SPX – 08/10 to Current – Uptrend has been broken and first tgt has been hit – 50% of entire 4Q10 rally stands at 1195 which seems like a reasonable tgt area should 1250 be taken out – OUTSIDE mkts will dictate the overall direction of equity – Keep an eye on JPY, UST, GOLD, and EUR – As noted yesterday this is the first time in recent history that USD down made for WEAK EQUITY – MTD SPX is dn 5% while DXY is dn 3.5% - discipline over conviction.

IWM 10day Intraday – ST trend remains down and we have closed BELOW 79/80 support level for 2days – congestion remains at 79/80 level – decisive break tgts low 70s – how OUTSIDE mkts react will determine the depth of equity correction – things remain dicey. EEM vs IWM – 08/10 to Current – ST downtrend remains intact – recent rally tagged 5% level which occurred during the last bounce toward EOY – basket shorts recommended as long as volatility remains this high.

2/10 Spread – 02/11 to Current – Since mid FEB this spread has come off of ALL time wides and looks to be about to breakdown – this points to possible global slowdown and continued risk aversion – more below. 10/30 Spread – 02/11 to Current – as deficits seem destined to rise this spread possibly tells the longer term reality – break ABOVE 120bps will signal renewed LT debt/inflation fears – Keep an eye on OUTSIDE mkts (includes GOLD and FX).

GLD vs PLAT – 03 to Current GLD vs SPX – 03 to Current 30M consolidation of GOLD relative to other assets has the looks of upcoming strength – combining UST spreads along with these views sends the message of continued “inflation/FX” adjustments.

CRB vs SPX 07/10 to Current OIL vs SPX 07/10 to Current As long as “assets” rise faster then NEEDs one can say inflation is not a concern – but that changes when NEEDs begin to rise faster then assets – We are possibly entering an inflationary cycle that is beyond the control of CBs – more below.

XLF vs SPX – 07/10 to Current – downtrend in RELATIVE continues - view this as a YELLOW flag – break of recent RELATIVE lows will increase the likelihood of weaker financial mkts XLF 07/10 to current – primary and secondary uptrends have been broken and we are currently sitting ON support – Decisive break BELOW 16 tgts 15.2 area (-5%).

STAPLES – equal wgt MCD PG WMT JNJ 2000 to Current – Group down 6% YTD – another 4% until LT support – very rare that staples actually lead the mkts lower. 4 HORSE – equal wgt AAPL FFIV CRM AMZN – Consider this group the GENERALS - 01/09 to Current – dn 7.98% YTD and remains 11% above LT support – when the Generals falter we should begin looking for possible leadership change.