What is eMarkeTrend System (eMTS)?

List of Contents:

I. INTRODUCTION

II. MARKET TREND, DOW THEORY, ELLIOTT WAVE AND KONDRATIEFF SEASON

III. DAILY SIGNAL TABLE

IV. DOW THEORY TREND TABLE (for Annual Members only)

V. LONG-TERM MARKET STRATEGIES AND TREND ANALYSIS RULES

VI. MARKETS, SECTOR PORTFOLIOS, AND SECURITY MODELS

I. INTRODUCTION

eMarkeTrend System (eMTS) is a market trend analysis and recognition system. It provides trend information in terms of stop loss prices (supply and demand threshold), daily trend strength and trend direction indicators (red or green). By use of the digitized trend signals, this system can give a clear picture of short-term, mid-term and long-term market trend direction. From now on, every investment decision can be based on logical facts.

In today’s market that is filled with all sorts of news, information and rumors, you will have an accurate and unbiased sense of the true market trend direction. eMTS can help you avoid past investment mistakes by changing the way you look at the market. It will give you new confidence about investment that you have never before experienced.

The following section explains how eMTS views the market trend in general, how it defines the forces that make up the market trend unit cycle, and how this relates to our proprietary Dow Theory Model. Further explanation is given on Dow Theory Trend Cycles, and how they make up Elliott Wave Cycles, which finally result in the Kondratieff Seasons.

II. MARKET TREND, DOW THEORY, ELLIOTT WAVE AND KONDRATIEFF SEASON

Terms:

1. eMTS: abbreviation for eMarkeTrend (Analysis, Recognition and Guiding) System.

2. Security: refers to any market index, stock, ETF (Exchanged Traded Fund), options, futures, currencies, etc.

eMTS views that the visible day-to-day price movement is inherently the result of constant conflict of two types of invisible market trend forces or cycles-- the Supply Cycle and the Demand Cycle. In other words, eMTS views that every type of market wave or cycle, regardless of whether it is short-term, mid-term or long-term, can be eventually broken down into two unit forces as follows-- the demand force (bullishness or yang) and the supply force (bearishness or yin). eMTS stores the quantitative manifestation of each force in the security’s Daily Signal Table (see “The Daily Signal Table” section for more details).

eMTS relies on our proprietary Dow Theory Model to detect on a long-term basis the general equity market trend direction turning point. Because the Daily Signal Tables of D-J Industrial Average ($INDU) and D-J Transportation Average ($TRAN) make up the Dow Theory Model, together they are referred to as the Dow Theory Trend Cycle. The quantitative result of this cycle-- the confirmation dates and their associated positive or negative turning point strength level-- is stored in the Dow Theory Trend table. Based on the signal in the Dow Theory Trend table, eMTS defines the Elliott Wave Cycle.

Finally, from the upward trend of Elliott Wave Cycles (1-5), eMTS determines the Kondratieff Spring and Autumn Seasons. By the downward trend of Elliott Wave Cycles (A-E), eMTS determines the Kondratieff Summer and Winter Seasons. Thus, together the Elliott Wave Cycles and Kondratieff Seasons are the ultimate long-term market trend cycles that every investor must know in order to design a set of effective market strategies for coping with the particular market climate you are in at that time in history.

The Dow Theory is of primary importance in creating a foundation for long-term market trend analysis; therefore, for the remainder of this discussion, we will only address the Dow Theory. A brief about the traditional Dow Theory will be introduced first, then we will address our revolutionary enhancement to this Dow Theory.

The traditional Dow Theory is based on value. That is, the market always swings from under-valuation to over-valuation and back to under-valuation again. Another key concept in the Dow Theory is that the price direction of both $INDU (Dow Jones Industrial Average) and $TRAN (Dow Jones Transportation Average) must move in unison. In other words, if $INDU has made a new high, then $TRAN must confirm it by also making a new high; if $INDU has made a new low, then $TRAN must also confirm it by making a new low. It is not important which index-- $INDU or $TRAN-- takes the first move in making the new high or new low. The key point is that the price direction made by one index must be confirmed by the other.

