Jobs/Added 50 AMSWA at 5.81/SCEDN-Now A Floater/ISM-Manufacturing Looks Good/AMAT/MKN & MKZ

I am having my annual physical today. My health insurance with Blue Cross has a $5,000 deductible, a HSA plan, but the annual physical is one of the few health costs which will be paid without regard to that deductible. I have never spent one day in the hospital, nor have I even had a cold in over a decade.

So, I am virtually a pure profit customer of Blue Cross Blue Shield of Tennessee. Last year, Blue Cross did not pay a dime on my annual physical. I called them up and was told that my doctor had coded the claim as a regular office visit, which was applied toward my deductible, rather than a physical which would be paid by the insurance. And, there was no credit shown on the statement for the $20 co-payment that I paid. Okay, Blue Cross was not the problem, so a quick call to my doctor's office would straighten the mess out, I negligently surmised in my first billing dispute on a healthcare bill.

About two hours later, after being shuffled back and forth among various offices in Nashville and then to St. Louis, and back to Nashville, I am finally directed to a woman at Baptist Hospital who says she is responsible. Great, I say, always good to find the responsible person, but then she says that she can not change the bill until Blue Cross returns the paper work denying the claim. She tells me to call back in a week.

Well, as you probably have figured out, I call back in a week and she does not answer the phone so I leave a voice mail message identifying the issue again for her. So in a couple of weeks, I receive another statement from Blue Cross, still coded as an office visit, rather than a physical, but at least I have received credit for my $20 co-payment this time. I feel like I am making progress after about 3 hours of my time. Then, I realize that my time is actually worth more than the bill, around $170, so I write a letter, pointing out everything that had happened, enclose my check, and then said in the letter, if you want to do the wrong thing, just deposit this check. Well, that check was deposited that very day.

1. Jobs: The unemployment rate for March was 9.7%, same as in February. March payrolls increased 162,000. This was the largest gain since March 2007. There was the first increase in construction jobs since June 2007. Household survey, which picks up small business, had a 264,000 increase, the third straight month of increases in the household survey. March census jobs were less than expected at 48,000. Employment Situation Summary The non-seasonally adjusted U-6 number, the broader gauge of unemployment, was 17.5% in March, down from the 17.9 reading in February: Table A-15. Alternative measures of labor underutilization The average work week expanded to 34 hours. The futures for the S & P 500 rose on the report. The stock market is closed today.

2. Applied Materials (owned)(2010 Speculative Strategy): AMAT raised its revenue guidance for 2010 last Tuesday to more than a 60% increase from 50%. An article in TheStreet.com has a good summary of AMAT's 2010 revenue guidance and the reaction to it by brokerage firms. Barclays was unimpressed, while Piper Jaffray expect AMAT to hit $22. Barrons has a summary of a Caris & Company report, where the analyst raised the price target to $15 from $14 after AMAT's new guidance. Applied Materials detailed its new guidance in a press release.

There is some debate among staff here at HQ as to whether or not to continue the 2010 Speculative Strategy given the current macro forecasts being made by the department heads for Macroeconomic Forecasts and for Historical Trend Analysis, discussed in yesterday's post. RB wants to expand the 2010 Speculative Strategy to include twenty more stocks with odd lot purchases of 10,000 shares each. The LB is leaning toward selling most of the stocks currently in the 2010 speculative strategy and plow the proceeds into the dividend growth strategy. RB countered, pointing out that the ^VIX has had 25 consecutive days of movement below 20, and under LB's stinking Vix Asset Allocation Model, it was time to shoot for the moon howled the RB. LB replied that the RB had never even read the post about the VIX Model. If the dim wit lame brain had read it, it would have seen that 3 months is required before the formation of a stable vix pattern. And so on it went for hours during the early morning staff meeting, as the OG sipped on his coffee and tried to read the morning papers.

