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The world hasn't fallen apart yet, spring is in the air and the buyers have been swarming looking for bargains in the stock market. Yield of short term Treasuries and money market funds are so low that money is fleeing the safety of these markets and trading off risk for yield. Amid all of the instability of the PIIGS (Portugal, Italy, Ireland, Greece and Spain) some sanity is coming to the surface. It does appear that Greece will receive some help however, Greece will have to put in place some austere changes that could lead to further strikes. This will be sorted out.

Next week is roll-over week for the S&P 500's and the other financial indices. Next Thursday, March 11, 2010, the front month, will be June. Ah, the thoughts of spring are in the air and the weather here in the northeast is beginning to yield to the seasonal change which is approaching.

What we can and do expect to see is a return of volatility in the markets next week as the futures traders move their positions from March to June. This is called the switch or spread. When interest rates are low, it is likely that the number will be a negative number, when interest rates are high; the number becomes more positive. In other words, for the current month the price of the futures contract will be higher than the roll month and thus you are paid to switch. This will change once interest rates begin to rise again. The switch has begun but will really be seen on Wednesday when most will move from March to June.

We are now entering real estate agents' favorite time of year, the spring real-estate buying season. People that have to move start their search now so that they might be able to find their dream homes and be moved in and settled before the fall classes begin for the children. Because there is such a large backlog of unsold houses and foreclosures in inventory, it is likely that home prices will continue to feel the pressure of too much supply in the market. The spring selling season will be better than the fall and winter season but it will fall short of expectations.

The US Dollar index has taken a breather of late and retreated. Danger hangs around 79.695 where the Market Profile chart warns of instability.

This information is confirmed by the uptrend line at 79.369. The stochastic indicator, the RSI and our own indicator are all issuing buy-signal. Please note that the Bollinger bands are getting very narrow, warning us that there will be a violent move in the near future. Naturally, it doesn't tell us in which direction that move will take the market.

The Thomas DeMark Expert indicator continues to issue a sell-signal. We are above the Ichimoku Clouds for only the daily time-frame and are below the clouds for both the weekly and the monthly time-frame. Remember, we will have the jobs report on Friday and that likely will push the market around a bit.

S&P 500 daily chart shows the Thomas DeMark going higher at overbought levels, stochastic indicator overbought and issuing a sell-signal, RSI at overbought levels and our own indicator issuing a sell-signal. The downtrend line is at 1123 and the uptrend line is at 1099.53. When a channel is drawn on this chart you see the range between 1099.53, on the downside and 1138.40 on the upside. Remember, we will have some nervousness today as we await tomorrow's "Jobs" data. We believe that the data will not be as awful as expected but awful nonetheless. We are floating just above the Ichimoku Clouds on the daily and the weekly charts.

We are below the clouds on the monthly chart. NASDAQ 100 is backing and filling at very overbought and extended levels. The RSI is at overbought levels but is not issuing a sell-signal, the stochastic indicator and our own indicator are issuing a sell-signal, and the Thomas DeMark Expert indicator is overbought.

The uptrend line is at 1825.41. The market looks a little heavy and likely will back and fill. We are above the Ichimoku Clouds for the daily and the weekly time-frames, we are in the clouds for the monthly time-frame. There is a downtrend line on the monthly chart at 1844.03. Should the NASDAQ 100 find the strength to close above that level, it will open the door to much higher levels. The downtrend line on the daily chart is at 1859.86. Russell 2000 is grossly overbought. As a matter of fact, the chart has pole like qualities. That said, it is difficult to say where the feeding frenzy will stop.

Actually, when you look at the daily chart, you see one bull flag and a possible second forming now. We have a sell-signal from stochastic indicator, and our own indicator. RSI grossly overbought. We are above the Ichimoku Clouds for the daily and the weekly time-frames. When you look at the weekly chart, you have to be impressed with the strength of this index.

