Welcome to the April 15, 2009 issue

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Stocks acted better today after yesterday brought an end to a 3-day advance. An unexpected decline in retails sales was the main culprit on Tuesday, serving as a reminder of the rocky economic road we face. But good news on housing and prices helped lead the market to a positive session today.

With the huge numbers posted in the 1-Month Total Return column for the Domestic and International Stock Funds (many of them in the mid-40-percent range), it is difficult to give sensible short-term advice for the funds. This week we’ve shown patience and decided to wait a bit on some of the changes that would normally be indicated by our system. We will be re-evaluating this situation over the next few days and will update you in next week’s Hotline.

We continue to be cautiously optimistic about the next six months, with some stress on caution.

There is no change in our recommended allocations.

New Fund Ratings – For domestic stock funds, three funds are now rated Buy: Fidelity OTC Portfolio, Buffalo Mid Cap, and Vanguard Capital Opportunity (which is closed). Five funds are now rated Hold: Vanguard PRIMECAP Core, T. Rowe Price Capital Appreciation, Sequoia Fund, Needham Small Cap Growth, and Oakmark Equity & Income. Two funds are now rated Sell: Vanguard Dividend Appreciation Index, and Vanguard Dividend Appreciation Index ETF. For international stock funds, PowerShares Golden Dragon USX is now rated Buy. IShares S&P/TOPIX 150 is now rated Sell. There are no other changes.

Vanguard Dividend Appreciation is in the Vanguard Moderate and Vanguard Venturesome model portfolios. We will switch the fund into Vanguard Capital Value (ticker: VCVLX).

The Stock Market – Although the disappointing retail sales numbers has put a damper on the “deceleration thesis,” there is some well-received economic news today. The National Association of Home Builders reported the biggest gain in confidence among homebuilders in five years for April, with the index increasing five points to 14. That is the highest level since October 2008. In addition, consumer prices don’t appear to be a threat based on the latest report coming out of the Bureau of Labor Statistics.

The Bond Market –

The Select Portfolio – There is one trade indicated for this portfolio: Sell Rydex Inverse S&P 500 (RYURX) and Buy Fidelity Select Telecommunications (FSTCX).

The next Hotline is scheduled for Wednesday, April 22 at 7pm ET.