Winning Investments with Exchange-Traded Funds 1 Stock Selection and Timing

WINNING INVESTMENTS WITH EXCHANGE-TRADED FUNDS

A TRADING SYSTEM

RANKINGS	Oct				Nov
2004	8	15	22	29	5

Biotech Hldrs	10	10	10	11	13
Biotech Ishrs	16	16	16	16	16
EAFE Ishrs	6	5	5	5	5
Energy Spdr	2	2	2	2	2
Financial Spdr	5	6	7	8	10
Japan Ishrs	13	14	14	13	14

Explanatory Notes
PORTFOLIO SPREADSHEETS

This small portion of a weekly Portfolio spreadsheet illustrates part of a Rankings table.

The top two rows show the weekly Friday dates. The next set of rows shows the ranking numbers for each fund, week by week, ending with the current week. For example, the first row below the dates shows Biotech Hldrs has been dropping in rank from a 10 to 13 through November 5th indicating the relative price of this fund has been getting weaker. Energy Spdr is the best ranked (strongest) fund in the section, a steady 2 out of a possible 17. 'Spdr' means Standard & Poor's Depositary Receipts, an acronym for shares of a trust fund designed to mimic the pricing of the S&P Energy Select Sector Index.

MARKET TIMING
LeadingTrend	75	61	56	69	88
LaggingTrend	34	49	59	59	70
MarketTrend	Up	Up	Dwn	Up	Up

At the bottom of each weekly portfolio sheet, three rows like those to the left tell the overall state of the market. The first row tells the percentage of funds in the portfolio that have prices above their moving-average trends. The second row tells the percentage of funds in the portfolio that are are in uptrends. When the first-row trends are greater than the second-row trends, the market is a 'buy.' When the first-row percentage drops below the second row's, as it did on October 22nd, the market is a 'sell.' The one-week reversal which you see here is a rare event.

The third row simply makes the comparison for you automatically and tells you clearly the current direction of the market, with which you should prefer to be in sync.

To see these parts assembled in a complete, curent portfolio table, click here

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