.S. 30%

Top U.S. Sectors

Precious Metals 2.5

U.S. Real Estate 2.0

U.S. Basic Materials 1.5

U.S. Technology 1.5

U.S. Banks 1.5

Composite Internet 1.5

Top Intl. ETFs

MSCI Spain Index Fund 3

MSCI Pacific ex-Japan Index Fund 3

MSCI Sweden Index Fund 3

MSCI Australia Index Fund 2

FTSE EPRA/NAREIT Asia Index Fund 2

MSCI Austria Index Fund 2

MSCI Mexico Index Fund 2

FTSE/Xinhua China 25 Index Fund 2

MSCI Hong Kong Index Fund 2

MSCI All Country Asia ex Japan Index Fund 2

FTSE China (HK Listed) Index Fund 2

Strategy 3

Money Markets 9%

Emerging Markets 9%

Precious Metals 9%

Industrial Materials 9%

EAFE 9%

U.S. Large Cap 9%

International Real Estate 9%

U.S. REITs 9%

U.S. Small Caps 9%

Energy 9%

Agriculture 9%

Strategy 4

Money Markets 20%

Emerging Markets 20%

Precious Metals 20%

Industrial Materials 20%

International Real Estate 20%

My timing model lost a full point this week and is now signaling 70% exposure to equities. Stock prices appear to be rolling over, but the market is a good distance from signaling a trend change in my model. I'm not convince we're going to see a huge sell off, but I also believe prices are stretched and upside potential is limited.

Emerging is losing relative strength vs. EAFE and U.S. stocks, but is still the leader. Real Estate and Banks are sector and asset class leaders over the intermediate term, but I'm not sure how long that's going to last.