EquityLetter.com

equityletter.com 02/15/10

2010-02-14T15:33:00.001-08:00

Thank you in advance for all comments and criticisms.....regards, equityletter.com

02/15/10

Note: Event Calendar is located at bottom of page

I. General Commentary

There is no market commentary this week.

The major market averages under our coverage that we currently rate with positive weekly technical indications are the U.S. $ Index (UUP-23.63) and the I-share 7-10 year Treasury bond (IEF-90.12). We currently have negative views on SPDR- S&P 500 (SPY-108.04), Diamonds Trust (DIA-100.16), NASDAQ Composite (COMP-2183.53), IShares Russell 2000 Index Fund (IWM-61.02) and the Powershares QQQQ Trust (QQQQ-43.76) *Take note that there are no changes from the previous letter.*

Sector analysis below will provide information as to where to best allocate funds at this time.

For access to Equity Letter individual trading positions and ideas contact Richard Reilly at rreilly123-2@comcast.net

Please frequent http://www.equityletter.com/

II. Sector Analysis

The IEF-90.12 (I-share 7-10 year Treasury bond) declined 0.79% for the week as the yield on the 10- year treasury increased from 3.55% to 3.69%. For comparative reference the yield on the 10-year Treasury began the 2010 trading year at 3.84%. The IEF is entering week five of a “buy” signal. The weekly closing price support level in order to maintain our current “buy” signal shall remain at 90.09. Any weekly closing price below 90.09 will negate our current “buy” signal for the IEF. The IEF has well defined over head price resistance residing at the 91.00 area. The weekly price support level appears around the 89.00-89.30 area. With a “buy” signal currently in place we would continue to accumulate upon weakness but would also trim back long positions at the above mentioned 91.00 area.

A. Financials

The Financial Select Sector Index (XLF-13.95) finished the trading week 0.07% advance. The 2010 trading year return of the XLF is a negative 3.12%. The XLF is entering week four of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall remain at 14.57. Any weekly closing price above 14.57 will negate our current “sell” signal for the XLF. A fresh “sell” signal has been generated in U.S. Bancorp (USB-23.26). A weekly “buy” signal remains current for XLF component Wells Fargo (WFC-26.88). Weekly “sell” signals continue to exist for XLF components Citigroup (C- 3.18), Morgan Stanley (MS-27.16) Goldman Sachs (GS-153.93), American Express (AXP-38.42), Bank of New York (BK-27.05), Bank of America (BAC-14.45), J.P. Morgan (JPM-38.95), Chicago Mercantile Exchange (CME-291.07) and MetLife (MET-34.64). The XLF squeaked out a gain for the week but the relative under performance versus the major market indices stands out as noteworthy. Any weekly closing price below 13.78 will indicate further weakness down to the 11.00 price support area. Continue to use any extended upside strength in the XLF or above negatively mentioned components to reduce long exposure and or to initiate short trades.

B. Builders

The Homebuilder exchange traded fund (XHB-15.88) advanced 5.73% for the week. The 2010 year-to-date performance of the XHB currently rests at a positive 5.09%. The XHB is entering week nine of a “buy” signal. Our weekly closing price support level in order to maintain our current “buy” signal for XHB shall be raised to 14.99. Any weekly closing price below the 14.99 support level will negate our current “buy” signal in the XHB. Weekly “buy” signals have been generated for XHB components Toll Brothers (TOL-19.87), Pulte Homes (PHM-11.74), Lennar (LEN-16.96), and KB Home (KBH-16.62). Weekly “buy” signals remain in place for XHB components D R Horton (DHI-12.67) and Ryland Group (RYL-22.17). Week nine of a “buy” signal; we remain skeptical as to the fundamentals for the building sector we do not want to fight a favorable technical picture. We shall remain neutral at this time.

B. Semiconductor

The Semiconductor group (SMH-26.06) advanced 3.89% for the week. The current SMH performance for the 2010 trading year is a negative 6.59%. The SMH is entering week five of a “sell” signal. Our weekly price resistance level in order to maintain our current “sell” signal shall remain at 26.28. Any weekly closing price above 26.28 will negate our current “sell” signal for the SMH. Fresh weekly “buy” signals have been generated in SMH components Intel (INTC-20.43) and Texas Instruments (TXN-24.03). Weekly “sell” signals continue to exist for, Analog Devices (ADI-27.99), Micron Technology (MU-8.44), SanDisk (SNDK-26.98), Applied Materials (AMAT-12.47) and Novellus (NVLS-22.47). Take note that AMAT and ADI are scheduled to report quarterly earnings in the coming week. Internal component strength from influential SMH components INTC and TXN gives cause for notice that the early year retreat of the SMH may be close to drawing to a conclusion. We shall watch the SMH 24.80 price support level intently for further evidence of a possible change of weekly trend.

D. Retailers

The Retail sector (RTH-91.54) finished the trading week with a 1.13% advance. The current 2010 return of the RTH stands at a negative 2.45%. The RTH is entering week nine of a “sell” signal. Our weekly closing price resistance level for the RTH in order to maintain the current “sell” signal shall be lowered to 93.23. Any weekly closing price above 93.23 will negate our current “sell” signal for the RTH. A fresh weekly “buy” signal has been triggered in Home Depot (HD-29.00). Weekly “sell” signals continue to remain in place for RTH components Walgreen’s (WAG-33.49), Sears Holding’s (SHLD-90.47), Target (TGT-48.64), Kohl’s (KSS-49.83), WalMart (WMT-52.90) and BestBuy (BBY-35.76). Take note that WMT is scheduled to report quarterly earnings in the coming week. Week nine of a sell signal; continue to use extended price strength in the RTH and above negatively mentioned names to reduce long exposure and or to initiate short trades.

E. Steels

The Steel sector (SLX-57.31) finished the week with a 5.41% advance. The current 2010 trading year return for the SLX measures in at a negative 6.84%. The SLX is in the fourth week of a “sell” signal. Our weekly closing price resistance level for the SLX shall remain at 59.00. Any weekly closing price above 59.00 will negate our current “sell” signal for the SLX. Weekly “sell” signals remain in place for SLX components U.S. Steel (X-47.98), Arcelor Mittal (MT-37.43), and Nucor (NUE-41.13). Steel Dynamics (STLD- 15.96) is in the fiftth week of a “sell” signal. We shall remain neutral at this time as we see near term price support for the SLX at the 51.00 area. Any failure for the SLX to hold above said price support will be a prelude to a much deeper slide.

F. Pharmaceuticals and Healthcare

The Pharmaceutical group (PPH-64.80) increased by 0.60% last week. The PPH 2010 trading year return stands at a negative 1.81%. The PPH is entering week four of a “sell” signal. Our weekly price resistance level in order to maintain the current weekly “sell” signal shall remain at 67.34. Any weekly closing price above 67.34 will negate our current “sell” signal for the PPH. PPH components Merck (MRK-36.92), Pfizer (PFE-17.80), Johnson & Johnson (JNJ-62.72), Abbott Lab’s (ABT-53.93), Eli Lilly (LLY-33.95) and GlaxoSmithKline (GSK-38.75) all continue to remain on our “sell” list at this time. Take note that MRK is scheduled to report quarterly earnings in the coming week. Week four of correction mode, we shall maintain our neutral stance at this time.

III. Gold

GLD (streetTracks gold index) – The GLD (107.04) advanced 2.25% on the week. The GLD current return for the 2010 trading year is a negative 0.25%. The GLD is entering week four of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall remain at 108.80. Any weekly closing price above 108.80 will negate our current “sell” signal for the GLD. It was an up week for the GLD this past week as it continues to hold above the rising weekly trend line support around that is now up to the 104.00 price level. Any downside penetration of the 104.00 price support level on a weekly closing price basis will foreshadow further downside to the 96.00 area of strong support. We shall maintain our neutral stance for the GLD at this time as the longer term bull trend remains intact despite the current corrective near term phase.