3. ISM Manufacturing: This was a good report. The ISM manufacturing index rose to 59.6% in March, higher than the consensus forecast of 57.5%, and the highest reading since July 2004. The new order index increased to 61.5 from 59.5%: ISM The RB just said "go all in", then it launched into more babble about how it said to go all in back in March 2009. Some readers may remember that was when the LB called the Doc to see if he would inject a quart of valium into the RB. Fed Is Less Gloomy

4. SCEDN (Owned): This may be my favorite equity preferred floating rate security now. I would not be surprised by a call at some point within the next two years at its $100 par value. RB just said that it recommended buying a 1000 at $84 and instead the super cautious nerd LB bought just 50 shares at $ 84 last October. SCEDN went ex dividend on 3/31 for its last fixed coupon and promptly recovered the full amount of that dividend in its share price, staying at $100 per share. Quote Southern California Edison Co. - SCEDN Other investors may be thinking along the same lines as me, since the price is hugging par value. SCEDN has the best float of all of the floaters in my opinion, and it is an issue of Southern California Edison. I much prefer owning a non-cumulative equity preferred stock issued by that utility than a similar issue from any financial institution, the source of all other exchange traded equity preferred stocks: Advantages and Disadvantages of Equity Preferred Floating Rate Securities. The SCEDN will afford decent protection in a rising rate environment, paying a 1.45% spread over the greater of 3 month Libor, the 30 year treasury or the 10 year treasury (using CMT for the treasuries, see Federal Reserve Data on CMTs: 30 year weekly data). Prospectus Supplement I would not personally buy it at $100 however. The 30 year CMT is the higher number now. The Fed weekly data has a 4.68% print on it for the week 3/26/2010. If that was the relevant number during the next computation point for SCEDN, hypothetically speaking, then the yield would be 4.68 + 1.45=6.13% x. $100 par value=$6.13 annually divided by 4 quarters =$1.5325. The prior fixed coupon rate was $1.3373. The last fixed coupon dividend is scheduled to paid on 4/30/2010.

5. Added 50 AMSWA at $5.81 (now part of 2010 Speculative Strategy)(see disclaimer): American Software (AMSWA) was previously bought in the LOTTERY TICKET category. /Bought 50 AMSWA at 6.02-LT There is no reason to repeat the discussion in that post. I would note that a sizable position was acquired in AMSWA by the hedge fund Renaissance Technologies, www.sec.gov. The position disclosed in this SEC filing may or may not be current.

The buy of 50 shares of AMSWA was purchased after compromise #12,243,954,145.17 was reached by the LB and the RB. After AMSWA was cleared for purchase as a result of the foregoing compromise, the voting commenced on the number of shares to be purchased with the number of votes assigned by Headknocker. RB voted its entire 7 vote allocation in favor of buying 10,000 shares, thinking that it had finally figured out how this Democracy at HQ worked, best not to split the votes. The LB, given 8 votes by the HK, voted to buy 50 shares.

The end result was that 50 shares of AMSWA could be bought with the entire 100 transferred to the 2010 Speculative Category, provided AMSWA does not cut its dividend which is currently yielding about 6.2% at a $5.81 price: American Software Inc, AMSW.A This is a link to the Reuters description of American Software and to its key developments page.

6. Simon Johnson: In this interview found a YF's Tech Ticker , Simon Johnson, a MIT professor, thinks that the next meltdown will be collapses in emerging markets including China.

7. MKN and MKZ (own): This unusual security (MKN) was ex interest yesterday with a $1.8 per share annual interest payment on its $10 par value. I like these kind of principal protected securities. The ones which I own are issued by Citigroup and pay the greater of a guarantee (3% for MKN and MKZ) or some rate tied to the annual percentage gain in an index. The key problem is that the percentage gain can not exceed the maximum permissible level, based on closing prices, on any day during the annual period, otherwise the interest rate reverts back to the guarantee. The notes are short term, both MKN and MKZ mature in 2014 at $10. The worst thing that can happen, assuming Citigroup survives to pay par value, is that the investor will receive a 3% annual interest payment each year until the note matures. I managed to pick up MKN at less than its par value late in January, to my surprise. Bought 100 MKN at 9.85 On 4/7, I will receive my first annual interest payment, a 18% interest rate based on the percentage gain of the commodity index from its starting value to the closing date for the first annual period (commodity index java chart: WSJ.com) The closing value of the index on 3/30/2010 will now be the starting value for the second year. Pricing Supplement No. 2009- I believe, subject to further check, that the closing value on March 30, 2010 of the index was 132.67. Note ON MKN The permissible increase is 33%. This means that the commodity index can never close a single day to and including March 30, 2011 over 176.45, during the second annual period. If there is one day of a close above 176.45, then the interest is 3% for the second annual period, no matter what happens after that maximum level violation.

So assume for purposes of illustration, that the commodity index does not have a close above 176.45 before 3/31/2011 and closes 3/30/2011 at 160. Then the interest rate for the second annual period would be 20.599%. If you had one close at 179, just one day above the maximum level, the interest rate would revert back to 3%.