The Dow Theory further signals that the market could be in trouble if one index does not confirm the other on the new high. The longer this type of non-confirmation lasts, the higher the chance that some kind of trouble may lay ahead. It also indicates that a bottom might have been met if one index does not confirm the other on the new low. The longer this type of non-confirmation lasts, the higher the chance that the bottom might have been seen.

However (per our personal view), the drawback of the traditional Dow Theory is that one must wait for the new high or new low price confirmation before an action is taken. It is quite possible that the other sector markets and/or the index ($INDU or $TRAN) have kept rising for months, but the Dow Theory refuses to come up with the confirmation. For example, $INDU made its historical new high at 11722.98 on January 14, 2000, whereas $TRAN had achieved its historical new high at 3783.50 on May 12, 1999. During the 8 months of price non-confirmation, according to the Dow Theory, you should not take any action, not only due to the price non-confirmation, but also due to the over-valuation permeating the entire market at that time. A Dow Theory follower probably had left the market due to the warning. However having done that, he would have missed the most exciting part of the entire bull market that started in 1976. Take YHOO (Yahoo! Inc.) for example: it went from 169.94 on 05/12/99 to 353.00 on 01/14/00 with 107.72% net return, and INTC (Intel Corp.) went from 62.50 to 103.06 with 64.90% net return in just 8 months!

Secondly (again, per our personal view), there is the technical disadvantage for taking the new high or low price as the guideline to confirm the market action. After the bubble burst in 2000, DJIA had made the new low at 7286.27 on October 9, 2002, whereas DJTA marked its new low at 1942.19 on March 11, 2003. Due to the non-confirmation of DJIA on DJTA’s new low, one could do nothing but wait. A Dow Theorist would know that, sooner or later, either DJIA had to join DJTA on the downside, or DJTA had to join DJIA on the upside. The drawback is from the fact that the prior high of DJIA was at 11722.98 and DJTA at 3783.50. Therefore, based on these facts, he would not have taken action until both indices had confirmed on the upside by breaking the prior highs. That delay in action would have caused him to miss the entire rally that began in March 2003. Take SMH (Semiconductor Holders Trust) for example: it went from 24.75 on 03/17/03 to 39.40 on 12/09/03 with 59.19% net return, and INTC went from 17.97 to 30.17 with 67.89% net return in just 9 months!

Based on the above findings, we conclude that the traditional Dow Theory, as well as the Elliott Wave and Kondratieff Cycles, is an excellent tool in determining the long-term primary market trends, but inefficient in recognizing the secondary market trends that many times are quite profitable. This finding is also supported by the statement made by Robert Rhea in 1932 on p. 26 of “The Dow Theory” -- “The Dow Theory is not an infallible system for beating the market. Its successful use as an aid in speculation requires serious study, and the summing up of evidence must be impartial. The wish must never be allowed to father the thought”.

The necessity for change is due to the fact that the market today is even far more complex, sophisticated and advanced than at the time of Robert Rhea back in 1930’s. Many industrial sectors, business practices, financial theories and instruments did not yet exist at that time. The economy essentially went from “analog” to “digital” in the past 10-15 years-- and that on a global scale, which now enables the capital to transfer across borders by a simple click. Therefore we feel that there is a need to infuse new life and new methodology into the traditional Dow Theory interpretation, though the core spirit and beauty should be kept intact.

The following revolutionary enhancements to the traditional Dow Theory is the result of years of research, study, design, development and testing:

1. Instead of reading the actual price for market movement, the new methodology directs your attention to the Digitized Trend Signals computed by eMTS quantitative Dow Theory model. The benefit is that the transformed signals can help you get away from the confused daily price movement and put your focus back on the market trend.

2. The recording of the high/low market price is no longer needed for calling the confirmation. It can now be replaced by the Digitized Trend Signals from both the primary and secondary trends shown in the Dow Theory Trend Table and the Daily Signal Table respectively. The benefit comes from the unparalleled clarity that has made the Dow Theory analysis even more simple and exciting than before.

3. The traditional price confirmation is replaced by the eMTS Trend Signal Confirmation process that is completed at the following two levels:

3.1. The Primary Trend— i.e., the Dow Theory Trend Table:

Dow Theory Trend Cycle, Elliott Wave Cycle and Kondratieff Season.

