Flexible Plan Investments, Ltd. Classic Strategy Update
Week Of November 19, 2008

The major market indices moved lower last week.   Looking at our key technical market indicators, breadth remains mixed, while leadership continues negative.  Monetary conditions continue positive, as lower interest rates seem likely for the foreseeable future.

Our time-tested econometric model remains moderately in positive territory for equities and Classic accounts are fully invested. The trade to equity funds occurred October 21 at the close.

The Federal Reserve in its release of the minutes of its last meeting makes clear that additional interest rate reductions will be necessary to combat the “significant” weakness in the economy.  It also appears that the Fed has been busy rerunning its computer models and has come to a conclusion already reached by private economists – unemployment will grow at a greater rate than that previously anticipated and economic activity will decline more than expected.

There was good news on the inflation front as the two most significant inflation measures, the CPI and the PPI, both registered sizeable declines.  The Consumer Price Index reported today showed a 1% monthly decline on the heels of declines in the previous two months.  It was the largest monthly decline in consumer prices in the 60-year-plus history of the Index.  It was, of course, aided by the 50% decline in oil prices to a 22-month low.

The market remains very oversold, volatility levels, which often suggest turning points, are the highest in seventy years and we are moving into the seasonal positive period next week where year-end rallies often begin. 

As always, we will be watching our key indicators carefully for any leading sign of change, and will act swiftly to respond as our model readings dictate.

Past performance does not guarantee future results. The opportunity for profits carries with it the possibility of losses. A complete list of all of our recommendations over the last 12 months is available upon request.