IV. Energy- (Oil, Oil Service, Nat’l Gas, Coal)

The Large-Cap Integrated Oil space (XOI-1014.02) closed out the trading week with a 1.58% advance. The current XOI 2010 trading year return is a negative 5.07%. The XOI is entering the fourth week of unfavorable technical conditions. Our weekly price resistance level in order to maintain our current “sell” signal shall remain at 1056.72. Any weekly closing price above 1056.72 will negate our current “sell” signal for the XOI. At this time weekly “sell” signals shall remain in place for XOI components Chevron-Texaco (CVX-71.01), Conoco-Phillips (COP-48.67), British Petroleum (BP-54.67), Suncor Energy (SU-29.20) and Exxon-Mobil (XOM-64.80). The price rebound of the XOI this past week was not very impressive. We shall maintain our “sell” for the XOI at this time with the first downside target being the 910.00 level.

The Oil Service Index (OIH-119.23) advanced 2.95% this past trading week. The 2010 year to date return for the OIH stands at a positive 0.88%. The OIH is in week four of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall remain at 124.71. Any weekly closing price above 124.71 will negate our current “sell” signal for the OIH. Weekly “sell” signals remain present across the board for OIH components Halliburton (HAL-30.02), Schlumberger (SLB-64.30), Baker Hughes (BHI-46.50), Ensco (ESV-40.48) and Transocean (RIG-83.38). The appreciation in the OIH last week was not enough to warrant a change in opinion. It is week four of a “sell” signal; we continue to view the 111.50 price support level as a must-hold price floor for the OIH. Any failure for the OIH to maintain said price support would foreshadow a swift downward move to the 90.00 area. We should note that last week’s price strength in the OIH failed to generate any internal component “buy” signals. We shall keep our “neutral” rating at this time.

Natural Gas (UNG-9.86) declined 1.40% this past week. The UNG current 2010 trading year return is a negative 2.18%. The UNG is entering week three of a “sell” signal. Our weekly price resistance level in order to maintain our current “sell” signal shall remain at 10.48. Any weekly closing price above 10.48 will negate our fresh “sell” signal for the UNG. We shall maintain our “sell” rating for the UNG at this time as distribution remains the dominant technical theme.

The Coal Sector (KOL-33.84) advanced by 6.31% this past week. The KOL 2010 trading year performance stands at a negative 6.31%. The KOL is entering the fourth week of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall remain at the 34.87 price level. Any weekly closing price above 34.87 will negate our current “sell” signal for the KOL. We shall remain “neutral” at this time and shall continue to monitor the 29.50 support level for possible long entry.

V. Dow 30 Analysis

Our Weekly Trend Indicator (WTI) measures in at -18, a slight increase from the previous week reading of -24. Currently 20.0% of the thirty Dow Jones Industrial components have favorable weekly chart technical indications; this is an increase from 10.0% in the prior week. The Dow Jones Industrial average advanced 0.87% for the week to 10099.14. The return for the 2010 trading year stands at a negative 3.15%.

The S&P 500, as measured by the SPY (108.04), advanced 1.29% for the week. The current 2010 trading year return for the SPY is a negative 3.05%. Small caps issues, as measured by the IWM (IShares Russell 2000 Index Fund- 61.02), advanced 2.95% for the week. The IWM current 2010 trading year return is a negative 2.27%.

The DIA (101.27) closed out the week with a 1.11% advance and is entering week four of a “sell” signal. Our weekly closing price resistance level in order to maintain the current “sell” signal shall remain at 103.06. Any weekly closing price above 103.06 will negate our current “sell” signal for the DIA. We view the strength last week in the DIA as nothing more than a short term over-sold relief rally within a market that is clearly in “correction” mode. We would use any further price appreciation that approaches the above mentioned 103.00 price resistance area to reduce long exposure or to initiate short trades.

Fresh weekly buy signals generated: HD, INTC, KFT

Fresh negative weekly signals generated:

Readers should take note that Dow Jones Industrial components HPQ, KFT, MRK and WMT are scheduled to report quarterly earnings in the coming week.

Dow 30 stocks with positive weekly signals:

BA, CSCO, HD, INTC, KFT, TRV

Dow 30 stocks with negative weekly signals:

AA, AXP, BAC, CAT, CVX, DD, DIS, GE, HPQ, IBM, JNJ, JPM, KO, MCD, MMM, MRK, MSFT, PFE, PG, T, UTX, VZ, WMT, XOM

· Underlined names have changed from previous week*

VI. KEY EVENTS IN THE WEEK AHEAD:

Monday, February 15

Economic

Earnings

Before:

After:

Events

Equity & Bond Markets closed for Presidents Day

Tuesday, February 16

Economic

08:30 Empire Manufacturing (Feb.): 18.00 cons.

09:00 Net Long Term TIC Flows (Dec.): $50.0B cons.

Earnings

Before: ANF, AEIS, AGAM, CPLA, CBZZ, CF, CRIC, DGIT, DHT, DW, FOSL, GPC, GTXI, KFT, MRK, TNDM, PTC, PDC, Q, SRI, TEVA, UTHR, VAL

After: AAN, ACC, AMMD, CPC, CRAY, FTI, GIVN, GLBC, HWAY, INWK, JAH, LZB, XPRT, MASI, MIG, MRH, NBR, NFX, PACR, RAX, RGC, RRR, SGK, SDXC, VCLK, WTS, WFMI, WINN

Events

LF Analyst Day
FED: Fed's Lockhart
$25 bln 3-month and $28 bln 6-month Treasury Bill Auctions

Wednesday, February 17

Economic

08:30 Housing Starts (Jan.): 580K cons.

08:30 Building Permits (Jan.): 615K cons.

08:30 Export Prices Ex.-Ag. (Jan.): 0.5% prior

08:30 Import Prices Ex.-Oil (Jan.): 0.4% cons.

09:15 Capacity Utilization (Jan.): 72.6% cons.

14:00 Treasury Budget (Jan.): -$46.0B cons.

14:00 FOMC Minutes (1/28)

Earnings

Before: AUXL, BXC, CFL, BW, XEC, DE, DVN, DTG, ENZN, EEFT, FELE, RAIL, FNDT, GENZ, HGRD, HL, HST, IAG, IMA, ITRN, JAKK, KOP, MSO, NEWS, NICE, OMX, OC, PFCB, RIMG, ROC, SBGI, SSYS, MDCO, VSI, WSO, XTO

After: SVN, AEA, AAP, AEM, ADI, AMAT, CAR, BEAT, CECO, CRA, CHK, CLF, CLD, CYH, CITP, CYBX, DENN, DYP, ENH, FARO, FRT, GUID, HVT, HPQ, IPHS, ITMN, IO, IRBT, ITRI, JACK, KEG, KGC, KRG, KONG, LVS, LHO, LOGM, NHP, NCIT, NTAP, NHWK, NVDA, OII, ODSY, OMER, ORLY, OFIX, PEET, PTP, PCLN, STR, CKH, SKX, SNPS, TEX, TRMA, TRN, UNTD, VTAL

Events

DHR, ROK, TYC, JEC at Barclays Capital Industrial Select Conf.
DRI Analyst Meeting
FED: Fed's January FOMC Minutes

Thursday, February 18

Economic

08:30 Continuing Claims: 4500K cons.

08:30 Initial Claims: 430K cons.

08:30 PPI (Jan.): 0.8% cons.

08:30 Core PPI (Jan.): 0.1% cons.

10:00 Leading Indicators (Jan.): 0.5% cons.

10:00 Philadelphia Fed (Feb.): 17.0 cons.