3.2. The Secondary Trend— i.e., the Daily Signal Table:

The eMarkeTrend portfolios (see the last chapter for more details).

The benefit is that, with the primary trend signal in hands, you may design the appropriate trading strategy based on the confirmed secondary trend signals. Thus, eMTS will keep you from losing the profit-making opportunities such as the rally from March 2003 to the early of 2004.

4. The key concepts of the Dow Theory and the eMTS quantitative modeling techniques are successfully combined and applied to other vertical market sectors as well. This is the revolutionary extension to the Dow Theory concept. The evidence is that the Theory is by no means limited to Dow; it can be applied to every market sector of any country in the world. Thus, any retail investor can easily spot the sector domino effect at the international level. For example, the trend direction in the U.S. semiconductor portfolio (SMH and INTC) must move in unison with the Taiwanese semiconductor portfolio (Taiwan Semiconductor and United Technologies, for example), and the trend direction in the Indian software sector must move in unison with the U.S. Internet software sector. This is due to the resource allocation occurring on an international scale in today’s modern world.

5. On the level of cross-sector analysis, the eMTS weekly updated Market Summary Table on each of the three markets (see “Portfolio Models” chapter for more details) provides a bird’s eye view of how the demand-side and supply-side of composition sectors project how the U.S. economy will be 6 months down the road. For example, the energy sector may give an early warning about inflation. Additionally, the physical and equity precious metal sectors are able to measure how solid the U.S. economic foundation truly is-- e.g., when the U.S. dollar depreciates, gold and silver may go up, and vice versa.

6. Finally, by having the Dow Theory Trend turning point confirmation dates, Elliott Wave Cycles and Kondratieff Season can thus be determined.

References:

2. Please refer to http://www.elliottwave.com/ for more details on Elliott Wave Cycle.

3. Please refer to http://faculty.washington.edu/modelski/IPEKWAVE.html for more details on Kondratieff Cycle.

III. DAILY SIGNAL TABLE

There is one Daily Signal Table for each security. Each Daily Signal Table can be regarded as the quantitative model for the corresponding security.

The information for each table is as follows:

· The records are listed in reverse chronological order-- most recent date listed first.

· Each table has twenty (20) columns.

· Each column title is in bold font and its defined meaning is listed as follows.

The column titles for the Daily Signal Tables are enumerated and defined below:

Column 1. Date (in black): Market date is in mm/dd/yy format.

Column 2. Open (in black): Market daily open price.

Column 3. High (in black): Market daily high price.

Column 4. Low (in black): Market daily low price.

Column 5. Close (in black): Market daily close price.

NOTE:

SUPPLY CYCLE (SC or supply-cycle or yin-cycle) =

Supply Cycle Threshold (column 6) + the following daily Supply Cycle Swing (column 7).

Theoretically, when the market timing is on SC, it indicates that the market condition is on the bearish side. There is more supply than demand in general. It is characterized by a declining trend with a series of lower prices. Thus, it would be an ideal timing to accumulate at the Buy Confirmation Signs area-- that is, to “buy low.”

Column 6. Supply Cycle Threshold (in red or left blank):

6.1. The appearance of this price marks the start of SC and the end of DC.

6.2. When the SC starts, theoretically the following daily High/Low/Close prices should drop below the Supply Threshold and not rise above it. That is, the Supply Threshold is the resistance line that must be breached for the sake of yin. The faster the market falls below the Supply Threshold, more bearish and powerful the supply force is.

6.3. A bullish SC is the phenomenon that the daily High/Low/Close prices rise above the SC’s Supply Threshold and refuse to drop below it by the time the SC ends.

Column 7. Supply Cycle Swing (in black or left blank):

7.1. An integer value measuring the daily-digitized strength of the Supply Cycle.

7.2. Value range = 0 (most bearish) ó 50 (neutral) ó 100 (most bullish).

7.3. In general, when more than five (5) Trend Indicators are green, the primary trend is bullish. The opportunity to buy increases as the number of green Trend Indicators increases. Thus, a Swing below 20 or 10 reflects an oversold condition and an opportunity to buy.

