The Rhodes Report

5/3/2008:  It is rather clear there are ongoing “rolling corrections” beneath the surface in today’s markets. In terms of performance, whether one is bullish or bearish on the broader market hasn’t made as much of a difference as we would have thought. But understanding where the ‘funds’ currently stand and where they are likely to ‘move’ makes a great deal of sense in terms of trading allocation.

To that end, we want to look at the “long in the tooth” and very profitable pairs trade of Long Energy/Short Financials. In recent weeks, we have begun to see a topping process take place in spread as the 14-week stochastic and 12-week rate-of-change are trading at near overbought levels and more importantly – showing signs of negative divergences – indicating a loss of momentum. Hence, we would posit that this mean reversion trend towards lower prices have quite a bit of downside left in front of it. At a minimum, we expect a test of the 40-week moving average – and at most a test of the 200-week moving average. Or, we can target the 50%-62% retracement box in between. In any case – there remains substantial downside remaining. In our portfolio – we currently have the trade currently on; and are looking to add more.

Good luck and good trading, Richard Rhodes

2007 Performance

Global ETF Long/Short: +27.13% (YTD 2008: +8.73)

PTP Long Only: +36.3% (YTD 2008: +2.43%)

PTP Long/Short: +20.84% (YTD 2008: +12.69%)

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About The Rhodes Report: Richard Rhodes is Editor/Publisher of The Rhodes Report - a daily report. His private trading experience spans the course of 20-plus years - including stock, options and futures trading. Moreover, he believes simple trading methods work best, and thus seeks to impart this into recommendations.

Mr. Rhodes is widely quoted in the financial press, media, and other newsletters and is a two-time winner of MSN MoneyCentral's Strategy Lab competition.

Subscription Information: Subscription rate: $159/6-months; or $279/annually.

This newsletter is a fundamental and technical publication; whose focus is to capitalize on the larger tidal changes developing in the world capital markets by providing specific ETF and individual stock recommendations.

For more information, please visit http://www.rhodes-capital.com/

About The Rhodes Capital:  Richard Rhodes is Editor/Publisher of The Rhodes Report - a daily report. His private trading experience spans the course of 24-years - including stock, options and futures trading. Moreover, he believes simple trading methods work best, and thus seeks to impart this into recommendations.

Mr. Rhodes is widely quoted in the financial press, media, and other newsletters and is a two-time winner of MSN MoneyCentral's Strategy Lab competition.

Subscription Information:   Subscription rate: $279/annually; $159/6-months

This newsletter is a fundamental and technical publication; whose focus is to capitalize on the larger tidal changes developing in the world capital markets by providing specific ETF and stock recommendations.

For more information, please visit http://www.Rhodes-Capital.com/