Investors Intelligence Global

II Insight

September 2012

Dear Insight readers

With the summer now behind us, we thought it would be a good time to resume our free Insight service.

This summer proved to be a roller coaster with a slide in May, down to a low in June. There a base was built and with our indicators oversold we did a lot of buying across our U.S. portfolios. The rally then kicked off and we still hold many of those positions today. The big question now is, will these upside breakouts hold? We shall attempt to answer that conundrum below.

Tarquin Coe

Technical Analyst, Investors Intelligence, New York office

The past month has seen the S&P 500 consolidate just under the 2012 April high. We liked the pause as it allowed indicators to settle back and regroup. That action is healthy and provides a recharge ahead of the next leg up. That leg up looks to have ignited with the September 5^th surge, a move which saw the index add 2%. The index broke out to a new 2012 high but the question is will the breakout hold? That is where indicators come in.

At the start of September our proprietary short-term-composite indicator unwound to 30% thanks to the late August consolidation. With that indicator now at a shade over 55%, overbought conditions are still some way off and that bodes well for the S&P 500 extending higher in the weeks ahead.

An upside level achievable in the very near-term is 1440.24 (the May 2008 peak). Beyond that, the 2007 and all-time high of 1576.09, is the next big level to pencil in. That all-time high may be tested over the next twelve months, though of course this possibility would need constant reviews as

conditions change.

Indicators and indexes are reviewed every day in the US Daily Hotlines.

As mentioned in the opening comment, we did a lot of buying during the June rout. That is very apparent in the Coe Report Portfolio, with the bulk of buying in June. As the rally confirmed our bullish market view, we added further longs, resulting in a now invested position of 175%. We are rarely so aggressive but we felt the risk-to-reward ratio was very favorable at the June bottom.

We have not closed out a position since August 6tfh (a profitable short in Avon Products) so the plan now is to ratchet up stops and lock-in gains. We started that process on Monday of this week.

A monthly subscription to the Coe Report is available for just $40 a month. With indexes at a make or break point now is possibly the perfect time to take out a monthly subscription and give the service a trial and benefit from our expert advice.

Date	Stock	Code	Type	Open Price	Current Price	% P&L	Target	Stop	Alloc %	Comment
3 Feb 2012	Newmont Mining Corp	NEM	Long	60.755	51.69	-14.92%	72.42	42.80	5	Stop type - EOD3
4 May 2012	SPDR Gold Trust	GLD	Long	159.62	168.44	+5.53%	190	161.80	10	Stop Type - ITD
18 May 2012	Royal Gold Inc	RGLD	Long	63.26	90.42	+42.93%	85	80.50	5	Stop type - ITD
21 May 2012	Reynolds American Inc	RAI	Long	41	44.46	+8.44%	45	43.75	5	Stop type - ITD
1 Jun 2012	Lorillard Inc	LO	Long	120.125	123.64	+2.93%	140	115	5	Stop type - EOD3
1 Jun 2012	Dynex Capital Inc	DX	Long	9.23	10.7	+15.93%	10	10.10	5	Stop type - ITD
4 Jun 2012	Randgold Resources Ltd.	GOLD	Long	86.80	111.47	+28.42%	120.73	101.85	5	Stop type - ITD
6 Jun 2012	Market Vectors-Gold Miners	GDX	Long	47.36	50.46	+6.55%	55	48.60	10	Stop type - ITD
8 Jun 2012	Illinois Tool Works Inc	ITW	Long	55.87	60.6	+8.47%	60	56.50	5	Stop type - ITD
8 Jun 2012	Eastman Chemical Co	EMN	Long	47.38	57.37	+21.08%	60	51.70	5	Stop type - ITD
11 Jun 2012	Kellogg Co	K	Long	48.63	50.39	+3.62%	57.70	49.63	5	Stop type - ITD
13 Jun 2012	JPMorgan Chase & Co	JPM	Long	34.93	39.3	+12.51%	40	36.60	10	Stop type - ITD
13 Jun 2012	Mattel Inc	MAT	Long	32.12	35.5	+10.52%	40	34.25	5	Stop type - ITD
15 Jun 2012	Nike Inc	NKE	Long	100.96	99.29	-1.65%	114.81	87.5	5	Stop type - EOD3
15 Jun 2012	ConocoPhillips	COP	Long	54.96	56.64	+3.06%	75	50	5	Stop type - EOD3
18 Jun 2012	Apple	AAPL	Long	585.97	680.44	+16.12%	644	610	7.5	Stop type - ITD
20 Jun 2012	ISHS Russell 2000 Index	IWM	Long	78.75	84.26	+7.00%	84.66	81.05	15	Stop type - ITD
20 Jun 2012	Intrepid Potash	IPI	Long	21.02	24.1	+14.65%	35	22.60	5	Stop type - ITD
27 Jun 2012	SPDR Sector Trst Consumer Discretionary	XLY	Long	43.161	46.78	+8.38%	48	45.10	10	Stop type - ITD
27 Jun 2012	SPDR Sector Trst Energy	XLE	Long	63.81	73.45	+15.11%	70.50	71.20	10	Stop type - ITD
18 Jul 2012	Williams Cos.	WMB	Long	30.70	33.89	+10.39%	35	31.60	5	Stop type - ITD
25 Jul 2012	AT&T Inc	T	Long	35.47	37.3	+5.16%	40	33.50	5	Stop type - EOD3
27 Jul 2012	Exterran Holdings Inc	EXH	Long	14.57	19.42	+33.29%	22	17.50	2.5	Stop type - ITD
13 Aug 2012	Smithfield Foods Inc	SFD	Long	19.19	20.38	+6.20%	22	17.91	2.5	Stop type - EOD
16 Aug 2012	Baytex Energy Trust	BTE	Long	46.22	48.21	+4.31%	50	39.75	5	Stop type - EOD
24 Aug 2012	Altria Group Inc	MO	Long	33.93	34.27	+1.00%	40	33	5	Stop type - EOD3
31 Aug 2012	Arm Holdings Plc	ARMH	Long	27.21	26.23	-3.60%	32.18	24.90	2.5	Stop type - EOD3
5 Sep 2012	Verizon Communications Inc	VZ	Long	43.87	43.72	-0.34%	50	42	5	Stop type - EOD3
7 Sep 2012	Belden Inc	BDC	Long	37.87	38	+0.34%	60	33.80	5	Stop type - EOD3
Closing prices as of 09/07/2012