7.4. In general, when more than five (5) Trend Indicators are red, the primary trend is bearish. The opportunity to sell increases as the number of red Trend Indicators increases. Thus, a Swing above 80 or 90 relects an overbought condition and an opportunity to sell.

NOTE:

DEMAND CYCLE (DC or demand-cycle or yang-cycle) =

Demand Cycle Threshold (column 8) + the following daily Demand Cycle Swing (column 9).

Theoretically, when the market timing is on DC, it indicates that the market condition is on the bullish side. There is more demand than supply in general. It is characterized by a rising trend with a series of higher prices. Thus, it would be an ideal timing to distribute the holdings at the Sell Confirmation Signs area-- that is, to “sell high.”

Column 8. Demand Cycle Threshold (in green or left blank):

8.1. The appearance of this price marks the start of DC and the end of SC.

8.2. When the DC starts, theoretically the following daily High/Low/Close prices should rise above the Demand Threshold and not drop below it. That is, the Demand Threshold is the support line that must be held for the sake of yang. The faster the market rises above the Demand Threshold, more bullish and powerful the demand force is.

8.3. A bearish DC is the phenomenon that the daily High/Low/Close prices fall below the DC’s Demand Threshold price and refuse to rise above it by the time the DC ends.

Column 9. Demand Cycle Swing value (in black or left blank):

9.1. An integer value measuring the daily-digitized strength of the Demand Cycle.

9.2. Value range = 0 (most bearish) ó 50 (neutral) ó 100 (most bullish).

9.3. Same as item 7.3 above.

9.4. Same as item 7.4 above.

Column 10 to Column 19:

The ten (10) (Supply/Demand) Trend Indicators (TI) (in red or green).

a. red light (supply-trend):

The bear or supply is in control. It is most bearish when all ten (10) TIs are in red.

b. green light (demand-trend):

The bull or demand is in control. It is most bullish when all ten (10) TIs are in green.

Note: Our Digitized Trend Signals are NOT any of the traditional technical trend indicators (simple or exponential moving averages, Stochastic, MACD, RSI, ROC, PPO, CMF, Williams % R, Bollinger Band Width, etc.), whether directly or indirectly via addition, multiplication or combinational use. We offer a whole new approach to market trend analysis.

Column 20. Period Days Count (in red or green):

20.1. When the count is in red:

It refers to the count of a series of consecutive market days, each of which must have at least six (6) TIs in red-- the SUPPLY PERIOD (SP or supply-period or yin-period).

20.2. When the count is in green color:

It refers to the count of a series of consecutive market days, each of which must have at least six (6) TIs in green-- the DEMAND PERIOD (DP or demand-period or yang-period).

IV. DOW THEORY TREND TABLE (for Annual Members only)

The long-term Dow Theory Trend table is built by the output of the Dow Theory Model.

Column 1. Dow Theory Trend Confirmation Date (in black):

The market date when one index (DJIA or DJTA) upwardly or downwardly confirms with the other index (DJTA or DJIA) trend with no more than one (1) day of difference.

Column 2. Positive Turning Point Level (in green or left blank):

When a Dow Theory Trend Confirmation Date is recorded and if the confirmation type is bullish, the model calculates the strength as the Positive Turning Point Level. The level is represented by a positive value whose range is between 0.0 and 100.0 (from 0.0 to +100.0).

Column 3. Negative Turning Point Level (in red or left blank):

When a Dow Theory Trend Confirmation Date is recorded and if the confirmation type is bearish, the model calculates the strength as the Negative Turning Point Level. The level is represented by a negative value whose range is between 0.0 and 100.0 (from 0.0 to –100.0).

Column 4. Elliott Wave Cycle Ending Label (in green or red or left blank):

The bullish trend labels:

1.1, 1.2, 1.3, 1.4, 1.5 -- UP

(2.a, 2.b,) 2.c -- down

3.1, 3.2, 3.3, 3.4, 3.5 -- UP

(4.a, 4.b,) 4.c -- down

5.1, 5.2, 5.3, 5.4, 5.5 -- UP

The bearish trend labels:

A -- DOWN

B -- up

C -- DOWN

D -- up

E -- DOWN

Column 5. Elliott Wave Cycle Total Years (in green or red):

When the number is in green color, it is the total years of the bullish trend labels.

