Table of Contents

1.  Market Outlook
2.  Three Crucial Sectors
3.  Global High Income Fund (GHI)
4.  Additional Investing Ideas
5.  Investor Trivia -- +180% Returns
6.  Featured Topic -- Preferred Stocks
7.  Free Investing Resources

Today's Top Stock Picks

Three Crucial Sectors... and Three Ways to Profit from Them
ETFs are one of the fastest-growing investment instruments available. But few people realize how useful they can be in analyzing sector health. Read More. . .

This Non-Leveraged Fund Offers Up a Juicy 13.9% Yield
Global High Income (GHI) is an extremely high-yielding fund that uses no leverage, meaning it provides a high return for less risk. Read More. . .

Market Outlook

In what was a fairly uneventful week for the market, the Dow Jones surrendered nearly 130 points during the first two days of trading before regaining those same 130 points the following two, leaving last Friday as the tiebreaker. Fortunately, stocks turned higher heading into the weekend -- giving the Dow a modest two-week winning streak.

Unlike previous market-jarring reports from companies like General Electric (NYSE: GE) and Google (Nasdaq: GOOG), reaction to the latest batch of earnings has been somewhat muted. For the most part, first-quarter profits are still coming in mixed, but generally skewed to the upside. Of course, it's not the actual numbers that traders are keying on, but what companies are forecasting for the remainder of the year.

Economic news has also been making more noise of late -- particularly crude oil prices peaking near $120 per barrel and fanning the inflation flames. Investors have also fretted over yet another decline in factory orders for big-ticket goods like home appliances. Demand for durable goods has now waned for three consecutive months, the longest downturn since the recession of 2001.

Yet, despite abysmal new home sales, a geopolitical flare-up in the Persian Gulf, and tumbling consumer confidence readings, the major averages all gained ground on last Friday to finish the week in the green.

As earnings reports continue to flood in, the prevailing opinion seems to be one of relief. In fact, many now believe that the Fed's rate-cutting campaign may be coming to an end, and that talk has fueled a sudden strengthening of the dollar -- which had recently fallen to a new record low against the euro. That rebound, in turn, will have ramifications on the prices of oil, gold and other commodities.

Speaking of which, is gold headed lower or higher from here? Jim Stanton, editor of the Xcelerated Profits Report, has been carefully scrutinizing the charts of ETFs like streetTRACKS Gold Shares (NYSE: GLD) for clues. As you'll read below, the recent correction may not have completely played out just yet, but some funds are nearing a level where buyers might want to begin stepping in.

Also in today's newsletter, High-Yield Investing editor Carla Pasternak explains why income-seeking investors may want to look outside our borders. The Global High Income Fund (NYSE: GHI, $14.88) -- which invests in a broad basket of emerging-market government debt -- not only dishes out a yield of 13.9%, but has also consistently rewarded investors with double-digit total returns for over a decade.

Good Investing!

-- Nathan Slaughter
Co-Editor
TopStockAnalysts Digest

One of the best ways to analyze market sectors is to look at the exchange-traded funds (ETFs) that represent them.

ETFs are one of the fastest-growing investment instruments. Over the past couple of years, hundreds have hit the market, giving investors a simple way to diversify their portfolios and increase their exposure to different sectors and markets. Here are a few other benefits:

An Entire Market In One Trade: ETFs consist of a group of different assets in one security. ETFs reflect the performance of the underlying sector/market that they represent. So instead of researching different stocks, you can benefit from an entire sector/market in just one investment. For example, you can play the gold or oil market through one of several ETFs. And if gold/oil prices go up, so will your ETF. If the British pound moves higher, so does the ETF linked to it. You can also buy ETFs to capture downside action, plus ones that double the move of the underlying market.

Major Diversity And Portfolio Protection: ETFs cover geographic regions, countries, indexes, sectors, commodities, and currencies. By investing in an ETF that represents an entire market and includes many different assets, you spread your risk and protect your portfolio, while also benefiting from the upside growth possibilities of many stocks.

Easy To Execute Trades At Any Time: ETFs trade on the major stock exchanges like regular stocks, and you can buy them through any brokerage account any time you like. In this regard, they're more flexible than mutual funds, which you can only buy at the closing price each day and which typically require a minimum holding period.

Lower Cost: ETFs are also cheaper than mutual funds. While mutual funds require a minimum investment, you can invest as much money as you want in ETFs. In addition, their maintenance fees are much lower than mutual funds.