I also own 200 shares of MKZ, a similar security, that has a 31% maximum level tied also to the same commodity index as MKN, though with different starting and closing dates. Pricing Supplement This one has a 3% guarantee and matures on 7/11/2014. This one is nearing the end of its first annual period which will be June 23, 2010 (payment date 6/30/2010). The starting value for the first annual period is 123.338. It has not violated its maximum which would be 161.56. Bought 100 MKZ at 9.91 in the Roth IRA/ So it has room to run over the next 3 months without breaking the maximum number. The index closed Thursday at 133.86, up 1.7 for the day. If the index closed on 6/23/2010 at that level, the percentage gain from MKZ's starting value would be 8.53%, but no telling what will happen over the next 3 months. It would be hard to see a maximum violation during the remaining 3 months, but you never know with these kind of securities. Theoretically it would be possible to receive as much as 31%. MKN hit 18% in its first year.

One of my readers sent me an email discussing the percentage gain of MKN on its ex dividend date. At one point yesterday, it had gained back almost the entire value of the $1.8 interest payment. It was ex interest yesterday so none of those buyers on Thursday will receive the interest payment on 4/7. I could not explain it, and it doesn't matter why to me since I am not a seller of this security. I want to see what happens next.

Bought 50 PVSW at 4.72-Lottery Ticket/Refiners/Bought 50 AMSWA at 6.02-LT/Bought 50 ACTI at 2.20-LT/Volatility and Vix Asset Allocation Model

The Great Leader here at HQ, always searching for a new Head Trader to replace the aging and frequently erratic Old Geezer, welcomed AL, Tennessee's favorite son, former VP, to HQ's trading operation, as our newly designated HT for the day. The Great Leader asked AL to do the honors and to turn on the IMAC computer at the HG trading desk. Al just looked perplexed, like the OG who sometimes tried to enter a trade when the computer was off. AL asked the GL in a whisper, barely audible except to the RB, "how do you turn this contraption on?", he said. Or, some think they heard that AL first asked in a whisper: "what was this contraption?" Whatever Al said, it caused the GL to turn a little red, blush a little, in fact that was the first time the peon minions and the minion peons at HQ saw a slight blush in the face of the GL, for surely the inventor of the internet could turn on a computer, we all thought, but none dared to utter a word, including the closet Republican LB who almost giggled, as the entire staff here at HQ started in unison to look at the side wall, as if the most interesting thing in the world was the remains of the bug the GL had just smashed with his shoe.

Now, some would later say that the GL had planted that bug before the incident with AL and the computer, just in case AL had a problem starting it, which would be embarrassing for the founder of the internet to say the least, and why was the bug strategically placed on the GL's shoe? Well, you can see what happened, really, everybody forgot about Al, the internet, and the trading desk, and just focused on that bug on the wall, when the GL, hardly making a sound, moving as fast as a caffeinated slightly obese man (according to that Body Mass Index promulgated by commie liberals) could move, slipped over to the trading desk and turned the computer on for AL, our favorite son here in the only known oasis for him in the SUV Capital of the World.

To digress, it may seem odd to refer to the Body Mass Index as a commie liberal plot against American Capitalism. Healthy Weight: Body Mass Index (BMI)} Headknocker was the first to see its true underlying purpose, an effort to undermine the very fabric of American Capitalism and to send our economy into a perpetual downward spiral. Item # 4 Sold AVY/ Really, isn't it obvious when you think about. How much of the economy is dependent on first putting excess weight on and then taking it off? Need HK say more on that subject. A Modest Proposal to the Democratic Party: Forget About the Surtax and Try a Tax on Fat/Charlie Rangel-A Pillar of Tax Morality? The More You Weigh-The More You Pay/ It is sometimes hard to follow the reasoning of the GL, but who could fault its logic? While many may have difficulty seeing the true purpose of the Body Mass Index, certainly all can see that the inventor of air conditioning, rather than W, was responsible for the Iraq Invasion.

The GL was looking about as nervous as anyone recalls seeing. Some even contend that the GL's hand trembled a bit when Al started to focus on the blinking green and red lights at the trading desk, and inquired whether he should buy just the ones blinking green. Fortunately, AL had to leave on urgent business before the start of the trading day, OG was returned as the HT, and some claim that they saw a glimmer of relief in the HK's face.

