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Morning Matters:

Weekly Review
by Geoff Garbacz

Since we began our portfolio, it is up 310.11% from 312.03% while the S&P 500 is down -19.62% through Friday's close. The portfolio has 25% cash from 0% cash five weeks ago. There are six winners to three losers. The portfolio is 75% invested.

The indexes were lower this past week. Below is a summary of open and closed positions. January was a losing month and now so is February.

Releases of note this week other than the weekly oil/gas numbers and jobless claims include retail sales and the University of Michigan Sentiment Survey.

The Madison Letter is now in cash from invested two weeks ago. Meanwhile, the Erlanger Big Barf Indicator moved into negative territory. The S&P 500 moved lower this past week.

The Dow Jones Industrial Average is now in a range of 10,000 to 10,500. Meanwhile, the S&P 500 is now between 1050 to 1100. Choppiness scores on the major indexes range from the mid 50s to low 40s.

Macro themes related to the dollar are important in today's environment. If the dollar falls, then the commodity trade will begin to outperform due to the weakness of the dollar. The Up Dollar ETF(UUP)has been in a downtrend since the beginning of March, 2009 but has been in a short term rally since December. The UUP closed at $223.65 from $23.45 week over week. The Dollar has ralled from its recent low of $22.02.

Meanwhile, the bond market moved lower for the week as the TLT closed at $91.96 from $92.31 at our last update. The TLT represents the long end of the yield curve where interest rate moves are the most sensitive. The Choppiness number on the TLT moves to 66 from 46 at the last update. Remember when the price of treasuries rise yields drop and then the price of treasuries fall when yields rise. High yield bonds fell and corporate bonds rose week over week.

The dollar is trading at 89.24 from 90.31 against the yen a week ago, the Euro is at .73 from .72 week over week and the pound is at .64 from .63 week over week. The CRB index finished at 258.55 from 265.59 week over week. Brent Crude Oil Futures is at $69.69 from $71.86 week over week. Gold moved to $1068 from $1084 week over week.

The S&P 500 is below its 50 day moving average as is the NASDAQ Composite. The S&P 500 is above its 200 day moving average as is the NASDAQ Composite. In addition to tracking, the 50 day moving average it is important to follow the Daily Advance/Decline Line for both the NYSE and the NASDAQ. The advance decline remains weak over the last week.

Second a review of breadth on a sector level is crucial to discerning new sector patterns. Below tracks the top 17 sectors. The review looks daily at the top six names on a market capitalization and determines whether they closed in the plus or minus column. We track this over the past ten sessions. Ranks range from 6 (most positive) to 0 (most negative). As an example, the Consumer Services sector tracks MCD, CMCSK, CCU, NWS, DIS and CCL. Scores of 4 or higher are highlighted green. There has been recent weakness in the past few days.

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