Knowledge Of Holdings: You can easily see the top holdings of any ETF. For example, the Energy Select Sector SPDR (AMEX: XLE) consists of the world's biggest oil stocks like ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX) and ConocoPhillips (NYSE: COP). Many ETFs will also inform you of any changes to the holdings.

Simply put, no matter what kind of investor you are and what your style is, ETFs are a diverse, flexible, and safe way to invest. So let's get to some analysis -- and give you three ways to profit...

Want To Gauge The Chances Of A Recession? Keep An Eye On This Crucial Sector
Recession. The financial pundits can't talk about it enough at the moment. Is the U.S. economy in a recession or not? If so, how bad is it? How bad could it become? When will it end?

The technical definition of a recession is two or more successive quarters of negative GDP growth, and the housing market correction (which began in 2007) and the subprime mortgage crisis that triggered a wider financial sector meltdown have greatly enhanced the chances of a recession.

In fact, some economists believe the economy is already in recession. These factors certainly had an effect during the fourth quarter when GDP growth hit just +0.6%. The initial first-quarter GDP growth estimate is due out on April 30th, and this should provide more clues. But for a better idea, just take a look at this sector...

The last recession occurred because of the "Dot Com" collapse, the September 11th attacks, and corporate accounting scandals. But surprisingly, these events contributed to a relatively mild contraction. The one factor that prevented a much worse recession was the continued spending of American consumers, despite the stock market woes.

This time though, things are different. The Consumer Confidence Index fell another 12 points in March and is now at its lowest level since 2003. Worse still, the Expectation Index (the forward-looking part of the index), which makes up 60% of the Consumer Confidence Index, is at a 35-year low. This is largely due to the housing market deflation and because many American homeowners have a good portion of their net worth tied up in their homes.

The truth is, consumer discretionary spending has slowed. You can see this reflected in the weekly chart of the Consumer Discretionary SPDR (AMEX: XLY).

The stock has endured a steady fall since last summer, and since trading as low as $28 in January, it has consolidated below its 200-week moving average.

The key number here is $34, as that's where both the 200-week moving average and downtrend line meet. As time goes by, this trendline and the 200-week moving average will move lower, regardless of what type of slowdown we're facing.

Downside Scenario: If the U.S. is headed for a full recession, XLY will probably trade below $28.

Upside Scenario: A weekly close back above these two indicators will tell us that consumers have regained their resiliency, and the worst is probably behind us.

The Sector That Started The Mess Is Now A Whisker From Critical Resistance
Since the massive financial sector was one of the catalysts for the market correction, let's check out the ETF that represents the sector -- the Financial Select Sector SPDR (AMEX: XLF).

Having hit a high of $38.15 in May 2007, XLF has traded steadily lower, culminating in price action below $22.50 on March 17th -- the day the Federal Reserve and JP Morgan (NYSE: JPM) bailed out Bear Stearns (NYSE: BSC). Since then, however, it's traded above that level and is closing in on a critical resistance level around $27.40.

The highest the stock has come to that level since reaching its March lows is $27.37 on March 24th. But the more bullish action hasn't yet been enough for it to break out of its downtrend regression channel, drawn off the May 2007 highs. But it's close! With the upper channel at $27.40, a weekly close above that level should be bullish.

So how about one of the market's other mega movers?

The Commodities Correction Means An Opportunity In The Metal Market
The U.S. dollar remains mired in a morass of negativity. However, although it's still trading relatively close to its lows, it may catch a break because a number of commodities have corrected. That includes the precious metals, so let's take a look at the ETF that tracks the price performance of gold -- streetTRACKS Gold Shares (NYSE: GLD).

As XLF made its lows on March 17th, GLD set an all-time high above $100. This isn't surprising, given that gold is a great hedge against economic turmoil. But as gold has since lost some of its shine, GLD traded below $87 in April. Yes, it's rebounded a bit since then, but the correction may have further to go. Take a look at the weekly chart of GLD:

GLD has spent the last couple of weeks in consolidating, but is currently trading below its 50-day moving average. This means there may still be some downside left.

Having hit an April low of $86.05, my analysis suggests that a move below this level should see GLD decline to at least the $83.20 area. This area also represents a 38% Fibonacci retracement off the June 2006 lows.

