State of the Market September 2010 Daryl Montgomery September 31, 2010 Copyright 2010, All Rights Reserved The contents of this presentation are not intended as a recommendation to buy or sell any security.

Background Material for the Talk Moving Averages – 50-day, 200-day plus 10, 20, 30, and 40-day. Bollinger Bands – plus or minus 2 standard deviations from a ~20-unit moving average. RSI – relative strength index, 80-overbought, 20 oversold, 50 divides bearish and bullish MACD – moving average convergence divergence, zero divide bullish bearish, peak and bottom numbers variable DMI – Directional Movement Index, +DI (blue), -DI (red) and trend line.

Disconnect Between Economy and Markets Economy is clearly deteriorating yet markets have rallied strongly during Sept. Fed is pumping money in front of election. All asset classes are rising. Money pumping will continue in Oct. What happens in Nov. or after remains to be seen. If money pumping continues, it will lead to a crash, possibly next spring.

Currency Summary U.S. $ fell below its 200-day, now bearish. Euro has rallied above its 200-day thanks to Euro-TARP. Japanese Yen chart is weakening. Canadian $ sideways trading. Australian $ rallying with gold, but has not hit a new high.

DXY Dollar Index: Three-Years Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

DXY Dollar Index: One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

FXE Euro ETF: Three-Years Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

FXE Euro ETF: One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

FXY Yen ETF: Three-Years Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

FXY Yen ETF: One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

FXA Australian $: Three-Years Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

FXA Australian $: One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

FXC Canadian $: Three-Years Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

FXA Canadian $: One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

Metals Gold has broken out to new all-time highs. Silver has broken out of its trading range established in 2008. Mining stocks around new highs. Nova Gold (NG) is testing its resistance and is forming either a cup or double top.

Gold ETF GLD Three-Years Weekly 10-40 Week Moving Averages and RSI, DMI, MACD

Gold ETF GLD One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

Silver ETF SLV Three-Year Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

Silver ETF SLV One-Year Daily 50, 200-Day Moving Averages, RSI, MACD, DMI

Mining ETF GDX Three-Years Weekly 10, 40-Week Moving Averages and RSI, DMI, MACD

Mining ETF GDX One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

NovaGold (NG) Three-Years Weekly 10, 40-Week Moving Averages and RSI, DMI, MACD

Nova Gold (NG) One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

Energy and Food Oil has been range trading for months. It is in a period of seasonal weakness until Feb. Natural Gas looks like it is trying to test bottom from last year. Keeps falling back. Uranium could be ready for a rally. Food commodities have been rallying strongly.

Oil ETF DBO Three-Years Weekly 10, 40-Week moving average, RSI, DMI, MACD

Oil ETF DBO One-Year Daily 50, 200-day moving average, RSI, DMI, MACD

Natural Gas ETF GAZ Three-Year Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

Natural Gas ETF GAZ One-Year Daily 50, 200-Day Moving Averages, RSI, MACD, DMI

Uranium Miner DNN Three-Year Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

Uranium Miner DNN One-Year Daily 50, 200- Day Moving Averages, RSI, DMI, MACD

Food ETF DBA Three-Years Weekly 10, 40-Week Moving Averages and RSI, DMI, MACD

Food ETF DBA One-Year Daily 50, 200-Day Moving Averages and RSI, DMI, MACD

Stocks and Bonds VIX may be at a low. DJT gave sell signal and then a major market rally began. Dow, S&P 500, Nasdaq and Russell 2000 have all rallied strongly in Sept. 10-Year treasury may be testing low. 2-Year treasury hit another all-time low (indication of huge liquidity in system).

Volatility Index VIX: Three-Years Weekly 10, 40-Week Moving Averages and RSI, DMI, MACD

Volatility Index VIX: One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

Volatility Index VIX: Ten-Year Monthly Red line high after Nasdaq Crash in 2002; RSI, DMI, MACD

DJIA Three-Years Weekly 10, 40-Week Moving Averages and RSI, DMI, MACD

DJIA One-Year Daily 50, 200-Day Moving Averages and RSI, DMI, MACD

DJT Three-Years Weekly 10, 40-Week Moving Averages and RSI, DMI, MACD

DJT One-Year Daily 50, 200-Day Moving Averages and RSI, DMI, MACD

S&P 500 Three-Years Weekly 10, 40-Week Moving Average and RSI, DMI, MACD

S&P 500 One-Year Daily 50, 200-Day Moving Average and RSI, DMI, MACD

Nasdaq Three-Years Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

Nasdaq One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

Russell 2000 Three-Years Weekly 10, 40-Week Moving Averages and RSI, DMI, MACD

Russell 2000 One-Year Daily 50, 200-Day Moving Averages and RSI, DMI, MACD

30-Year Bond Interest Rate Three-Years Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

30-Year Bond Interest Rate One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD

10-Year Bond Interest Rate Three-Years Weekly 10, 40-Week Moving Averages, RSI, DMI, MACD

10-Year Bond Interest Rate One-Year Daily 50, 200-Day Moving Averages, RSI, DMI, MACD