11:00 Crude Inventories: 2.42M prior

Earnings

Before: AEE, APA, ARB, ARIA, AACC, ATRC, AVA, B, ABX, BBW, CAB, CFX, CRY, DAI, DTV, DRYS, EVVV, FVE, GTIV, GLG, GT, HPY, HRL, ITWO, INCY, IVR, KBW, KNOL, KSWS, LTM, LL, MGM, NCI, NXY, NBL, NRG, OHI, ORB, PDCO, PLA, POOL, PDE, PEG, RS, REV, SCHS, SPAR, SPNC, STFC, GASS, SFY, SCMR, TK, TRA, TTC, ULBI, VDSI, VTR, WMT, WW, WCG, WST, WMB, WPZ, WIN

After: ACTG, ANAD, ANH, AGII, ARUN, AUTH, BFRM, BUCY, BLDR, CPKI, CBS, CEC, DELL, DDR, DBRN, ECLP, ETP, ETE, FFH, FSLR, GPRO, GFIG, LOPE, HGIC, HITT, HME, IM, INET, INTU, XXIA, JCOM, MCHX, MXWL, MAXY, MMSI, MORN, NANO, NM, ASGN, RCRC, RRGB, RCKY, SAPE, SEM, SMTL, SNH, SQNM, SHO, KNOT, UEIC, UAM, WOOF, WRE, WBMD, WMGI

Events

CECO Analyst and Investor Day
MSCC, NETL, TER, TUNE at Oppenheimer Semiconductor Summit
FED: Fed's Duke

Friday, February 19

Economic

08:30 CPI (Jan.): 0.3% cons.

08:30 Core CPI (Jan.): 0.2% cons.

Earnings

Before: AMWD, AGP, BRC, BAM, HMSY, HUN, IBI, JCP, LPNT, PAG, PCG, PNW, RUTH, SHPGY, SRT

After:

Events

ENR, DF, AVP, KO at CAGNY Conference
FED: Fed's Dudley

Current Technical Analysis Coverage Universe

ETF’s & Indices: SPY, IWM, UUP, IEF, QQQQ, DIA, COMPQ, XLF, IYR, XHB, XOI, OIH, UNG, USO, PPH, IYT, SMH, MOO, HHH, RTH, SLX, GLD

DOW JONES INDUSTRIAL AVERAGE & 30 COMPONENTS

Financial (XLF): JPM, BAC, WFC, C, USB, GS, MS, AXP, CME, MET, BK

Homebuilders (XHB): DHI, PHM, LEN, TOL, RYL, KBH

Semiconductors (SMH): INTC, TXN, AMAT, MU, SNDK, NVLS, ADI

Retailers (RTH): WMT, HD, TGT, WAG, SHLD, BBY, KSS

Steel (SLX): X, NUE, MT, STLD

Pharmaceuticals (PPH): PFE, MRK, JNJ, GSK, ABT, LLY

Oil (XOI): XOM, CVX, COP, BP, SU, PXP

Oil Service (OIH): SLB, HAL, BI, RIG, ESV, SII

Natural Gas (UNG): EP, APA, CHK, APC, XTO

Coal (KOL): ACI, BTU, MEE, CNX

Transportation (IYT): FDX, UPS, CHRW, BNI, CSX, NSC

Managed Care: UNH, WLP, HUM, AET

Gold: GLD, NEM, AU

Agriculture (MOO): MOS, MON, POT, DE

High Beta: AAPL, GOOG, RIMM, MA, FSLR

equityletter.com 02/08/10

2010-02-07T11:10:00.001-08:00

Thank you in advance for all comments and criticisms.....regards, equityletter.com

02/08/10

Note: Event Calendar is located at bottom of page

I. General Commentary

It is hard to imagine that the state of the global economy is such that the U.S. Dollar has become the favored currency for those seeking shelter. The first debt crisis cockroach appeared in Dubai, and then came Greece, and now there are worries regarding Portugal. Spain and Italy are now in the potential crosshairs of despair. Is the state of the global economy currently so dire that currency speculators now favor the U.S. economy as the least dangerous place on the planet? Last week U.S. government officials projected a $1.6 trillion (YES TRILLION) budget deficit for the year 2010. Ratings agency Moody’s responded to this news by stating that the U.S triple AAA debt rating may be in jeopardy unless action is taken to reign in the black hole of debt. Despite these alarming debt figures the U.S. Dollar continued to appreciate against the majority of other world currencies as fears of sovereign debt contagion spread across the globe. The recent strength of the U.S. Dollar is responsible for the unwinding of the “dollar carry trade” which in turn has fueled selling pressure on equity prices across the board. As we have heard infinitum from U.S. government officials almost to the point of nausea, “a strong Dollar is in the best interests of the United States”. A strong Dollar currently is not in the best interest of equity investments.

The major market averages under our coverage that we currently rate with positive weekly technical indications are the U.S. $ Index (UUP-23.65) and the I-share 7-10 year Treasury bond (IEF-90.84). We currently have negative views on SPDR- S&P 500 (SPY-106.66), Diamonds Trust (DIA-100.16), NASDAQ Composite (COMP-2141.12), IShares Russell 2000 Index Fund (IWM-59.27) and the Powershares QQQQ Trust (QQQQ-42.98) *Take note that there are no changes from the previous letter.*

Sector ETF’s within our coverage universe that remain in favor according to our weekly oriented technical analysis are not present at this time. *Take note that there are no upgrades from the prior letter.* Use price weakness to increase long exposure or to initiate long trades.

Sector ETF’s that we currently rate as neutral include the Homebuilding (XHB), Gold (GLD), Managed Care sector, Oil Service (OIH), Agriculture (MOO), Coal (KOL), Steel (SLX), Pharmaceuticals (PPH), Real Estate (IYR), Semiconductors (SMH), and Crude Oil (USO).

* Take note that the Managed Care sector is a downgrade to the neutral list from the previous letter.*

Sector ETF’s that we believe to be currently vulnerable to further downside pricing pressure are the Financials (XLF), Transportation (IYT), Integrated Oil (XOI), Natural Gas (UNG), and Retailers (RTH). *Take note that the XOI and IYT are new additions to downgrade list from the prior letter.*

Sector analysis below will provide information as to where to best allocate funds at this time.

For access to Equity Letter individual trading positions and ideas contact Richard Reilly at rreilly123-2@comcast.net

Please frequent http://www.equityletter.com/

II. Sector Analysis

The IEF-90.84 (I-share 7-10 year Treasury bond) advanced 0.49% for the week as the yield on the 10- year treasury decreased from 3.61% to 3.55%. For comparative reference the yield on the 10-year Treasury began the 2010 trading year at 3.84%. The IEF is entering week four of a “buy” signal. The weekly closing price support level in order to maintain our current “buy” signal shall remain at 90.09. Any weekly closing price below 90.09 will negate our current “buy” signal for the IEF. The IEF continues to benefit from equity market weakness. This being stated we see strong near term price resistance at the 91.00 area. The weekly trend remains favorable but the risk/reward of entering long trades at current price levels remains questionable at best.

A. Financials

The Financial Select Sector Index (XLF-13.94) finished the trading week 1.69% decline. The 2010 trading year return of the XLF is a negative 3.19%. The XLF is entering week three of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall remain at 14.57. Any weekly closing price above 14.57 will negate our current “sell” signal for the XLF. A fresh “sell” signal has been generated in Bank of New York (BK-27.14). Weekly “buy” signals remain current for XLF components Wells Fargo (WFC-27.42) and U.S. Bancorp (USB-23.97). Weekly “sell” signals continue to exist for XLF components Citigroup (C- 3.22), Morgan Stanley (MS-27.26) Goldman Sachs (GS-154.16), American Express (AXP-37.85), Bank of America (BAC-15.00), J.P. Morgan (JPM-38.30), Chicago Mercantile Exchange (CME-280.80) and MetLife (MET-34.68). Still under continued selling pressure the XLF managed to close above the last bastion of price support at the 13.78 price level. Any weekly closing price below 13.78 will indicate further weakness down to the 11.00 price support area. Continue to use any extended upside strength in the XLF or above negatively mentioned components to reduce long exposure and or to initiate short trades.

