Intermarket Analysis – 22nd September ‘09

Agenda

Intermarket Analysis

Currency markets
US credit Markets
Commodity markets
Equity Markets

2
Currency Markets
USD downtrend nears termination

USD Index is in the final leg of the current downtrend

Although index is still in a downtrend, we believe

last weeks price move is pointing to a reversal if the
index trades above 78.5 and 81.4 subsequently for a move
to levels of 88 - 90
Three push divergence
US DOLLAR INDEX CONTINUOUS [FINEX] (76.7500, 77.3350, 76.7000, 77.0000, +0.33000) 91
90
89

88
87
86
85
84
83

82
81
80

79
78
77

76
Three push divergence shifts 75

focus to possibility of a reversal 74

73
72
71

Relative Strength Index (41.0042)

80
70
60
50
40
30
20
Stochastic Oscillator (14.3077)

50

July August September October November December 2009 February March April May June July August September October
EURUSD
USDEUR - EURODOLLAR (1.46880, 1.47130, 1.46060, 1.46740, -0.00330)

1.60

1.55
Euro is expected to weaken from current
levels of 1.4730 1.50

1.45

1.40

1.35

1.30

1.25

Relative Strength Index (66.7185) 80

75
70
65
60
55
50
45
40
35
30
25
20
15
May June July August September October November December 2009 February March April May June July August September October
 GBP at crucial support
USDGBP - UK POUND STERLING (1.62160, 1.62640, 1.61320, 1.62100, -0.00600) 1.90
1.89
1.88
1.87
1.86
1.85
1.84
1.83
1.82
1.81
1.80
1.79
1.78
1.77
1.76
1.75
1.74
1.73
1.72
1.71
1.70
1.69
1.68
1.67
1.66
1.65
1.64
1.63
1.62
1.61
1.60
1.59
1.58
1.57
1.56
1.55
1.54
1.53
1.52
1.51
1.50
1.49
1.48
1.47
1.46
1.45
1.44
1.43
GBP below 1.60 will make 1.42
1.41
1.40
USD reversal case even stronger 1.39
1.38
1.37
1.36
1.35
1.34
1.33
1.32
1.31
27 3 10 17 24 1 8 15 22 29 5 12 19 26 2 9 16 23 2 9 16 23 30 6 13 20 27 4 11 18 25 1 8 15 22 29 6 13 20 27 3 10 17 24 31 7 14 21 28 5
November December 2009 February March April May June July August September October
Commodity Markets
September Gold Breakouts
GOLD [CASH] (1,004.45, 1,006.60, 995.500, 1,002.55, -3.60004) 1150
1100
1050
1000
Gold remains bullish as it has broken out of consolidation 950

900

September breakouts have played out well in gold 850

2009 800

750

700

650

2007 600

550

500

450

400

2005
350

300

2002
250

2001 2002 2003 2004 2005 2006 2007 2008 2009

Gold – Bullish against 970
GOLD [CASH] (1,004.45, 1,006.60, 995.500, 1,002.55, -3.60004) 1060
1050
1040

Support @$970 1030

1020
1010
1000
990
980
970
960
950
940
930
920
910
900
890
880
870
860
850
840
830
820
810
800
790
780
770
760
750
740
730
720
710
700
690
680
670

660

July August September October November December 2009 February March April May June July August September October
 Crude oil: consolidation to give way to a trend
LIGHT CRUDE CONTINUOUS 1000 BARRELS [NYMEX] (71.7800, 72.2000, 68.9600, 69.7100, -2.33000)

150
100.0%

140

Crude oil has traced out an ascending triangle 130

For itself, probability of a breakdown looks higher

120

A break below $68 and then below $65 will confirm a

downtrend to $50 110

61.8%
100

50.0% 90

80
38.2%

70

23.6% 60

50

40

0.0%
30

March April May June July August September October November December 2009 February March April May June July August September October
 Natural gas turns in September again
NATURAL GAS CONTINUOUS 10000 MMBTU [NYMEX] (3.72200, 3.79700, 3.53200, 3.57600, -0.20200) 19
18
17
16
15
14
13

12

11

10

September turn in natural gas shifts focus to 3

a possible reversal developing

Natgas might already have formed a bottom for 2009

2

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
 Copper uptrend nears completion
HG COPPER CONTINUOUS 25000 LBS [COMEX] (2.78350, 2.83150, 2.75050, 2.80550, +0.02050)

4.5

100.0%

4.0

3.5

61.8%
5?
3.0

50.0%

2.5
38.2%
3

23.6% 4 2.0

Copper prices might form termination 1

of current upmove
1.5
Look for confirmation and a fall to 2.20 if price
trades below 2.70 for Commex active month contract 2
0.0%

2007 November 2008 February April May June July August September November 2009 February April May June July August September
US Credit Markets
US 30 YR about to breakout
US TREASURY BONDS 30YRS - CONTINOUS [CBT] (120.844, 121.250, 120.562, 120.969, +0.28100)
145
144
143
142
141
140
139
138
137
136
135
134
133
132
131
130
129
128
127
126
125
124
123
122
121
120
119
118
117
116
115
114
113
112
111
110
August September October November December 2009 February March April May June July August September October
High Yields undeperforms the risk appetite

Bond markets are not confirming

the new highs being formed
in US equity markets
Equity Markets
 DJIA – Support @ 9200
DOW JONES INDL AVG (DJIA) (9,818.61, 9,818.69, 9,725.88, 9,778.86, -41.3398)
14500

14000
2
13500

13000

12500

ii
12000

1 11500

11000

i
10500

9794 B or 2
j 10000
iv
9500
4
A 9000

8500

B 8000

iii

v 7500
3

7000

6500
5
A or 1

November 2008 February March April May June July August September November 2009 February March April May June July August September
 S&P 500 approaches major turn date
S&P 500 INDEX (1,067.14, 1,067.28, 1,057.46, 1,064.66, -3.64001)
1600

1550

1500

1450

1400

1350

1300

1250

22 September 09
nd
1200

1150

1100

1050

1000

950

900

850

800

750

700

650

November 2008 February March April May June July August September November 2009 February March April May June July August September
 Nikkei 225
NIKKEI 225 INDEX (10,379.20, 10,399 .40, 10,292.50, 10,370.50, -73.2998)
14000

13500

13000

12500

12000

11500

11000

10500

10000

9500

9000

8500

8000

7500

7000

6500

July Augu st September October November Decem ber 2009 February March April May June July August Septem ber October
In Summary
USD index is in a process of forming a bottom. Last week price action points to
the possibility of a bottom if the index trades above 78.5

Commodity prices are not confirming the rise in risk appetite as industrial
metals continue to remain at brink of important support levels

Gold might give a major breakout trade if it continues to trade above $1000
this week, we remain bullish against $970 in the short term

Bond markets are consolidating before a major move. US 30 year bond price is
expected to rise to 124 although long term trend in still down

A strong blowout rally can be expected if USD turns down to support levels of
74 and below which might lead to marginal new highs in equity and some
commodity markets