1. Bought 50 PVSW at $4.72-Lottery Ticket Category Yesterday (see disclaimer). Frequent readers of this blog know that the LB ventures far and wide in search of LTs. It is possible to buy just about anything since understanding the business is not a hard and fast requirement for LTs. LB will quote from Pervasive's last 10-Q filing to describe its business:

"Pervasive Software is a global software and services company focused on helping companies get the most out of their data investments through embeddable data management and agile integration software. Our embeddable Pervasive PSQL database engine allows organizations to successfully embrace new technologies while maintaining application compatibility and robust database reliability in a near-zero database administration environment. Our agile, multi-purpose Pervasive Data Integrator integration platform accelerates the sharing of information between multiple databases, applications, or hosted business systems and allows customers to re-use the same software for diverse integration scenarios" Form 10-Q

A more complete and harder to understand description can be found at Yahoo's Profile page. I always look at the Reuters.com "Key Developments" page for a synopsis of recent information that may be of importance.

Okay, that sounds interesting. LB has no idea what any of that really means, maybe it understands a little, even though it of course knows the meaning of every word in that quote. No matter, LB looked at other factors in selecting this company for OG to purchase yesterday morning, if the Old Goat agreed with LB's analysis which goes without saying, and that assumes that the OG can form an opinion in its usual morning haze before he has his intravenous shots of caffeine.

First, and this is important to the OG, Pervasive has 40.444 million in cash and marketable securities, no debt, and a total market cap of about 84 million at the $4.72 price. So almost 1/2 of the market cap is accounted for just by the cash. Second, this small software firm has remained profitable during the recession, earning 7 cents last quarter. The 1 analyst who follows the company, the lesser the better according to OG, has guessed at the FY 2010 earnings, ending 6/2010, at 30 cents with 47.54 million in revenues. PVSW: Analyst Estimates for Pervasive Software Inc The current price is near book value: PVSW So, that ends the analysis of Pervasive, LB has emptied its side of the brain on the page and summarized everything it knows about it.

Before turning again to the minutes summarizing yesterday's action here at HQ, LB would like to say a word. LB has better things to do than to research these LT purchases that the OG and his NO WIT ally RB are currently favoring. This is not the kind of activity that is a productive use of the LB's prodigious mental capabilities as a Stock Jock Extraordinaire. The heart and soul of this trading operation is LB, certainly all most recognize that fact, no that did not sound right. LB needs to start over. Strike "heart and soul" in the minutes and put " the REAL BRAIN, the only part of the Grey Matter than Amounts to Anything, the Stock Stud, the analytical Rule Making THINKING machine and Not A Wimp Too." LB is a wimp, a scaredy-cat too, worse even than a scaredy-cat, a girlie man, the RB muttered and that was proven back in early March for all to see. RB Touts His Horn as HQ Closes for the Evening Did Right Brain Call the Bottom?

LOTTERY TICKET PURCHASES: LINKS IN ONE POST

2. Refining Stocks: Both Valero (VLO) and Delek (DK) were recently added to the portfolio. Bought 50 VLO at 16.3 Bought 50 DK at 5.75 Refining is another topic where my knowledge is far from adequate to make any serious investment. In fact, the full extent of my knowledge was set forth in a earlier post discussing Valero from October of last year, when I successfully traded it for a profit before repurchasing shares again a few days ago. Refiners: ALJ and VLO I mention this since an article from Morningstar is a good introduction to investment considerations involving refining.

3. Alcoa (owned): Alcoa rose almost 10% yesteray, almost tripling RB's investment during its March frolic and detour, based on an upgrade by Morgan Stanley to overweight and the announcement of a partnership with a Saudi Arabian company to develop an aluminum industry for Saudi Arabia.

4. Bought 50 AMSWA at $6.02-LT Category (see Disclaimer): Before Headknocker allowed this order to be entered, a limit order to buy 50 at $6.02 when the ask was $6.04, you know, the OG was just saving another buck, HK instructed the LB to determine whether this was a rule violation, in that it would appear to have exceeded the $300 maximum by $2 excluding commission. LB thought to itself, Why did the Lord stick me with these nitwits and no wits. But, LB did not express that sentiment to HK, remembering the last time a minion peon expressed a similar sentiment to our Great Leader, who promptly threw the HT threw the window here, then blamed the OG for not being quick enough to open the window first. LB reported back that there was no rule violation since AMSWA was traded for over a $150 profit as a LT before starting this blog, and that sum of course can be used to increase the LT maximum without triggering a rule violation.