Our ETF Review portfolio has been ticking along nicely this year. We held many positions during the recent rout, picking up dividend payments along the way. Some ETF areas have been resilient to the market volatility and we have been highlighting those on a regular basis.

Once such example is the iShares Biotechnology Index (IBB), which we bought on December 1^st last year at $102.41. Though the yield is barely 1%, the fund is defensive and has also proved to be a decent momentum play, generating a profit so far of +37.5%. We still like the fund and would suggest buying on any weakness. If owned, a stop-loss could be placed just beneath $125 as a move to there would put the twelve month uptrend under threat.

The ETF Review is published on a weekly basis with trading ideas from all areas of the ETF world, both on the long and short side.

Website technical feature – the MA crossover

There are many useful tools and features availaible to our subscribers. Given that a rally is underway in the equity markets we thought it would be a good time to illustrate the “MA Crossover” page which is under the “signals” tab. These lists, we have one for each geographical region, are created at the end of the trading day and detail all the golden-crosses (bullish) and dead-crosses (bearish). The signal is simply the 50-day exponential moving average (EMA) rising through the 200-day EMA to print a golden-cross and a dead-cross is where the 50-day EMA crosses down through the 200-day EMA.

Golden-cross signals often prove reliable in the early stages of a general market rally, such as what we may be experiencing now. Last week we used some of these bullish cross-overs to produce trading ideas in our daily reports.

Belden (BDC) was one such example. The computer network cable maker has printed three other golden-crosses since the 2009 bottom and each instance has seen a subsequent rally of at least several weeks in duration. The golden-cross coincided with a turn up on the relative chart versus the S&P 500, resuming the long-term trend of outperformance, adding further bullish technical evidence to the picture. We recommended buying the stock and are targeting a move to $60, the 2007 and all-time high.

Subcribers to our US Daily Hotline service have access to the MA crossover feature along with many other technical tools.

Disclaimer

Also available online at www.investorsintelligence.com. Unauthorized forwarding, copying or reproduction of this report will be treated as a breach of copyright. To subscribe, visit the website or contact Investors Intelligence on +1 914 632 0422.

To unsubscribe from this newsletter, please click here and hit 'Send'.

This report has been produced and compiled by Investors Intelligence, a division of Chartcraft Inc, and is provided for information purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. While all reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the time of publication, we make no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time Chartcraft and any of its officers or employees may, to the extent permitted by law, have a position or otherwise be interested in any transactions, in any investments (including derivatives) directly or indirectly the subject of this report. Also Chartcraft may from time to time perform other services (including acting as adviser or manager) for any company mentioned in this report. The value of securities can go down as well as up, and you may not get back the full amount you originally invested. Derivatives in particular are high risk, high reward investment instruments and an investor may lose some or all of his/her original investment. If you make an investment in securities that are denominated in a currency other than that of US dollars you are warned that changes in rates of foreign exchange may have an adverse effect on the value, price or income of the investment. The investments referred to herein may not be suitable investments for all persons accessing these pages. You should carefully consider whether all or any of these are suitable investments for you and if in any doubt consult an independent adviser. This report is prepared solely for the information of clients of Chartcraft who are expected to make their own investment decisions without reliance on this report. Neither Chartcraft nor any officer of Chartcraft accepts any liability whatsoever for any direct and consequential loss arising from use of this report or its contents