AlphaProfit Newsletter: April Indicator Update

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AlphaProfit Newsletter: April Indicator Update
April 1, 2009

Dear Valued Subscriber,

The AlphaProfit model portfolios were repositioned based on March 31, 2009 closing prices. The Repositioning Alert and Model Portfolio Composition documents are available in the Subscriber Login area of alphaprofit.com. Here is a summary of the considerations that resulted in the repositioning changes.

Market Developments

In response to extreme economic weakness, the Federal Reserve is willing to print dollars as needed and signaling preference for some inflation over deflation. The central bank is buying mortgage-backed and agency debt to support the housing market. To help banks unload troubled assets and lower credit costs, the U. S. Treasury plans to buy up to $1 trillion in legacy loans. We believe such measures can increase inflationary pressures.

President Obama is taking a proactive stand on reining Medicare costs to stem the soaring U. S. budget deficit. This in turn has undermined the health care sector's status as an investing 'safe haven'. Fidelity Select Biotechnology has outperformed the Dow Jones Wilshire 5000 benchmark by over 18% or 1800 basis points since its inclusion in the model portfolios on September 30, 2008. This has diminished its appeal from a risk-reward perspective.

Rating Transportation 'Favored Buy'

High-quality transportation shares have lagged the broad market recovery in March. We believe they have the potential to play 'catch up' and lead the broad market particularly if the investing environment remains favorable. We are rating the Transportation group 'Favored Buy' with Fidelity Select Transportation (Ticker: FSRFX, Risk Rating: Below Average) and iShares DJ Transportation Average (IYT, Below Average) as preferred investments.

Model Portfolio Changes

Against the above backdrop, we add exposure to gold, increase weighting for transportation, and cut back on biotechnology. The preferred mutual funds and exchange-traded funds (ETFs) to play the gold investment thesis are as follows:

• Fidelity Select Gold (FSAGX, Above Average)

• 65% MarketVectors Gold Miners (GDX, Above Average) + 35% SPDR Gold Shares (GLD, Below Average)

Sector Portfolio Indicator and Market Outlook

Following the repositioning of the model portfolios, we rate the AlphaProfit Sector Portfolio Indicator 'Buy'. This implies current prices are generally good to trade at.

The S&P 500 has rallied nearly 20% from its March 6 intra-day low to close the month at 797.87. The March 6 low has the potential to be 'the bottom' for this bear market. Our optimism in this regard is supported by two factors: surging M2 money supply and improving market technicals.

We believe the S&P 500 can work its way gradually higher in the period ahead. In the near-term, first quarter earnings reports and the outlook for 2009 earnings can pose challenges. An improvement in leading economic indicators and earnings estimates that results in a market characterized by lower volatility and normal investor risk acceptance will be required for stock prices to move substantially higher.

Model Portfolio Performance

The AlphaProfit model portfolio returns as of March 31, 2009 are as follows:

	Mar. 2009	YTD*	1 Year	3 Year	5 Year	Sep. 2003 Inception
AlphaProfit Focus™ Model Portfolio	5.4%	-18.1%	-45.5%	-46.4%	-16.0%	9.2%
AlphaProfit Core™ Model Portfolio	8.2%	-9.0%	-40.0%	-37.0%	-17.4%	0.7%
DJ Wilshire 5000 Total Market Index	8.8%	-10.1%	-37.7%	-34.6%	-19.5%	-7.1%

* YTD refers to December 31, 2008 to March 31, 2009 period

Stock recommendations along with the investment thesis and key risks for the recommended sectors and industries will be included in the April Report due for publication on Sunday, April 12.

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.