B. Builders

The Homebuilder exchange traded fund (XHB-15.02) declined 0.60% for the week. The 2010 year-to-date performance of the XHB currently rests at a negative 0.59%. The XHB is entering week eight of a “buy” signal. Our weekly closing price support level in order to maintain our current “buy” signal for XHB shall remain at 14.92. Any weekly closing price below the 14.92 support level will negate our current “buy” signal in the XHB. Weekly “buy” signals remain in place for XHB components D R Horton (DHI-12.67) and Ryland Group (RYL-22.17). Weekly “sell” signals remain prevalent for XHB components Toll Brothers (TOL-18.65), Pulte Homes (PHM-10.88), Lennar (LEN-14.71), and KB Home (KBH-14.92). Take note that XHB component PHM is scheduled to report earnings in the coming week. Week eight of a “buy” signal; internal component weakness remains a concern. We shall remain neutral at this time.

B. Semiconductor

The Semiconductor group (SMH-25.11) advanced 1.60% for the week. The current SMH performance for the 2010 trading year is a negative 10.06%. The SMH is entering week four of a “sell” signal. Our weekly price resistance level in order to maintain our current “sell” signal shall remain at 26.28. Any weekly closing price above 26.28 will negate our current “sell” signal for the SMH. Weekly “sell” signals continue to exist for Intel (INTC-19.47), Analog Devices (ADI-26.90), Texas Instruments (TXN-22.97), Micron Technology (MU-8.70), SanDisk (SNDK-26.09), Applied Materials (AMAT-12.23) and Novellus (NVLS-21.60). The SMH has the current distinction as being one of the worst sector performers for the 2010 trading year to date. We shall keep our neutral rating at this time as the sharp three-week price correction has left the SMH very near a strong price support level, the 24.30 area. The risk/reward for a long trade from current levels appears attractive.

D. Retailers

The Retail sector (RTH-90.56) finished the trading week with a 1.64% decline. The current 2010 return of the RTH stands at a negative 3.50%. The RTH is entering week eight of a “sell” signal. Our weekly closing price resistance level for the RTH in order to maintain the current “sell” signal shall remain at 93.45. Any weekly closing price above 93.45 will negate our current “sell” signal for the RTH. A fresh weekly “sell” signal has been triggered in Target (TGT-49.30). Weekly “sell” signals continue to remain in place for RTH components Walgreen’s (WAG-33.31), Sears Holding’s (SHLD-91.32), Home Depot (HD-27.98), Kohl’s (KSS-49.32), WalMart (WMT-53.45) and BestBuy (BBY-35.82). Week eight of a sell signal; continue to use extended price strength in the RTH and above negatively mentioned names to reduce long exposure and or to initiate short trades.

E. Steels

The Steel sector (SLX-54.37) finished the week with a 0.26% decline. The current 2010 trading year return for the SLX measures in at a negative 11.62%. The SLX is in the third week of a “sell” signal. Our weekly closing price resistance level for the SLX shall be lowered to 59.00. Any weekly closing price above 59.00 will negate our current “sell” signal for the SLX. Weekly “sell” signals remain in place for SLX components U.S. Steel (X-44.78), Arcelor Mittal (MT-38.06), and Nucor (NUE-40.46). Steel Dynamics (STLD- 14.99) is in the fourth week of a “sell” signal. Take note that a quarterly earnings report is due in the coming week from SLX component MT. We shall remain neutral at this time as we see near term price support for the SLX at the 51.00 area. Any failure for the SLX to hold above said price support will be a prelude to a much deeper slide.

F. Pharmaceuticals and Healthcare

The Pharmaceutical group (PPH-64.46) decreased by 1.57% last week. The PPH 2010 trading year return stands at a negative 2.33%. The PPH is entering week three of a “sell” signal. Our weekly price resistance level in order to maintain the current weekly “sell” signal shall remain at 67.34. Any weekly closing price above 67.34 will negate our current “sell” signal for the PPH. PPH components Merck (MRK-36.73), Pfizer (PFE-17.96), Johnson & Johnson (JNJ-62.64), Abbott Lab’s (ABT-53.97), Eli Lilly (LLY-34.52) and GlaxoSmithKline (GSK-38.06) all continue to remain on our “sell” list at this time. Week three of correction mode, we shall maintain our neutral stance at this time.

III. Gold

GLD (streetTracks gold index) – The GLD (104.68) declined 1.21% on the week. The GLD current return for the 2010 trading year is a negative 2.45%. The GLD is entering week three of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall remain at 108.80. Any weekly closing price above 108.80 will negate our current “sell” signal for the GLD. Continued price weakness for the GLD this past week but a late Friday rally enabled the GLD to hold above the weekly trend line support around the 103.00 price level. Any downside penetration of the 103.00 price support level on a weekly closing price basis will foreshadow further downside to the 96.00 area of strong support. We shall maintain our neutral stance for the GLD at this time as the longer term bull trend remains intact despite the current corrective near term phase.

IV. Energy- (Oil, Oil Service, Nat’l Gas, Coal)

The Large-Cap Integrated Oil space (XOI-998.28) closed out the trading week with a 1.82% decline. The current XOI 2010 trading year return is a negative 6.55%. The XOI is entering the third week of unfavorable technical conditions. Our weekly price resistance level in order to maintain our current “sell” signal shall remain at 1056.72. Any weekly closing price above 1056.72 will negate our current “sell” signal for the XOI. At this time weekly “sell” signals shall remain in place for XOI components Chevron-Texaco (CVX-71.18), Conoco-Phillips (COP-47.98), British Petroleum (BP-53.18), Suncor Energy (SU-29.80) and Exxon-Mobil (XOM-64.80). The XOI weekly close below the 1000.00 level is an indication of further weakness to come. We shall downgrade the XOI to “sell” at this time with the first downside target being the 910.00 level.

The Oil Service Index (OIH-116.07) declined 1.54% this past trading week. The 2010 year to date return for the OIH stands at a negative 1.79%. The OIH is in week three of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall be lowered to 124.71. Any weekly closing price above 124.71 will negate our current “sell” signal for the OIH. Weekly “sell” signals remain present across the board for OIH components Halliburton (HAL-28.29), Schlumberger (SLB-62.06), Baker Hughes (BHI-44.73), Ensco (ESV-38.94) and Transocean (RIG-83.99). It is week three of a “sell” signal; the good news is the OIH was able to find buying support near the previously stated 111.50 price support level. The low last week for the OIH was 112.43. We shall keep our “neutral” rating at this time.

Natural Gas (UNG-10.00) advanced 7.41% this past week. The UNG current 2010 trading year return is a negative 0.79%. The UNG is entering week two of a “sell” signal. Our weekly price resistance level in order to maintain our current “sell” signal shall remain at 10.48. Any weekly closing price above 10.48 will negate our fresh “sell” signal for the UNG. We shall maintain our “sell” rating for the UNG at this time as distribution remains the dominant technical theme.

The Coal Sector (KOL-31.83) declined by 3.11% this past week. The KOL 2010 trading year performance stands at a negative 11.87%. The KOL is entering the third week of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall be lowered to the 34.87 price level. Any weekly closing price above 34.87 will negate our current “sell” signal for the KOL. We shall remain “neutral” at this time and shall monitor the quickly approaching 29.50 support level for possible long entry.

V. Dow 30 Analysis

Our Weekly Trend Indicator (WTI) measures in at -24, a slight increase from the previous week reading of -26. Currently 10.0% of the thirty Dow Jones Industrial components have favorable weekly chart technical indications; this is an increase from 6.0% in the prior week. The Dow Jones Industrial average declined 0.55% for the week to 10012.23. The return for the 2010 trading year stands at a negative 3.99%.

The S&P 500, as measured by the SPY (106.66), declined 0.68% for the week. The current 2010 trading year return for the SPY is a negative 4.29%. Small caps issues, as measured by the IWM (IShares Russell 2000 Index Fund- 59.27), declined 1.40% for the week. The IWM current 2010 trading year return is a negative 5.08%.

