Weekend Summary and Conclusion 27/2/2011

TRENDS:

- XJO: long/medium-term - up.

- XJO: short-term - Down but retracement may have finished.

- Dow Industrials: medium-term - up

- Dow Industrials: short-term - Down but retracement may have finished.

- Hang Seng: medium-term trend - down. (Chinese market often leads.)

- Ozzie Dollar: Sideways consolidation. Short-term trend - up.

- Gold in Oz Dollars: Medium-term trend - up. But rally may have finished (Positive for

general market.)

XJO currently at 4837.

Major Support and Resistance for XJO: Resistance: 5000; Support 4200 .

Ratio American Bonds:Commodities - Positive for the general market

Ratio Copper/Gold, Short term down trend - may be reverting to the upside - reversion would be positive for the general market.

XJO Long-term Chart Pattern: Rising bearish wedge. Break upwards - very bullish; break downwards - very bearish. Wait and see. Probabilities for this chart pattern favour a downside break.

Any correction is likely to be muted because of Bernanke’s money supply (QE2) and the strength of the Presidential Cycle in the 3rd Year.

Next Week: Near-term favours the upside. Monday should be up. Geo-political events will determine longer term direction.

Next week - beginning of a new month. That usually favours the upside as fund-managers put new money to work.

Reading Al Jazeera shows demonstrations in Bahrain, Yemen, Jordan and Iraq. The Libyan civil war continues. Renewed demonstrations have occurred in Egypt. These events can move rapidly and move the markets with just as much rapidity.

The Game Plan:

- Seasonality favours further upside in March.

- The “overbought” conditions which prevailed in February have been eased.

- Short-term down trend seems to have finished.

- The longer term trend is up - follow the trend.

- If escalation of Middle East turmoil occurs, it will raise oil price and scuttle the longer term trend. Be flexible.