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Morning Matters:

Weekly Review
by Geoff Garbacz

Since we began our portfolio, it is up 384.03% from 344.76% while the S&P 500 is down -14.15% through Friday's close. This is the cumulative return of all recommendations since April 1, 2008. The average return of all open and closed recommendations is 9.60%. There have been 40 recommendations to date. This equates to turnover of 300% in two years or 150% a year. The portfolio has 8% cash from 25% cash three weeks ago. There are eleven winners to zero losers. The portfolio is 92% invested.

The indexes were higher this past week. Below is a summary of open and closed positions. January was a losing month and February was a winning month. Year to date the indexes are up slightly.

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

The Madison Letter is invested as of 2/18. Meanwhile, the Erlanger Big Barf Indicator (EBB) remains in positive territory. The S&P 500 has moved higher this week. Going forward, the EBB can only be found in Erlanger Chart Room.

The Dow Jones Industrial Average is now in a range of 10,500 to 11,000. Meanwhile, the S&P 500 is now between 1100 to 1150. Choppiness scores on the major indexes range from the mid 50s to low 30s.

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 weekly rally since December. The UUP closed at $23.63 from $23.81 week over week. The Dollar has ralled from its November low of $22.02.

Meanwhile, the bond market moved lower for the week as the TLT closed at $90.27 from $90.16 at our last Monday 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 41 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 rose and corporate bonds fell week over week.

The dollar is trading at 90.43 from 90.23 against the yen, the Euro is at .73 from .74 and the pound is at .66 from .65. The CRB index finished at 276.93 from 271.69. Brent Crude Oil Futures is at $80.33 from $76.97. Gold moved to $1133.60 from $1094.

The S&P 500 is back above 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 strong 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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