The DIA (100.16) closed out the week with a 0.39% decline and is entering week three of a “sell” signal. Our weekly closing price resistance level in order to maintain the current “sell” signal shall remain at 103.06. Any weekly closing price above 103.06 will negate our current “sell” signal for the DIA. It is week three of “correction mode” therefore we would continue to use any extended price strength that approaches our above mentioned price resistance level to reduce long exposure and or to initiate short trades. Our first downside target for the DIA remains the 95.00 price support area.

Fresh weekly buy signals generated: CSCO

Fresh negative weekly signals generated:

Readers should take note that Dow Jones Industrial components KO and DIS are scheduled to report quarterly earnings in the coming week.

Dow 30 stocks with positive weekly signals:

BA, CSCO, TRV

Dow 30 stocks with negative weekly signals:

AA, AXP, BAC, CAT, CVX, DD, DIS, GE, HD, HPQ, IBM, INTC, JNJ, JPM, KFT, KO, MCD, MMM, MRK, MSFT, PFE, PG, T, UTX, VZ, WMT, XOM

· Underlined names have changed from previous week*

VI. KEY EVENTS IN THE WEEK AHEAD:

Monday, February 8

Economic

N/A

Earnings

Before: AMRI, AGNC, BWP, CGA, CHDX, CAN, CPIX, CVS, GWR, HAS, HS, LFUS, L, LO, MCY, NDAQ, NVE, SIRO, VTNC

After: ADCT, ANDE, ATML, AXS, BWY, CPT, CRL, CIM, CMP, CRK, CUZ, CUTR, ERTS, ECPG, ESLR, FWRD, HAR, HIG, HIMX, LNCR, LNC, NUAN, OTTR, OMI, PKY, PIKE, PPS, PPDI, PFG, QGEN, RENT, SKH, SWI, SRX, TMRK, TWTC, VECO, VSAT, VMC, WRB, WCN, ZOLT

Events

WAG, HUM, UAM, WLP at UBS Global Healthcare Services Conf.
LINC, FFIV, PENN, RAX at Deutsche Bank Securities Small and Mid Cap Conf.

FED: $24 bln 3-month and $27 bln 6-month Treasury Bills Auctions

Tuesday, February 9

Economic

10:00 Wholesale Inventories (Dec.): 0.6% cons.

Earnings

Before: ACM, AGCO, AGU, AHCI, ALLT, ANR, ACLI, ATRO, BIIB, BJS, CAM, FUN, CE, CNC, CHD, KO, CTSH, CVH, CUB, CYNO, DHT, ENER, IT, GET, IACI, IFF, KVHI, LCAV, MLM, TAP, NOOF, NYX, OSTK, PCH, PHM, RTIX, RBCN, TIN, GTS, VSH, WMG, ZBRA

After: ATAC, AGAM, AFG, ASEI, AHL, BIDU, BOBE, CFN, CERN, EXBD, CXW, DIOD, DNEX, DSCM, EOG, GIL, GCOM, HCSG, HNI, PODD, KFRC, LTRE, LGF, MAXY, NTGR, OPEN, PEET, PSEC, QLTY, RNR, RUE, RUSHA, SB, TCO, TMH, UDR, ULTI, USNA, DIS, WWWW, XL

Events

ODSY, MHS, AET, SUNH at UBS Global Healthcare Services Conf.
RHT, SAP, ADBE, ENTR at Thomas Weisel Technology & Telecom Conf.
FED: $40 bln 3-yr Treasury Notes Auction

Wednesday, February 10

Economic

08:30 Trade Balance (Dec.): -$35.0B cons.

10:30 Crude Inventories: 2.32M prior

14:00 Treasury Budget (Jan.): -$60.0B cons.

Earnings

Before: ABD, MT, CAE, CCE, CSC, DF, DISCA, ELN, FORR, ICE, JNY, ID, LNCE, LVLT, LPX, MMC, MXGL, MTOX, NURO, NYT, NWPX, OMC, PFCB, SNI, SIAL, SON, S, TLM, TGH, TDG, WXS, WYN

After: ATVI, ALL, AMKR, ATR, ARRS, BMR, BSX, CBM, STV, SCOR, CPA, CLB, CPII, CRAY, DVA, PROJ, XRAY, EGP, ELON, EDMC, WIRE, EQIX, RE, GLUU, GSIC, HGR, HIW, NSIT, KONA, LPSN, LFT, LOOP, MAS, MDSO, NSR, OSUR, PRE, PVA, PAA, PL, PRU, O, SWIR, TLEO, TMK, WATG

Events

AMTD, BAC, COF, WFC at Credit Suisse Financial Services Conf.
AMSC, FLO, FMC, POWI at Deutsche Bank Securities Small and Mid Cap Conf.
FED: Fed's Tarullo

Thursday, February 11

Economic

08:30 Initial Claims: N/A

08:30 Continuing Claims: N/A

08:30 Retail Sales (Jan.): 0.4% cons.

08:30 Retail Sales Ex.-Auto (Jan.): 0.4% cons.

10:00 Business Inventories (Dec.): 0.4% cons.

Earnings

Before: ASF, AKNS, ALU, ARE, ALXN, ARIA, AN, BWA, CATM, CAAS, CBB, ECL, EMS, ECA, NPO, EXPE, FLIR, GLT, GPI, HEP, HOS, RX, IPCC, IRC, JASO, JRN, KBW, LH, LF, LUFK, MAC, CLI, MAR, MNTA, NOVA, NRG, OZM, OHI, PMTI, PTI, PTEN, PEP, PGN, PLD, QCCO, QUIX, REV, SCG, SKYW, SNN, SF, STRA, ELOS, SYNT, TKLC, TDC, TOT, TRAD, THS, VFC, VIA/B, WWE

After: ACL, AB, AWH, BEC, BJRI, NILE, BWLD, CEC, CEPH, CAKE, CPC, CMG, CHH, CGNX, CSTR, CML, DCT, DFG, EHTH, ENOC, EPIC, FARO, FFG, GDI, BGC, HNSN, HE, XXIA, LVS, MFE, MOH, NRP, PNRA, PTC, PNSN, PRAA, PRO, QDEL, RNWK, RSG, ROVI, SQNM, SNWL, SONO, STMP, SHO, SMMX, SVR, KNOT, USTR, VARI, XNPT, ZGEN

Events

ZION Analyst Meeting
AMP, LNC, MET, NYX at Credit Suisse Financial Services Conf.
FED: $16 bln 30-yr Treasury Bond Auction

Friday, February 12

Economic

09:55 Michigan Sentiment (Feb.): 74.8 cons.

Earnings

Before: A, ALE, HCP, IR, MFA, PAS, UPL

After: DUK

Events

AXAS at NAPE Expo 2010

Current Technical Analysis Coverage Universe

ETF’s & Indices: SPY, IWM, UUP, IEF, QQQQ, DIA, COMPQ, XLF, IYR, XHB, XOI, OIH, UNG, USO, PPH, IYT, SMH, MOO, HHH, RTH, SLX, GLD

DOW JONES INDUSTRIAL AVERAGE & 30 COMPONENTS

Financial (XLF): JPM, BAC, WFC, C, USB, GS, MS, AXP, CME, MET, BK

Homebuilders (XHB): DHI, PHM, LEN, TOL, RYL, KBH

Semiconductors (SMH): INTC, TXN, AMAT, MU, SNDK, NVLS, ADI

Retailers (RTH): WMT, HD, TGT, WAG, SHLD, BBY, KSS

Steel (SLX): X, NUE, MT, STLD

Pharmaceuticals (PPH): PFE, MRK, JNJ, GSK, ABT, LLY

Oil (XOI): XOM, CVX, COP, BP, SU, PXP

Oil Service (OIH): SLB, HAL, BI, RIG, ESV, SII

Natural Gas (UNG): EP, APA, CHK, APC, XTO

Coal (KOL): ACI, BTU, MEE, CNX

Transportation (IYT): FDX, UPS, CHRW, BNI, CSX, NSC

Managed Care: UNH, WLP, HUM, AET

Gold: GLD, NEM, AU

Agriculture (MOO): MOS, MON, POT, DE

High Beta: AAPL, GOOG, RIMM, MA, FSLR

equityletter.com 02/10/10

2010-01-31T14:37:00.000-08:00

Thank you in advance for all comments and criticisms.....regards, equityletter.com

