AlphaProfit Sector Investors' Newsletter: October Indicator Update

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AlphaProfit Newsletter: October Indicator Update
October 1, 2007

Dear Valued Subscriber,

I am pleased to inform you that the AlphaProfit Newsletter completed four years of uninterrupted publication on September 30, 2007. The AlphaProfit model portfolio returns as of this date are as follows:

	Sep. 2007	2HTD*	YTD**	1 Year	3 Year	4 Year
AlphaProfit Focus™ Model Portfolio	7.3%	1.5%	11.9%	25.3%	85.3%	137.9%
AlphaProfit Core™ Model Portfolio	7.0%	4.3%	11.6%	20.2%	71.3%	93.4%
DJ Wilshire 5000 Total Market Index	3.6%	1.4%	9.1%	17.1%	48.3%	70.2%

^* 2HTD refers to the June 30, 2007 to September 30, 2007 period.
^** YTD refers to the December 31, 2006 to September 30, 2007 period.

The equity market as measured by the broad Dow Jones Wilshire 5000 Total Market Index returned to its winning ways in September after losing ground for three straight months. The advance was largely driven by gains following the Federal Reserve's decision to cut the overnight bank lending rate by 0.5% on September 18. As leading banks followed suit with reductions on interest rates charged to credit worthy borrowers, the DJW 5000 vaulted nearly 530 points or 3.6% in two days.

All four of the industry-group funds included in the AlphaProfit model portfolios out-performed the DJW 5000 benchmark in September. Fidelity Select Gold (FSAGX) and Fidelity Select Materials (FSDPX) were strong performers gaining 24.6% and 8.6%, respectively while Fidelity Select Software & Computer Services (FSCSX) gained 6.3%.

Gold mining shares that trended lower in August despite a modest increase in gold prices were unstoppable in September. With the U. S. dollar tanking to multi-year lows against major currencies and the price of oil rising more than $8 per barrel, gold had everything going for it and surged more than $74 per ounce or 11% in September.

With fears of recession abating and commodity prices rallying, shares of metal miners and producers performed well in the materials sector. Shares of chemical industry heavyweights DuPont and Dow Chemical however lagged against the backdrop of rising oil prices.

In the software group, share prices of Internet companies benefited from consolidation possibilities while Oracle posted a strong earnings report. Quest Software put its stock option grants-related troubles behind. Meanwhile, Microsoft shares lagged after it lost its European Union antitrust decision appeal.

Maintaining Automotive Group at 'Favored Buy'.

The Detroit automakers are making progress in their negotiations with the United Auto Workers after the union decided to select General Motors as the lead company for negotiations.

General Motors has reached tentative agreement that UAW officials would like to see ratified by October 10. To transfer nearly $51 billion in health care liability, GM has agreed to pay nearly $30 billion in cash and pre-fund a health-care trust administered by the union. The UAW has in turn scored successes in preserving jobs. The union expects the GM contract to serve as a template for talks with Ford and Chrysler LLC.

Investors reacted positively to the progress GM made in its negotiations with the UAW. Shares of GM rated 'Favored Buy' at the end of August rose over 19% in September. Meanwhile, a falling U. S. dollar kept a lid on shares of Toyota Motor. 'Favored Buy' rated Fidelity Select Automotive (FSAVX) gained 5.9% during the month.

Even after this advance, valuation metrics for auto and auto-part company shares remain quite attractive vis-à-vis their prospects. We continue to rate Fidelity Select Automotive 'Favored Buy'. With no pure-play ETFs focusing on the automotive group, ETF investors may buy shares of General Motors and Toyota Motor in equal proportion to play this 'Favored Buy' recommendation.

Maintaining the AlphaProfit Sector Portfolio Indicator at 'Buy'.

Equity prices have rallied impressively in recent weeks, nearly mopping out all earlier losses. However, the morass in the housing market continues. To make sure that housing does not weaken the broader economy, the Federal Reserve has stated that it will 'act as needed'.

We believe the market will gradually work its way higher during the coming months. Negative news from the housing market will likely contribute to volatility and send equity prices lower from time-to-time. We maintain the AlphaProfit Sector Portfolio Indicator reading at 'Buy'.

Presently, we are not making any changes to the model portfolios. The model portfolio compositions as well as exchange traded fund (ETF) and mutual fund recommendations are available in the Subscriber Login area of the web site.

We welcome your comments.

Best regards,
Sam Subramanian
AlphaProfit Investments, LLC
Ideas. Insights. Results.
http://www.alphaprofit.com

Notes: The AlphaProfit Sector Investors' Newsletter™ is for information purposes only. AlphaProfit Investments, LLC is not soliciting any subscriber to buy or sell any security. Nothing herein should be construed as an offer to buy or sell securities or to give individual advice on investing. Before buying or selling any mutual fund, exchange-traded fund, security, or investment, read the prospectus carefully. For securities held in brokerage accounts, read the broker's specific terms and conditions which apply to trading of the securities. AlphaProfit Investments, LLC cannot and does not give any assurance that the present or future model portfolio changes will be profitable. Past performance is not a guarantee for future results. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. AlphaProfit Investments, LLC is not responsible for any errors or omissions. AlphaProfit Investments, LLC neither is associated with nor receives any compensation from any of the mutual fund companies, brokers or entities connected with the exchange-traded funds mentioned in the newsletter. Please review our Terms and Conditions of Use and Subscriber Agreement which is available on our website at www.alphaprofit.com; they govern your relationship with AlphaProfit Investments, LLC, including, but not by way of limitation, use of this newsletter. No part of the AlphaProfit Information may be reproduced or re-transmitted in any manner without written permission of AlphaProfit Investments, LLC.