Last week marked an important inflection point for the financials (Maybe oil too). There will be many bumps on the road to recovery, even a few more scary moments. But, starting now, and over the next few years, the healing process will finally begin.

There are many reasons for the rally in the financials. First, the Securities and Exchange Commission (SEC) declared war on some big security firms and the hedge fund industry by limiting “naked” short selling of select financials. Secondly, the SEC announced plans to investigate individuals who may be spreading rumors to manipulate stock prices. Thirdly, a government rescue of Fannie, Freddie, and millions of sub par mortgages. And finally, Wells Fargo announced better-than-expected earnings, hiked their dividend by 10%, and Bank of America maintained their dividend and is buying back $3.75 billion in stock.

Last week, the economy began to receive some good news from falling oil prices, but the stock market still does not believe the sell-off is for real. If the oil bubble truly broke its uptrend, and continues to aggressively adjust the prices consumers are paying at the pump, then hold on to your seat belts for a dramatic blast-off in the stock market.

Oil demand in China is slowing as the Chinese government prepares for the 2008 Olympics in Beijing, the provinces surrounding the city were ordered to cut the smog caused by industrial pollution by 70%. They are taking drastic steps to get the problem under control by ordering 40 factories to shut down from July 25 to Sept. 20.

In addition, the government in Beijing took 300,000 high-emission cars off its roads on July 1, banning them until Sept 20. On July 20th, private cars can only be driven on alternate days according to odd or even license plate numbers. The Chinese government hopes to take 45 percent of the city's 3.29 million cars off the roads to cure the pollution problem.

When you couple China's drop in oil demand with the demand destruction that has taken place here in the U.S., oil prices can drop pretty dramatically over the next 7-8 weeks.

Dynamic Growth: ETF Portfolio

NEW BUYS:

None

NEW SELLS:

None

Here are our Top 10 ETF's for the week of July 28th:

1) DBA: Powershares DB Agriculture Fund- .359
2) EWZ: Brazil Index- .338
3) SLX: Market Vectors Steel Index Fund- .335
4) FXF: Currency Shares Swiss Franc Trust- .342
5) EEB: Claymore ETF BNY BRIC- .289
6) DDM: Ultra Dow 30 Proshares ETF- Not Rated
7) DUG: Ultrashort Oil & Gas Proshares- Not Rated
8) PGJ: PS Golden Dragon China Fund- .112
9) KBE: KBW Bank ETF- Not Rated
10) IYF: iShares Dow Jones US Financial Sector- Not Rated

Here are our Top 10 Fidelity Sector Funds for August 2008

1) FSCHX: Chemicals
2) FSMEX: Medical Equipment
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FWRLX- Wireless
9) FSRBX: Banking
10) FSVLX: Home Finance

NEW BUYS:

None

NEW SELLS:

None

Honorable Mention (Holds):

None

For the Week:

-Gold closed at $936.90/oz -21.10 for the week. Last week gold closed at $958.00, and was trading at $960.60 two weeks ago.

-The Commodities CRB Index closed at 412.22, down from 427.17 last week, and down from 461.43 two weeks ago.

-Crude Oil closed at $123.26/bbl down from $129.47 last week, and down from $145.66 two weeks ago..

We need to see $75-$85/ barrel oil in the weeks ahead to get the economy back on track. Oil has remained above $100 for eighteen consecutive weeks.

-The U.S. Dollar closed at 72.85 up from 72.21 last week, and up from 71.94 two weeks ago.

Some believe the rate cuts have come to an end, and the dollar is attempting to rally. A strong rally in the dollar will help drive energy prices lower.

We raised our allocations last week by 5% across the board when the DJIA dropped below our 11,300 target. Going forward, the next 5% increase will come at DJIA 10,600 for Aggressive, and Moderately Aggressive portfolios, but Moderate, Moderately Conservative, and Conservative investors are not advised to get fully invested unless the DJIA breaks below the 10,000 mark.

Our current asset allocation is as follows;

75% Equities: (Normally 95%) Aggressive
65% Equities: (Normally 80%) Moderately Aggressive
55% Equities: (Normally 60%) Moderate
35% Equities: (Normally 40%) Moderately Conservative
15% Equities: (Normally 20%) Conservative