02/01/10

Note: Event Calendar is located at bottom of page

I. General Commentary

The first month of the 2010 trading year ended on a sour note as the major U.S. equity averages suffered declines for the third consecutive week. The Dow Jones Industrial average (INDU) declined by 1.04%, the NASDAQ Composite (COMP) was lower by 2.63%, the S&P 500 (SPY) dropped 1.67%, and the Small Cap Russell 2000 (IWM) fell by 2.62%. All four major market averages are now in the red for the current trading year. Why the sudden rush for the exit door? The main contributor to the recent market pressure is China. The latest efforts by the Chinese government to reign in a “hot economy” have installed fear as the current trading emotion of choice. Last week Chinese officials raised reserve requirements for some banks. They also instructed banks to suspend all lending for the duration of the month. Most commodity and energy related equities have seen sharp three-week price corrections since the Chinese have shifted efforts to cool down their economy.

Another troubling trend is the selling of “good news”. Last week strong earnings reports from Apple Computer and Microsoft were greeted with sellers rather than euphoric buyers. This trend has been present since the beginning of the earnings reporting season. The market appears to have already priced in a strong quarter that benefited from inventory restocking and is now looking ahead at the same familiar problems. Unemployment remains elevated with no significant job creation in sight, banks remain reluctant to extend credit due to more stringent standards. (Consumer Credit Statistics are due out in the coming week and will continue to show contraction) The U.S. Dollar continues to appreciate as skeletons from the global closet become more apparent. (Greece and Dubai come immediately to mind)

As we have stated in the past, beware of “good news” becoming “bad news” for the equity markets. “Good” U.S. economic news means we are that much closer to the removal of the training wheels of emergency government liquidity measures. This weeks January unemployment report will be another test of this thesis.

The major market averages under our coverage that we currently rate with positive weekly technical indications are the U.S. $ Index (UUP-23.45) and the I-share 7-10 year Treasury bond (IEF-90.70). We currently have negative views on SPDR- S&P 500 (SPY-107.39), Diamonds Trust (DIA-100.55), NASDAQ Composite (COMP-2147.35), IShares Russell 2000 Index Fund (IWM-60.11) and the Powershares QQQQ Trust (QQQQ-42.79) *Take note that there are no changes from the previous letter.*

Sector ETF’s within our coverage universe that remain in favor according to our weekly oriented technical analysis include the Managed Care sector. *Take note that there are no upgrades from the prior letter.* Use price weakness to increase long exposure or to initiate long trades.

Sector ETF’s that we currently rate as neutral include the Homebuilding (XHB), Gold (GLD), Oil Service (OIH), Agriculture (MOO), Coal (KOL), Steel (SLX), and Pharmaceuticals (PPH), Real Estate (IYR), Financials (XLF), Semiconductors (SMH), Large Integrated Oil (XOI), Transportation (IYT), and Crude Oil (USO).

* Take note that there are no additions to the neutral list from the previous letter.*

Sector ETF’s that we believe to be currently vulnerable to further downside pricing pressure are the Financials (XLF), Natural Gas (UNG), and Retailers (RTH). *Take note that the UNG is a new addition to downgrade list from the prior letter.*

Sector analysis below will provide information as to where to best allocate funds at this time.

For access to Equity Letter individual trading positions and ideas contact Richard Reilly at rreilly123-2@comcast.net

Please frequent http://www.equityletter.com/

II. Sector Analysis

The IEF-90.70 (I-share 7-10 year Treasury bond) advanced 0.10% for the week as the yield on the 10- year treasury increased from 3.60% to 3.61%. For comparative reference the yield on the 10-year Treasury began the 2010 trading year at 3.84%. The IEF is entering week three of a “buy” signal. The weekly closing price support level in order to maintain our current “buy” signal shall be raised to 90.09. Any weekly closing price below 90.09 will negate our current “buy” signal for the IEF. The IEF continues to benefit from equity market weakness. This being stated we see strong near term price resistance at the 91.00 area. The weekly trend remains favorable but the risk/reward of entering long trades at current price levels is questionable at best.

A. Financials

The Financial Select Sector Index (XLF-14.18) finished the trading week unchanged. The 2010 trading year return of the XLF is a negative 1.53%. The XLF is entering week two of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall be lowered to 14.57. Any weekly closing price above 14.57 will negate our current “sell” signal for the XLF. Weekly “buy” signals remain current for XLF components Wells Fargo (WFC-28.43), Bank of New York (BK-29.09), and U.S. Bancorp (USB-25.08). Weekly “sell” signals continue to exist for XLF components Citigroup (C- 3.32), Morgan Stanley (MS-26.78) Goldman Sachs (GS-148.72), American Express (AXP-37.66), Bank of America (BAC-15.18), J.P. Morgan (JPM-38.94), Chicago Mercantile Exchange (CME-286.82) and MetLife (MET-35.32). Take note that quarterly earnings reports are due in the coming week from XLF components CME and MET. Despite the fact that the XLF held above the near term 14.00 price support level we shall remain with our negative opinion at this time. Use any extended upside strength in the XLF or above negatively mentioned components to reduce long exposure and or to initiate short trades

B. Builders

The Homebuilder exchange traded fund (XHB-15.11) advanced 1.07% for the week. The 2010 year-to-date performance of the XHB currently rests at unchanged. The XHB is entering week seven of a “buy” signal. Our weekly closing price support level in order to maintain our current “buy” signal for XHB shall remain at 14.92. Any weekly closing price below the 14.92 support level will negate our current “buy” signal in the XHB. Weekly “buy” signals remain in place for XHB components D R Horton (DHI-11.79) and Ryland Group (RYL-22.26). Weekly “sell” signals remain prevalent for XHB components Toll Brothers (TOL-18.47), Pulte Homes (PHM-10.52), Lennar (LEN-15.36), and KB Home (KBH-15.28). Take note that XHB component DHI is scheduled to report earnings in the coming week. Week seven of a “buy” signal; internal component weakness gives cause for concern. We shall remain neutral at this time.

B. Semiconductor

The Semiconductor group (SMH-24.76) declined 3.45% for the week. The current SMH performance for the 2010 trading year is a negative 11.32%. The SMH is entering week three of a “sell” signal. Our weekly price resistance level in order to maintain our current “sell” signal shall be lowered to 26.28. Any weekly closing price above 26.28 will negate our current “sell” signal for the SMH. Weekly “sell” signals continue to exist for Intel (INTC-19.40), Analog Devices (ADI-26.96), Texas Instruments (TXN-22.50), Micron Technology (MU-8.72), SanDisk (SNDK-25.42), Applied Materials (AMAT-12.16) and Novellus (NVLS-20.90). Take note that SMH component NVLS is scheduled to report quarterly earnings in the coming week. The SMH has the current distinction as being one of the worst sector performers for the 2010 trading year to date. We shall keep our neutral rating at this time as the sharp three-week price correction has left the SMH very near a strong price support level, the 24.30 area.