When the number is in red color, it is the total years of the bearish trend labels.

Column 6. Kondratieff Wave Cycle Season Start / End (in green or red):

Spring, Autumn: the period of one bullish Elliott Wave Cycle (1.1 – 5.5)

Summer, Winter: the period of one bearish Elliott Wave Cycle (A – E)

Column 7. Comment: Editor’s brief comment on the above signals (if necessary).

V. LONG-TERM MARKET STRATEGIES AND TREND ANALYSIS RULES

The digitized eMTS market trend priority hierarchy from top (the very long-term) to bottom (the mid-term and the short-term):

The BEAR:	The BULL:
Kondratieff Summer or Winter	Kondratieff Spring or Autumn
Elliott Wave Down Cycles	Elliott Wave Up Cycles
D.T. Negative Turning Point Confirmation	D.T. Positive Turning Point Confirmation
SUPPLY PERIOD	DEMAND PERIOD
SUPPLY CYCLE	DEMAND CYCLE

D.T. = The Dow Theory.

Note: The percentages mentioned below are only examples. Please adjust them according to your own personal financial condition. The models are designed only for buy and sell strategies.

Long-Term Market Strategies:

When the Kondratieff Season is in Spring or Autumn, general equity asset (aka: paper money) is in BULL and hard equity asset (aka: hard money such as the gold and silver) is in BEAR. Therefore, one should allocate 60% of the investment fund into general equity asset for a long-term buy and hold strategy . Use the remaining 40% for cycle trading on general equity asset and/or hard equity asset by applying the Cycle Trading Rules to the Daily Signal Table.

When the Kondratieff Season is in Summer or Winter, general equity asset (aka: paper money) is in BEAR and hard equity asset (aka: hard money such as the gold and silver) is in BULL. Therefore, one should allocate 60% of the investment fund into cash-equivalent asset and hard equity asset for the long-term. Buying and holding general equity asset for the long-term is not the appropriate strategy during these seasons. Use the remaining 40% for cycle trading on general equity asset and hard equity asset by applying the the Cycle Trading Rules to the Daily Signal Table.

Trend Analysis Rules:

A. Buy Confirmation Signs (The Bullish Checklist):

1. On the PERIOD Level:

1. The SUPPLY PERIOD (SP or supply-period or yin-period) ends shorter than the previous SP-- i.e., the supply-period is getting shorter.

2. The DEMAND PERIOD (DP or demand-period or yang-period) lasts longer than the previous DP-- i.e., the demand-period is getting longer.

2. On the CYCLE Level:

1. The SUPPLY CYCLE (SC or supply-cycle or yin-cycle) period ends shorter than the previous SC-- i.e., the supply-cycle is getting shorter.

2. The DEMAND CYCLE (DC or demand-cycle or yang-cycle) period lasts longer than the previous DC-- i.e., the demand-cycle is getting longer.

3. In SC, the daily H/L/C prices rise above the first resistance line-- the Supply Cycle Threshold price-- before the SC ends. Usually it should be followed by #4 sign below.

4. After SC changed to DC, the daily H/L/C prices immediately rise above the second resistance line-- the Demand Cycle Threshold price.

5. The daily Swing rises above 50.

3. On the PRICE Level:

1. The Supply Threshold price is higher than the previous Demand Threshold price.

2. The Supply Threshold price is higher than the previous Supply Threshold price.

3. The Demand Threshold price is higher than the previous Demand Threshold price.

B. Hold Confirmation Sign:

Hold as long as the Bullish Checklist signs continue.

Don’t get too excited and lose the watch during this period.

C. Sell Confirmation Signs (The Bearish Checklist):

1. On the PERIOD Level:

1. The DEMAND PERIOD (DP or demand-period or yang-period) ends shorter than the previous DP-- i.e., the demand-period is getting shorter.