As you would expect, once the order was filled at the limit of $6.02, the Old Geezer put up his hands expecting a high five for his trading acumen, and once again the Old Goat would be disappointed that no one at HQ appreciated his efforts.

Although AMSWA has a generous dividend for a software company, around 6% at my cost, it is not earning enough to cover that dividend, in other words, the payout ratio is well over 100%. Eventually, something has to give, either a dividend cut or an improvement in earnings, and I am hoping for an improvement in earnings once corporations loosen their IT budgets.

I have said many times that I am not much of a tech investor. I have at best a minimal grasp of American Software's business described by it as follow:

"American Software was incorporated as a Georgia corporation in 1970. We develop market and support a portfolio of software and services that deliver enterprise management and collaborative supply chain solutions to the global marketplace. We have designed our software and services to bring business value to enterprises by supporting their operations over intranets, extranets, client/servers or the Internet. ....

We provide our software solutions through three major business segments, which are further broken down into a total of four major product and service groups. The three business segments are (1) Supply Chain Management (“SCM”), (2) Enterprise Resource Planning (“ERP”) and (3) Information Technology (“IT”) Consulting. The SCM segment consists of Logility, a wholly-owned subsidiary (as of July 9, 2009) that provides collaborative supply chain solutions to streamline and optimize the production, distribution and management of products between trading partners. The ERP segment consists of (i) American Software ERP, which provides purchasing and materials management, customer order processing, financial, e-commerce, Flow Manufacturing and traditional manufacturing solutions, and (ii) New Generation Computing (“NGC”), which provides industry-specific business software to both retailers and manufacturers in the apparel, sewn products and furniture industries. The IT Consulting segment consists of The Proven Method, an IT staffing and consulting services firm."

Pages 18-19 Form 10-Q A more detailed description can be found at Reuters profile page. The firm is profitable and has no debt. In its last press release announcing quarterly results, American Software claimed to have achieved 35 consecutive quarters of profitability: AMSWA had 41.533 million in cash and investments as of 10/31/2009.

This is a link to the Key Development page at Reuters.com. The next dividend of 9 cents per share goes ex next February.

5. Bought 50 ACTI at $2.2-Lottery Ticket Category (see disclaimer): OG vaguely recalls that this one was a previous LT, bought and sold before this blog was started last October, but he is not going to check it. It was recognized when the name pop on a screen, looking for LTs, with search criteria that included cash per share, debt and share price.

This is how Actividentity describes its business:

"ActivIdentity™ Corporation . . . is a global leader in strong authentication and credential management, providing solutions to confidently establish a person's identity when interacting digitally. For more than two decades, the Company's experience has been leveraged by security-minded organizations in large-scale deployments such as the U.S. Department of Defense, Cadence Design Systems, Nissan, and Saudi Aramco. The Company's customers have issued more than 100 million credentials, securing the holder's digital identity. Our strong authentication, credential management, security clients, and authentication devices are embraced by large organizations and governments to defend against security threats and identity fraud." (page 3: www.sec.gov). The

"ActivIdentity Security Clients protect against unauthorized access by providing easy-to-manage enterprise single sign-on capabilities, strong authentication, and an enforcement point for corporate security policy. Using the proven, market-leading ActivIdentity Security Clients, organizations not only can address regulatory requirements by replacing static passwords with two-factor authentication, but also eliminate the need for users to remember multiple static passwords.
Whether using ActivIdentity ActivClient™ to secure workstations with smart cards and smart USB tokens, ActivIdentity SecureLogin™ Single Sign-On to provide comprehensive enterprise single sign-on and password management capabilities, or ActivIdentity™ Authentication Client to offer additional authentication, user, and management services, ActivIdentity delivers a complete solution to meet the requirements of any organization.

ActivIdentity Authentication Devices provide organizations with a one-stop shop experience. ActivIdentity Authentication Devices range from Smart Cards, Smart Card Readers, Smart USB Tokens, OTP Tokens,DisplayCard Tokens, and Soft Tokens to Hardware Security Modules. ActivIdentity Authentication Devices provide the flexibility to deploy any combination of devices to best meet an organization's specific business needs, security requirements, and budget." (pages 23-24: www.sec.gov )

Cash and investments as of 9/30/09 was 92.222 million with no debt on the balance sheet (see p. 59: www.sec.gov) The market cap at a total cost of $2.24 is around . ACTI has not been profitable on a GAAP basis. Possibly, if the analysts are correct, a small profit may be realized for the FY ending 9/2010: ACTI: Analyst Estimates for ActivIdentity Corporation If the FY 2011 estimate of 19 cents is hit, then this one will start to look better then than now.