D. Retailers

The Retail sector (RTH-92.07) finished the trading week with a 0.71% advance. The current 2010 return of the RTH stands at a negative 1.89%. The RTH is entering week seven of a “sell” signal. Our weekly closing price resistance level for the RTH in order to maintain the current “sell” signal shall be lowered to 93.45. Any weekly closing price above 93.45 will negate our current “sell” signal for the RTH. A fresh weekly “sell” signal has been triggered in Sears Holding’s (SHLD-93.28). A weekly “buy” signal continues to remain in place for RTH component and Target (TGT-51.27). Weekly “sell” signals continue to remain in place for RTH components Walgreen’s (WAG-36.05), Home Depot (HD-28.01), Kohl’s (KSS-50.37), WalMart (WMT-53.43) and BestBuy (BBY-36.65). Week seven of a sell signal; continue to use extended price strength in the RTH and above negatively mentioned names to reduce long exposure and or to initiate short trades.

E. Steels

The Steel sector (SLX-54.51) finished the week with a 7.45% decline. The current 2010 trading year return for the SLX measures in at a negative 11.39%. The SLX is in the second week of a “sell” signal. Our weekly closing price resistance level for the SLX shall be lowered to 60.66. Any weekly closing price above 60.66 will negate our current “sell” signal for the SLX. Weekly “sell” signals remain in place for SLX components U.S. Steel (X-44.43), Arcelor Mittal (MT-38.68), and Nucor (NUE-40.80). Steel Dynamics (STLD- 15.18) is in the third week of a “sell” signal. Take note that a quarterly earnings report is due in the coming week from SLX component STLD. The combination of Chinese efforts to cool their economy and U.S. Dollar strength have proved lethal for the highly volatile steel sector over the past two weeks. We shall remain neutral at this time as we see near term price support for the SLX at the 51.00 area. Any failure for the SLX to hold above said price support will be a prelude to a much deeper slide.

F. Pharmaceuticals and Healthcare

The Pharmaceutical group (PPH-65.61) decreased by 1.41% last week. The PPH 2010 trading year return stands at a negative 0.59%. The PPH is entering week two of a “sell” signal. Our weekly price resistance level in order to maintain the current weekly “sell” signal shall be lowered to 67.34. Any weekly closing price above 67.34 will negate our current “sell” signal for the PPH. Fresh weekly “sell” signals have been triggered in PPH components Merck (MRK-38.18) and Pfizer (PFE-18.66). Johnson & Johnson (JNJ-62.86), Abbott Lab’s (ABT-52.94), Eli Lilly (LLY-35.20) and GlaxoSmithKline (GSK-39.01) all continue to remain on our “sell” list at this time. Take note that a quarterly earnings report is due in the coming week from PPH component PFE. Week two of correction mode, we shall maintain our neutral stance at this time.

III. Gold

GLD (streetTracks gold index) – The GLD (105.96) declined 1.13% on the week. The GLD current return for the 2010 trading year is a negative 1.26%. The GLD is entering week two of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall be lowered to 108.80. Any weekly closing price above 108.80 will negate our current “sell” signal for the GLD. Continued price weakness for the GLD this past week is indicating a downside test of the weekly trend line price support around the 103.00 area. Any downside penetration of the 103.00 price support level will foreshadow further downside to the 96.00 area of strong support. We shall maintain our neutral stance for the GLD at this time as the longer term bull trend remains intact despite the current corrective near term phase.

IV. Energy- (Oil, Oil Service, Nat’l Gas, Coal)

The Large-Cap Integrated Oil space (XOI-1016.78) closed out the trading week with a 2.02% decline. The current XOI 2010 trading year return is a negative 4.81%. The XOI is entering the second week of unfavorable technical conditions. Our weekly price resistance level in order to maintain our current “sell” signal shall be lowered to 1056.72. Any weekly closing price above 1056.72 will negate our current “sell” signal for the XOI. At this time weekly “sell” signals shall remain in place for XOI components Chevron-Texaco (CVX-72.12), Conoco-Phillips (COP-48.00), British Petroleum (BP-56.12), Suncor Energy (SU-31.65) and Exxon-Mobil (XOM-64.43). Take note that quarterly earnings reports are due in the coming week from XOI components BP, SU, and XOM. We remain concerned regarding weaker pricing for crude oil. If the XOI closes out the coming week below the 1000.00 price support level we will downgrade from neutral to “sell”.

The Oil Service Index (OIH-117.88) declined 3.03% this past trading week. The 2010 year to date return for the OIH stands at a negative 0.89%. The OIH is in week two of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall be lowered to 130.00. Any weekly closing price above 130.00 will negate our current “sell” signal for the OIH. Weekly “sell” signals remain present across the board for OIH components Halliburton (HAL-29.21), Schlumberger (SLB-63.46), Baker Hughes (BHI-45.28), Ensco (ESV-39.03) and Transocean (RIG-84.74). A change of weekly trend has been signaled. A second week of selling pressure has left the OIH very near a critical price support level, 111.50. Any weekly closing price below 111.50 will indicate further weakness to come. We shall keep our “neutral” rating at this time.

Natural Gas (UNG-9.31) declined 10.05% this past week. The UNG current 2010 trading year return is a negative 7.64%. The UNG has closed below our weekly price support level therefore indicating a change of trend from positive to negative. Our weekly price resistance level in order to maintain our fresh “sell” signal shall be set at 10.48. Any weekly closing price above 10.48 will negate our fresh “sell” signal for the UNG. We shall downgrade the UNG from neutral to sell at this time as it appears that new low prices are forthcoming.

The Coal Sector (KOL-32.85) declined by 5.95% this past week. The KOL 2010 trading year performance stands at a negative 8.86%. The KOL is entering the second week of a “sell” signal. Our weekly closing price resistance level in order to maintain our current “sell” signal shall be lowered to the 36.35 price level. Any weekly closing price above 36.35 will negate our current “sell” signal for the KOL. We shall remain “neutral” at this time and shall monitor the quickly approaching 29.50 support level for possible long entry.

V. Dow 30 Analysis

Our Weekly Trend Indicator (WTI) measures in at -26, a decrease from the previous week reading of -24. Currently 6.0% of the thirty Dow Jones Industrial components have favorable weekly chart technical indications; this is a decrease from 10.0% in the prior week. The Dow Jones Industrial average declined 1.04% for the week to 10067.33. The return for the 2010 trading year stands at a negative 3.46%.

The S&P 500, as measured by the SPY (107.39), declined 1.67% for the week. The current 2010 trading year return for the SPY is a negative 3.63%. Small caps issues, as measured by the IWM (IShares Russell 2000 Index Fund- 60.11), declined 2.62% for the week. The IWM current 2010 trading year return is a negative 3.73%.

The DIA (100.55) closed out the week with a 1.06% decline and is entering week two of a “sell” signal. Our weekly closing price resistance level in order to maintain the current “sell” signal shall be lowered to 103.06. Any weekly closing price above 103.06 will negate our current “sell” signal for the DIA. It is week two of “correction mode” therefore we would continue to use any extended price strength that approaches our above mentioned price resistance level to reduce long exposure and or to initiate short trades. Our first downside target for the DIA remains the 94.30 price support area.

Fresh weekly buy signals generated: TRV

Fresh negative weekly signals generated: MRK, PFE

Readers should take note that Dow Jones Industrial components CSCO, KFT, PFE, and XOM are scheduled to report quarterly earnings in the coming week.

Dow 30 stocks with positive weekly signals:

BA, TRV

Dow 30 stocks with negative weekly signals:

AA, AXP, BAC, CAT, CSCO, CVX, DD, DIS, GE, HD, HPQ, IBM, INTC, JNJ, JPM, KFT, KO, MCD, MMM, MRK, MSFT, PFE, PG, T, UTX, VZ, WMT, XOM

· Underlined names have changed from previous week*

VI. KEY EVENTS IN THE WEEK AHEAD:

Monday, February 1

Economic

08:30 Personal Income (Dec.): 0.3% cons.

08:30 Personal Spending (Dec.): 0.3% cons.

10:00 Construction Spending (Dec.): -0.5% cons.

10:00 ISM Index (Jan.): 55.2 cons.