2. The SUPPLY PERIOD (SP or supply-period or yin-period) lasts longer than the previous SP-- i.e., the supply-period is getting longer.

2. On the CYCLE Level:

1. The DEMAND CYCLE (DC or demand-cycle or yang-cycle) period ends shorter than the previous DC period-- i.e., the demand-cycle is getting shorter.

2. The SUPPLY CYCLE (SC or supply-cycle or yin-cycle) period lasts longer than the previous SC period-- i.e., the supply-cycle is getting longer.

3. In DC, the daily H/L/C prices breach the first support line-- the Demand Cycle Threshold price-- before the DC ends. Usually it will be followed by #4 sign below.

4. After DC changed to SC, the daily H/L/C prices immediately drop below the second support line-- the Supply Cycle Threshold price.

5. The daily Swing drops below 50.

3. On the PRICE Level:

1. The Demand Threshold price is lower than the previous Supply Threshold price.

2. The Demand Threshold price is lower than the previous Demand Threshold price.

3. The Supply Threshold price is lower than the previous Supply Threshold price.

Sell Psychology:

1. Act only with logical evidence (signs) observed, not by emotional or gambling mentality.

2. Once the Sell signs are confirmed, don’t cling to any empty promise or hope that the price will come back in the future-- it may or may not.

3. The important thing to remember is that you can always buy them back at a later time. If the security is truly bullish, eventually it will prove itself with the Bullish Checklist signs later.

Money Management:

1. After the profit is incurred, always transfer 50% of it to a place of safety (e.g., a bank checking account) both for year-end taxation purposes and also for standing capital to replenish the operating fund were a loss incurred in the future.

2. Do the above policy consistently, learn to control any tendencies toward greediness and practice the virtue of patience. These are the only ways to stay a winner over the long-term.

D. Cash Confirmation Sign:

Stay in cash as long as the Sell Confirmation signs continue.

Use this period to practice the virtue of patience.

VI. MARKETS, SECTOR PORTFOLIOS, AND SECURITY MODELS

The security ticker symbol is in bold font. The market title is in Italic bold font.

eMTS views each portfolio as the “Dow Theory” for the target sector, i.e., the trend direction of both securities must move in unison.

Note: ‘$’ means that the security is a non-tradable index.

A. The Dow Theory Trend Model:

1. Model $INDU (D-J Industrial Average).

· Please refer to http://finance.yahoo.com/q/hl?s=^DJI for more details.

2. Model $TRAN (D-J Transportation Average).

· Please refer to http://finance.yahoo.com/q/hl?s=^DJT for its holdings.

· Transport Supplement: CSCO (Cisco Systems) and JNPR (Juniper Networks).

Note: Due to the proprietary nature of the eMTS Daily Signal Tables of $INDU and $TRAN, we have reserved the right to withhold them from public view.

B. General Equity Market:

The Large Size & Value Model:

3. Model DIA (DIAMONDS Trust 1).

· Please refer to http://finance.yahoo.com/q/hl?s=DIA for its holdings.

· Morningstar Style Box: Large Size & Value.

4. Model XLF (Financial Select Sector SPDR).

· Please refer to http://finance.yahoo.com/q/hl?s=XLF for its holdings.

· Morningstar Style Box: Large Size & Value.

The Large Size & Growth Model:

5. Model SPY (SPDR Trust).

· Please refer to http://finance.yahoo.com/q/hl?s=SPY for its holdings.

· Morningstar Style Box: Large Size & Blend.

6. Model QQQ (NASDAQ-100 Trust 1).

· Please refer to http://finance.yahoo.com/q/hl?s=QQQ for its holdings.

· Morningstar Style Box: Large Size & Growth.

The Mid Cap & Small Blend Model:

7. Model MDY (MidCap SPDR Trust).

· Please refer to http://finance.yahoo.com/q/hl?s=MDY for its holdings.

· Morningstar Style Box: Medium Size & Blend.

8. Model IWM (Small Blend, iShares Russell 2000 Index).

· Please refer to http://finance.yahoo.com/q/hl?s=IWM for its holdings.

· Morningstar Style Box: Small Size & Blend.

