Plan of Attack... Page 2 ETF Watch... Page 4 Model Portfolio... Page 8

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1 TABLE OF CONTENTS Market Background... Page 1 Plan of Attack... Page 2 ETF Watch... Page 4 Model Portfolio... Page 8 Market Background After a short holiday week that was much more difficult to navigate than what is typical, the bulls are in complete control again as we work our way into the final month of the year. So far this week, those bulls have received two early Christmas presents. The first of these was news that the Dubai debt debacle wasn t nearly as bad as initially reported, while the second was confirmation that Bank of America (BAC) would be repaying the $45 billion in Troubled Asset Relief Program (TARP) funds that the bank had received. The Dubai news came as the new month got under way, giving investors a perfect excuse to continue the pattern of early month strength, but it s the Bank of America news that has been the most encouraging. As I ve been discussing on my blog on RealMoney and in my past several newsletters, there have been a few things that investors have been paying close attention to, and these include the underperformance of the financial sector. Although the overall action has been less than scintillating, the major indices have at least held in a lateral channel as they have churned near recent highs. But, as many have been quick to point out, the chances of a really good run into the end of the year had been considerably limited without the participation of the banks. The bulls are hoping that the Bank of America news will change that but, as of this writing, the Financial Select Sector SPDR (XLF) is trading at the lows of the day, having suffered a nasty reversal off early highs. Meanwhile, the other negative lately has been the underperformance of small-cap stocks, which has translated into poor technical conditions in the Russell While there have been a handful of pockets of activity, particularly in China-related names, leadership has been narrowing and the action has become downright frothy in many of the stocks that traders have favored. Without speculative juices flowing into other areas, the extended conditions in those few groups could lead to some real damage underneath the surface, should some profit-taking kick in. Fortunately, however, there were indications on Tuesday that traders were beginning to broaden their horizons as they pushed stocks higher in areas like fertilizers and chips. That continued yesterday, and, as a consequence, the Russell 2000 was able to inch past short-term descending resistance and reclaim its 50-day moving average. That index is still in shaky shape from a technical perspective, but it s in a position to move past the right shoulder of its lopsided head-and-shoulders pattern. (Continued on the next page) PLEASE SEE IMPORTANT LEGAL DISCLAIMER ON LAST PAGE

2 Still, there are a couple of wild cards that we need to keep a close eye on. The first is the jobs report, which comes out Friday. Should the bulls manage a strong close to Thursday s trading session, there would be a possibility for a sell-the-news reaction Friday morning, no matter how the numbers come in. It s impossible to game those events, and we ll just have to wait to see how the proverbial cookie crumbles. The other concern, of course, is the U.S. dollar. The buck is entrenched in an incredibly sticky downtrend, and while there are worries that the short-dollar trade might be getting overcrowded, the currency markets dwarf the equity markets by many factors. That makes it difficult to apply the same concepts you would in, say, thinly traded China momentum stocks. Nonetheless, should something come along to push the dollar past its descending-resistance trendline, the resulting rally could exact some real damage. Finally, we have sentiment. We pointed out last week that the Investors Intelligence poll showed an increasing gap between the bulls and the bears, and that continued this week: The number of money managers with a bullish outlook increased to 50%, while those with a bearish perspective decreased to 16.7%. Any reading under 20% on the bearish side is an indication that some corrective action may very well be in the cards, as would suggests that sentiment is becoming much too complacent. The worry, of course, is that we are seeing an upside capitulation as money managers finally give in to the frustration and stop waiting for a better pullback that has yet to materialize, after having been loathe to chase this market while it moved off March lows. It s been the overall skepticism of market players that s been a major driving force behind this rally. When you combine that with the notion that money managers are becoming more sanguine, it s difficult not to be concerned that performance anxiety will become less of a factor. 2

3 Plan of Attack Despite all of the concerns delineated in the Market Background section above, however, there s little argument about the fact that the market is in very good shape from a techncial perspective. It s not all rainbows and butterflies, and we still have Friday s jobs report to get through, but warning flags and compelling Current Long-Term Allocation arguments from the bears are nothing new. Cash, 100% Current Short-Term Allocation Cash, 100% The key to this market over the past nine months has been simply to trust the pricing action for what it is. That is why, as painful as it was, I used last Friday s early wash-out to finally close out my remaining short-index positions in Direxion Daily Financial Bear 3X (FAZ:NYSE), ProShares UltraShort Dow 30 (DXD:NYSE) and UltraShort Oil & Gas ProShares (DUG:NYSE). There s a huge disconnect between what s happening out in the real world and what the market is telling us, but all of those worries and concerns won t matter until they do. I have no idea how long this current trend may last, but the one thing I do know is that they are far more persistent than what will ever seem reasonable. 3

4 ETF Watch SPDRs S&P 500 Trust Series ETF (SPY). 4

5 ishares Dow Jones Transportation Average index Fund ETF (IYT) 5

6 SPDRs Select Sector Energy ETF (XLE) 6

7 Market Vectors Agribusiness ETF (MOO) Have a great weekend, and as always, stay on the lookout for my Allocation and Market Alerts. James Rev Shark DePorre 7