Bottom line: If the U.S. Dollar continues to struggle, or if traders decide to liquidate their gold positions for other reasons, the $83 area would be a good level to start accumulating GLD shares.

The Longer-Term Outlook
Longer-term, critical support for GLD comes in around the $73 level. As you can see on the chart, this area not only represents the long-term uptrend line, but also the May 2006 high (this was previous resistance that has turned into support).

There are a number of reasons that could cause GLD to drop to this $73 area. Among them: Some kind of event that leads to a mass sell-off in the gold market... strength from the U.S. dollar... or just a normal correction. But if that occurs, it would offer a great buying opportunity.

Thanks for joining me.

Jim Stanton

* * * * * * *

With more than 30 years experience as a stockbroker, bondbroker, commodities trader and hedge-fund consultant, Jim Stanton has seen most of what the stock market can throw at investors -- and knows how to avoid the landmines. His impressive range of technical analysis and quantitative systems have generated outstanding profits for individual investors, private clients, and hedge funds alike. Today, he writes for the Xcelerated Profits Report investment newsletter, free Smart Profits Report e-letter, and runs his own ESP Profit System trading service -- using his cutting-edge, computerized trading platform.

If you'd like to read more columns like this from Jim, plus receive market analysis, investment insights, and get the best ways to profit from today's hottest trends, simply sign up for the free Smart Profits Report.

Our team of professional traders (with 82 years of combined market expertise) will show you how to invest like the Wall Street pros, so you can beat the investment crowd. They'll guide you through the market's minefields and show you how to use sophisticated, yet easy-to-execute investment strategies, so you'll be able to grow your wealth faster than 99% of "ordinary" investors. It's knowledge that only comes from years "in the trenches." Separate yourself from the masses with this powerful resource.

The Global High Income Fund (NYSE: GHI, $14.88) is one of the highest-yielding closed-end funds that doesn't use leverage to lift returns. In other words, the fund does not borrow or issue preferred shares to create extra money to invest, giving it an important element of safety in volatile markets.

This emerging-market income fund keeps at least 80% of its assets in debt securities. The fund invests largely in the bonds of foreign governments, which make up approximately 66% of its portfolio. Its largest position, comprising nearly 6% of assets, is in Argentinean bonds maturing in August 2012 -- and in total, nearly 14% of the fund's assets are presently parked in Argentina. Other government bonds in which the fund has important positions include those issued by Turkey, Russia, Brazil, the Dominican Republic, and Serbia.

The average credit quality of GHI's bond portfolio is just below investment grade ("BB"). Nearly a quarter of the portfolio is in investment-grade bonds, including about 10% in safe "AAA" and "A"-rated bonds. The bonds have an intermediate average duration of less than six years, making them relatively stable in the face of changing interest rates.

Emerging-market debt usually trades at a premium compared to the debt of more established markets. That enables the fund to pass on the higher yields to shareholders without resorting to leverage or returns of capital.

In the past 12 months, the fund distributed $1.341 in regular monthly payouts and another $0.7269 in year-end capital gains, for a total annual payout of $2.07 per share. That gives GHI a historical yield of a tempting 13.9%.

GHI's stated policy is to make monthly distributions of 9% of the fund's net asset value on an annualized basis. In this regard, it is important to note that NAV dropped slightly year-over-year, from $15.03 at the end of January 2007 to $14.41 in the same month of 2008. Correspondingly, the monthly per share payout dropped from the mid-$0.11 range in early 2007 to about $0.108 currently.

The fund's regular monthly distributions have consisted entirely of investment income or long-term capital gains. Unlike most funds with a fixed distribution policy, GHI's payments are not supplemented by a return of capital that simply pays you back your original investment by digging into the fund's capital base. In fiscal 2007, for example, 60% of the distribution was comprised of investment income, and the balance came from capital gains. Since most of the distribution is taxed as ordinary income, the fund is best held in a tax-advantaged account.

GHI has traditionally provided investors with double-digit yearly returns. For example, over the past decade it has returned an average of +13.4% annually. These returns are slightly dampened by a management fee of 1.32%.

Investors should note that many of the countries GHI invests in are commodity exporters, so their fortunes are tied to commodity prices. While this is an important risk factor, commodity prices have so far held up well in the face of a U.S. economic slowdown.

GHI is suitable for risk-tolerant investors who seek a high current income not generated by leverage or supplemented by returns of capital.