The Real Estate Model:

9. Model $RMS (Morgan Stanely REIT).

· Please refer to http://finance.yahoo.com/q/hl?s=^RMS for its holdings.

10. Model IYR (iShares Dow Jones US Real Estate).

· Please refer to http://finance.yahoo.com/q/hl?s=IYR for its holdings.

The Consumer Retail Model:

11. Model RTH (Retail HOLDRs Trust).

· Please refer to http://www.nasdaq.com/structuredeq/holdrs_rth.stm for its holdings.

12. Model XLY (Consumer Discretionary SPDR).

· Please refer to http://finance.yahoo.com/q/hl?s=XLY for its holdings.

The Semiconductor Sector Model:

13. Model SMH (Semiconductor Holders Trust).

· Please refer to http://www.nasdaq.com/structuredeq/holdrs_smh.stm for its composition.

· Please refer to http://finance.yahoo.com/q?s=SMH for more details.

14. Model INTC (Intel Corp).

· Please refer to http://finance.yahoo.com/q?s=INTC for more details.

The Internet Sector Model:

15. Model HHH (Internet HOLDRs Trust).

· Please refer to http://www.nasdaq.com/structuredeq/holdrs_hhh.stm for its composition.

· Please refer to http://finance.yahoo.com/q?s=HHH for more details.

16. Model YHOO (Yahoo! Inc).

· Please refer to http://finance.yahoo.com/q?s=YHOO for more details.

The Biotech Sector Model:

17. Model BBH (Biotech HOLDRs Trust )

· Please refer to http://www.nasdaq.com/structuredeq/holdrs_bbh.stm for its composition.

· Please refer to http://finance.yahoo.com/q?s=BBH for more details.

18. Model DNA (Genentech Inc).

Please refer to http://finance.yahoo.com/q?s=DNA for more details.

Note: The above eight (8) portfolios can tell us how the general equity market is projecting the U.S. economy will be 6 months down the road.

C. Asia I and II:

19. Model CHN (The China Fund Inc).

· Please refer to http://finance.yahoo.com/q?s=chn for more details.

20. Model EWH (iShares MSCI Hong Kong Index).

· Please refer to http://finance.yahoo.com/q?s=ewh for more details.

21. Model EWJ (iShares MSCI Japan Index).

· Please refer to http://finance.yahoo.com/q?s=ewj for more details.

22. Model EWT (iShares MSCI Taiwan Index).

· Please refer to http://finance.yahoo.com/q?s=ewt for more details.

D. Energy Sector:

23. Model XLE (Energy Select Sector SPDR).

Please refer to http://finance.yahoo.com/q/hl?s=XLE for its holdings.
Morningstar Style Box: Large Size & Value.

24. Model XOM (Exxon Mobil Corp.).

· Please refer to http://finance.yahoo.com/q?s=XOM for more details.

Note: The Energy Sector can give an advance warning of inflation and, consequentally, also warn of a coming Federal rate hike.

E. Precious Metal Sector:

25. Model $GOLD (Gold in $USD per Troy oz.).

Please refer to http://www.stockcharts.com with the ticker symbol $GOLD.

26. Model $SILVER (Silver in $USD per Troy oz.).

Please refer to http://www.stockcharts.com with the ticker symbol $SILVER.

27. Model NEM (Newmont Mining Corp.)

Please refer to http://finance.yahoo.com/q/cp?s=NEM for more details.

28. Model PAAS (Pan American Silver Corp.)

Please refer to http://finance.yahoo.com/q/cp?s=PAAS for more details.

F. Currency Sector:

29. Model $USD (U.S. Dollar Index).

· Please refer to http://www.stockcharts.com with the ticker symbol $USD.

Note:

a. The Physical Precious Metal Market can help us to check the fundamental strength of the U.S. economy. For example, if the U.S. economic foundation is truly solid and vigorous, then the U.S. dollar (i.e., the stock of USA, Inc.) will be more valuable because of the demand. When the U.S. dollar goes up, PM goes down. When the U.S. dollar goes down, PM goes up.

b. The Physical PM and Equity PM must confirm each other in trend direction. This is one of the revolutionary extensions of applying the Dow Theory concept to another sector.

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