State of the Market August 2010 Daryl Montgomery August 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 haven’t had a big sell off yet. Similar picture happened in summer 2008 when Credit Crisis was accelerating. Market dropped sharply in the fall 2008 to catch up with reality. Either the market will fall apart or the economy will re-accelerate strongly. November election keeping market up.

Currency Summary U.S. $ bounced off 200-day, still in rally pattern. Euro still in bear pattern, hasn’t rallied to 200-day. Japanese Yen rally to 15-year highs against U.S. $ big story.

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

Metals Gold is bullish and rallying and trying to convincingly break to a new high. Silver still range trading and at top of range. Silver is economically sensitive. Mining stocks stuck have not gone to new highs and confirmed gold rally. Nova Gold (NG) 50-day MA trying to bounce off 200-day.

Gold ETF GLD Three-Years Weekly 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. Charts in bear pattern since June. Seasonal weakness starts by September. Natural Gas looks like it is trying to test bottom from last year. Watch it! Wheat has had a big rally and food commodities have turned bullish.

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

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 has calmed down from its jump in the spring. Big rally off the bottom was extreme and unusual. Dow, S&P 500, Nasdaq and Russell 2000 had bear sell signals in July. DJT Monday. Interest rates have had sharp sell off globally. Looks like a liquidity trap.

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

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