Earnings

Before: AMG, ACV, CRNT, CYOU, DEP, EPD, XOM, GCI, HAE, HEW, HUM, MDU, MOG/A, NI, ONB, SOHU, SYY

After: ADVS, APC, ARRY, CCK, DST, EXTR, HOLX, ICUI, LOCM, MNKD, NOA, OCLR, PMT, PCL, RGA, RCII, RTEC, SIMO, TUP, UNCA

Events

SD at Credit Suisse Group Energy Summit
FED: Treasury's Geithner Testifies Before Senate on FY11 Budget
$23 bln 3-month and $26 bln 6-month Treasury Bill Auctions

Tuesday, February 2

Economic

10:00 Pending Home Sales (Dec.): 1.1% cons.

14:00 Auto Sales (Jan.): 4.14M prior

14:00 Truck Sales (Jan.): 4.49M prior

Earnings

Before: AMSC, AMB, AXE, ADM, ARTG, ARM, ADP, BEAV, BP, COCO, CPO, CMI, DHX, DOW, DHI, EMR, ETR, EVR, HHS, HSY, NRGY, KFT, LDR, LXK, MAN, MRO, HZO, MPEL, OSTK, PTRY, PCX, PNR, PBG, PRGO, RDWR, RRST, SMG, STEL, STE, SU, TECH, TNB, TDW, TKR, UTI, UPS, WHR, WEC

After: ACE, APKT, ACTU, AFL, AGAM, ADS, AJG, ATO, BRE, CHRW, CTRP, EXM, FISV, SOLR, IVAC, IRF, JKHY, JDSU, JLL, KNXA, LCRD, MANH, MTW, MEE, MMSI, MET, MIL, MYGN, NLC, NETL, NWSA, PXD, QSFT, RSYS, RVBD, SLGN, SSD, TSO, TRMB, UNM, VASC, VRSN, VOCS, WBSN

Events

AEP, FE, NS, MWE at Credit Suisse Group Energy Summit
MS, WFC, COF, HBAN at Morgan Stanley U.S. Financials Conf.

Wednesday, February 3

Economic

07:30 Challenger Job Cuts (Jan.): -79.9% prior

08:15 ADP Employment Change (Jan.): -40K cons.

10:00 ISM Services (Jan.): 50.9 cons.

10:30 Crude Inventories: -3.89M prior

Earnings

Before: ALVR, ASCA, ARW, ATMI, AUDC, BECN, BDK, BCO, CSL, CMCSA, CVLT, DWSN, DBD, ENB, HW, HNT, IP, IVR, ITG, ITT, LAZ, MHO, MMP, MKTX, NOV, NSTC, OIIM, PFE, RL, POWL, RVSN, ROP, R, SVVS, SGP, SLAB, TMO, TWX, TZOO, UMC, WU, WWW

After: AFFX, AKAM, AMP, NLY, AIZ, ATW, AVB, BBBB, CELL, BRS, BRCM, CDNS, CBG, CBL, CENT, CPC, CSCO, CNQR, CVTI, DLB, DBTK, DCP, ENTR, EFX, EQR, FEIC, FNF, FBN, GHDX, HAIN, HSTX, HRC, HMN, IEX, INSP, KIM, MKL, MEAS, WFR, MWW, NBIX, NEWP, NVLS, ONNN, OTEX, OPNT, OHB, PSEM, RBC, REG, RNOW, SGMO, SIGI, SSTI, SPTN, SFN, SPF, STLY, STLD, SYMM, THQI, TGI, TBI, URI, UFPI, VIRL, V, WLT, WGL, WSH, YUM

Events

BK, TD, BMO, MI at Morgan Stanley U.S. Financials Conference
RIG, HAL, APC, WES at Credit Suisse Group Energy Summit
FED: Fed's Warsh

Thursday, February 4

Economic

08:30 Initial Claims: 454K cons.

08:30 Continuing Claims: 4600K cons.

08:30 Productivity-Prel. (Q4): 6.0% cons.

08:30 Unit Labor Costs-Prel. (Q4): -2.5% cons.

10:00 Factory Orders (Dec.): 0.6% cons.

Earnings

Before: ABMD, AGN, LNT, ATK, AHII, ARJ, STST, AVP, BCE, BDC, BLC, BHE, BCRX, BG, BKC, CRR, CI, CINF, CLX, CME, CNMD, DTPI, DO, UFS, ELNK, ENTG, FLO, HGG, HI, HSP, ITWO, IVC, K, KNL, KLIC, LII, LZ, MA, MTRX, MMS, MDCI, MF, MSTR, MEND, MKSI, MGI, MCO, MPS, MWIV, NCR, NOC, NUS, CHUX, OHI, OMTR, PTIE, PMTI, PENN, PAS, POL, POWI, QUIX, RAI, RSTI, RDS/A, RGLD, RTI, SBH, SLE, SNA, SNE, SE, SPR, HOT, SPH, TEN, TBL, UTEK, WBC, WW

After: ARAY, ACTL, ATVI, AATI, ABCO, ALKS, ASEI, BMI, BEZ, BEBE, BBND, BFRM, BLKB, COGO, CNW, CYS, DNEX, DNB, EW, ESE, ESS, XIDE, FALC, FIS, FMC, HLIT, HA, ILMN, IN, XXIA, LQDT, LMNX, MTD, MCHP, MCRS, MAA, MTX, MPWR, MTSC, MFLX, NFG, N, EGOV, OPWV, OPXT, PCCC, PKI, PMC, PFWD, PTEC, PBI, PWAV, RAH, RMD, SFLY, SIMG, SLH, SRCL, SFSF, SUN, SNCR, TWLL, TSYS, TTMI, VARI, VRTX

Events

SKYW, LUV, ALGT at Raymond James Growth Airline Conference
COP, OXY, VLO ME at Credit Suisse Group Energy Summit
WFR Capital Markets Day

Friday, February 5

Economic

08:30 Nonfarm Payrolls (Jan.): 13K cons.

08:30 Unemployment Rate (Jan.): 10.0% cons.

08:30 Average Workweek (Jan.): 33.2 cons.

08:30 Hourly Earnings (Jan.): 0.2% cons.

15:00 Consumer Credit: -$9.5B cons.

Earnings

Before: AET, AYE, AXL, AIV, BZH, BPO, BRKS, SUR, IPSU, LRN, KELYA, MAG, MDC, MD, NNN, PPL, PBH, SXT, SPG, SEP, TE, TSN, VVI, WY, YRCW

After: BPL

Events

STJ Analyst Meeting
GLW Investor Meeting

FED: Treasury's Geithner at G7 Meeting

Current Technical Analysis Coverage Universe

ETF’s & Indices: SPY, IWM, UUP, IEF, QQQQ, DIA, COMPQ, XLF, IYR, XHB, XOI, OIH, UNG, USO, PPH, IYT, SMH, MOO, HHH, RTH, SLX, GLD

DOW JONES INDUSTRIAL AVERAGE & 30 COMPONENTS

Financial (XLF): JPM, BAC, WFC, C, USB, GS, MS, AXP, CME, MET, BK

Homebuilders (XHB): DHI, PHM, LEN, TOL, RYL, KBH

Semiconductors (SMH): INTC, TXN, AMAT, MU, SNDK, NVLS, ADI

Retailers (RTH): WMT, HD, TGT, WAG, SHLD, BBY, KSS

Steel (SLX): X, NUE, MT, STLD

Pharmaceuticals (PPH): PFE, MRK, JNJ, GSK, ABT, LLY

Oil (XOI): XOM, CVX, COP, BP, SU, PXP

Oil Service (OIH): SLB, HAL, BI, RIG, ESV, SII

Natural Gas (UNG): EP, APA, CHK, APC, XTO

Coal (KOL): ACI, BTU, MEE, CNX

Transportation (IYT): FDX, UPS, CHRW, BNI, CSX, NSC

Managed Care: UNH, WLP, HUM, AET

Gold: GLD, NEM, AU

Agriculture (MOO): MOS, MON, POT, DE

High Beta: AAPL, GOOG, RIMM, MA, FSLR