ACTI just agree to buy CoreStreet for 20 million mostly in cash. This is a link to the Key Developments page at

Reuters.com. I suspect that ACTI fell some yesterday in sympathy with Vasco Data.

6. Commodities and Diversification: This is a link to an article in MarketWatch that highlights that exposure to commodities did not serve to diversify risk over the past few years, since there has been a high positive correlation between stock and commodity prices. When stocks took off in March, so did commodity prices, and commodity prices tanked with stocks particularly during July 2008 to March 2009 period, as shown in this chart of GSG, an ETF for commodities which I have occasionally owned: ISHARES GSCI CMDTY ETF Financial planners can be simpletons at times. Asset allocation is not a static process, and its proper application requires a continuing analysis of many variables. Static v. Dynamic Asset Allocation

Correlations between asset classes can itself be volatile. Instability & Volatility in Asset Correlations In that post, I discussed when I would generally expect commodities to have positive and negative correlations to stocks. Sometimes there will be a strong negative correlation, and at others a weak or strong positive correlation. Those who posit a truism, that a particular asset will provide negative correlation under all circumstances, has not performed any analysis of historical patterns and is simply using a crutch, no doubt charging a lot of money for being wrong too.

I view this as an important paper written by William Coaker on the instability of asset correlations: http://spwfe.fpanet.org:10005/public/

I made the same point as made by the author of the Marketwatch article about the positive correlation of commodities and stocks in several earlier posts including this one from May: Item # 4 Bought MSPRA RJZ & ADX/ COMMODITIES AS AN ASSET CLASS

6. Volatility: The VXD, the volatility for the DJIA, continues to show the most stability, as previously predicted, and is showing good, continuous movement below 20, the important demarcation line in the VIX Asset Allocation model: Vix Asset Allocation Model Explained Simply With as Few Words as Possible The VXD crossed the 20 demarcation line on October 12, 2009 on a closing day basis, but has had some trouble staying under 20. VXD Index Charts I would regard the movement slightly over 20 and then below 20 to be normal given the prior heightened stages of volatility, and the residual effects of nervousness suffered by investors as a result of the the Near Depression. As with the volatility spikes after the 1987 crash, and the Nasdaq crash of 2000-2002, it takes at least a year for the human psyche to recover from the trauma. More on the Vix Model: What it Does not Predict is as Important as What it Does/Parallels to VXO 1987-1988 The Nasdaq volatility index is the VXN and I discuss its recovery period in this post: Parallels Between VXN 2001-2002 and VIX 9/08 to__ ?/Commodity ETFs

The VIX is moving toward stability, but has not yet crossed the 20 demarcation line. It closed yesterday at 20.49. VIX Index Charts - I have mentioned in several prior posts that I view this move toward stability as a positive. But the pattern is also consistent with the Phase I Unstable Vix Pattern, similar to what was experienced in the early stages of a bear market, when the VIX would move in a whipsaw pattern from 20 to 30 and back, with some temporary spurts above 30 and below 20. The difference now is that the pattern has formed not at the beginning of a bear market but at what will hopefully be its end.

I would have no objection to using the VXD for the VIX in the model. The stable VIX Pattern, defined to mean a probable bull market lasting for three or more years, is formed by continuous movement in the VIX below 20 for 3 months. We have yet to have a single day of that movement since August of last year when the market was clearly in a bear VIX pattern. At least, I can start the count already for VXD, starting after the recent disruption on December 10th when the VXD closed at 19.47. Subsequent closes have been: 18.70; 18.23; 18.8; 18.35; 19.77; 19.44; & 18.73. A close below 15 in the VXD would also be bullish in the model.

The model is best using as a guideline for asset allocation when a long stable pattern is disrupted by what I call a Trigger Event. These trigger events occurred in several stages for the last bear market with the first one occurring in August 2007: VIX Chart from 2007: Alerts and Triggers Major Disruption of Cyclical Stable Bull VIX Pattern (see also: VIX and S & P Compared 1990 to 1997 Multiple Confirmations of VIX Model-Canary in a Coal Mine ) Before the Trigger Event, there will be Alerts that would require an immediate assessment of the conditions causing the alert, and their likely or possible impact on asset allocation.