8 MODEL PORTFOLIO TRADING POSITIONS Holding Current Date # Cost Basis Current $ Gain/ % Gain/ Allocation Quote Initiated Shares per Share Value Loss Loss CASH Position 100% * Please note: There are no trading positions in the model portfolio at this time. PERFORMANCE Trading Positions Original Cost $ 100, Current Value $ 92, Total Average Return -7.55% 2009 YTD Return % Performance results listed here reflect values of stocks as of the close of the most recently completed trading day, and take into account dividends paid, interest earned in the cash in the model portfolio (using the average money market rate compounded daily), and a model commission rate of $8.00 per trade. Results are updated overnight (other than interest earned, which is updated monthly) and posted prior to the market open the following business day. The YTD Return figures reflect changes since the first trading day of the current year. The Total Average Return figures reflect changes since the model portfolio s inception 3/15/2007. LONG-TERM POSITIONS* Holding Current Date # Cost Basis Current $ Gain/ % Gain/ Allocation Quote Initiated Shares per Share Value Loss Loss CASH Position 100% * Please note: There are no long-term positions in the model portfolio at this time. PERFORMANCE Long-Term Positions Original Cost $ 50, Performance results listed here reflect values of stocks as of the close of the most recently completed trading day, and take into account dividends paid, interest earned in the cash Current Value $ 50, in the model portfolio (using the average money market rate compounded daily), and a model commission rate of $8.00 per trade. Results are updated overnight (other than Total Average Return 1.68% interest earned, which is updated monthly) and posted prior to the market open the following business day. The YTD Return figures reflect changes since the first trading day 2009 YTD Return 0.53% of the current year. The Total Average Return figures reflect changes since the model portfolio s inception 3/15/2007. (The overall model portfolio performance continues on the next page) 8

9 OVERALL MODEL PORTFOLIO PERFORMANCE Total Original Cost $ 150, Performance results listed here reflect values of stocks as of the close of the most recently completed trading day, and take into account dividends paid, interest earned in Current Value $ 148, the cash in the model portfolio (using the average money market rate compounded daily), and a model commission rate of $8.00 per trade. Results are updated overnight (other Total Average Return -0.93% than interest earned, which is updated monthly) and posted prior to the market open the following business day. The YTD Return figures reflect changes since the first trading day 2009 YTD Return -7.53% of the current year. The Total Average Return figures reflect changes since the model portfolio s inception 3/15/2007. S&P 500 Date of Portfolio Inception Open Level Current Level % Gain/Loss Since Portfolio Inception 2009 YTD Return S&P 500 Index (SPX) 3/15/2007 1, % 21.77% At the time of publication, Mr. DePorre held no positions in the stocks mentioned. 9

10 Customer Service: Please or call TSCM (8726) Mon. Fri. 8 a.m. to 6 p.m. ET; or outside the U.S. and in Canada, call Reader Feedback and Questions: Please send an directly to RevShark. Again, please direct all account-related inquiries to customer service. Legal Information This information is confidential and is intended only for the authorized Subscriber. Please notify us if you have received this document in error by telephoning TSCM (8726). James Rev Shark DePorre is a self-taught trader who primarily trades for his own account from his home on Anna Maria Island, Fla. He also writes the Trading Insights blog for TheStreet.com, Inc. s RealMoney premium subscription Web site. TheStreet.com, Inc. is a publisher and has registered as an investment adviser with the U.S. Securities and Exchange Commission. TheStreet.com ETF Shark Alerts contains Mr. DePorre s own opinions and is provided for informational purposes only. You should not rely solely upon TheStreet.com ETF Shark Alerts for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in TheStreet.com ETF Shark Alerts constitutes, or is intended to constitute, a recommendation by Mr. DePorre or TheStreet.com, Inc. of any particular security or trading strategy or a determination by Mr. DePorre or TheStreet.com, Inc. that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Mr. DePorre is subject to the following restrictions with respect to any exchange-traded fund* ( ETF ) discussed in TheStreet.com ETF Shark Alerts. Individual equity securities may not be discussed in TheStreet.com ETF Shark Alerts or included in its Model Portfolio: For ETFs mentioned in TheStreet.com ETF Shark Alerts in which Mr. DePorre does not have an interest at the time of publication, Mr. DePorre may not enter orders to purchase or sell such ETF (in any account for his own benefit or the benefit of a family member) until 24 hours after publication of the issue of TheStreet.com ETF Shark Alerts in which the ETF is mentioned. For ETFs that Mr. DePorre holds (in any account for his own benefit or the benefit of a family member) at the time of publication of an issue of TheStreet.com ETF Shark Alerts, Mr. DePorre will not be permitted to sell the position until: (i) for NASDAQ 100 Trust Shares qubes (NASDAQ: QQQQ) and any other ETF with an average three-month trading volume (as reported on Yahoo! Finance) of at least 90,000,000 shares, the second trading day from the date it was first discussed in TheStreet.com ETF Shark Alerts, and (ii) for all other ETFs, the third trading day from the date it was first discussed in TheStreet.com ETF Shark Alerts. TheStreet.com ETF Shark Alerts portfolio is a model portfolio of stocks chosen by the author in accordance with his stated investment strategy. Your actual results may differ from results reported for the model portfolio for many reasons, including, without limitation: (i) performance results for the model portfolio do not reflect actual trading commissions that you may incur; (ii) performance results for the model portfolio do not account for the impact, if any, of certain market factors, such as lack of liquidity, that may affect your results; (iii) the price of ETFs chosen for the model portfolio may change in a short period of time, and although the purchase or sale of an ETF in the model portfolio will not be effected in the model portfolio until confirmation that the alert has been sent to all subscribers, delivery delays and other factors may cause the price you obtain to differ substantially from the price at the time the alert was sent; and (iv) the prices of ETFs in the model portfolio at the point in time you begin subscribing to TheStreet.com ETF Shark Alerts may be higher than such prices at the time such ETFs were chosen for inclusion in the model portfolio. Past results are not necessarily indicative of future performance. * The newsletter may discuss any investment vehicle listed as an ETF in the Yahoo!Finance ETF Center, located at 10