Ready, set, start shopping! Yes, we are entering the spring housing season when buyers appear to shop and find homes. Why the sudden rush, well, it is clear that interest rates are not going to go any lower and it is just as clear that interest rates on home mortgages likely will increase in the future. The Federal Reserve has signaled to the markets that the free lunch is over so, those who have been sitting on the sidelines waiting for further declines in home prices will be encouraged to purchase the sought after home and lock in the rates now. Naturally, this will appear as an encouraging sign for the economy. Look for the housing numbers to increase in the next few months. Remember too that some of these purchases will steal from future purchases and that we likely will see an upward blip now, and a slow down later. This the same type of behavior that we saw in car sales during the cash for clunkers promotions. A further government encouragement is the tax breaks for first time purchases and purchases that will expire in April.

The market, as measured by the S&P 500 has been in rally mode for the past six trading session, although the trading session on Friday left a doji like candle on the chart. We would not fault the market if, it decided to take a break from the current rally to allow for some backing and filling. Friday's action left an outside day on the chart. When the bears had the ball they failed when the bulls had it they also failed this leads us to believe that Friday's action was a transition day which could lead to a reversal of direction. It appears that the market took the Fed's hike in the rate as a positive, acknowledging that the economy seems to be expanding. It further appears that the Fed is on watch and trying to extricate itself from the stimulus game, although they have said, at their meeting, that they stand at the ready to do whatever is necessary to prevent an economic implosion. We wonder how they will handle the bankruptcy of the various states here in the USA. Are they going to rescue New York or California, after all, both states are larger and more populated than is Greece.....hum?

Tuesday: February consumer confidence is released at 10:00 and December Case-Shiller home price index for December is released at 9:00. Wednesday: January new single-family home sales are released at 10:00 and January equipment leasing and finance index is released at 10:00. Thursday: January durable goods are released at 8:30, mutual fund sales and redemptions and December house price index is released at 10:00. Friday: 4th quarter GDP is released at 8:30, January existing home sales are released at 10:00, and Chicago purchasing managers' report for February is released at 9:45.

The US Dollar index traveled above the upper Bollinger band, intraday in the Friday session, a moved back inside the band. Actually, the US Dollar index opened on a bullish spike looking a lot like a short-covering rally, and then, when the buyers retreated, the sellers took the lead and leaned on the market bringing it back to the previous day's range. This action illustrates the power of a short-covering rally. It would not surprise us to see the US Dollar index trade down to 79.64 and perhaps 79.085 before starting another rally. The uptrend line is at79.93 for the Monday session and 79.97 for this coming Friday. We are overbought as measured by all the indicators that we follow for the weekly time-frame. The daily time-frame is near overbought levels and pointing higher. The 5-day moving average is at 80.277. The top of the Bollinger band is at 81.179 and the lower edge is seen at 78.253. We are above the Ichimoku clouds for the daily time-frame but remain below the clouds for both the weekly and the monthly time-frame. If we could see the US Dollar index close above 81.53, we will see more shorts scared out of their positions.

The action on Friday in the S&P 500 was a clear rejection of the high and a rejection of the low. It would not surprise us to see the S&P 500 retreat to 1084.16 and even 1075.87. The stochastic indicator, the Thomas DeMark Expert indicator and our own indicator are all overbought. Both our own indicator and the stochastic indicator have just issued a sell-signal. The RSI is going sideways slightly below overbought levels and the Thomas DeMark Expert indicator is doing the same but at overbought levels. The 5-day moving average is at 1085. The top of the Bollinger band is at 1113.07 and the lower edge is seen at 1051.57. Friday was the sixth day up, and the probability of a retreat is likely. We are inside the Ichimoku Clouds on the daily time-frame, above the clouds for the weekly time-frame and below the clouds for the monthly time-frame. We would be very cautious moving forward, so stay nimble.

The NASDAQ 100 also enjoyed a sixth day of a higher close than open in the Friday session. We see signs of exhaustion. The NASDAQ 100 lost 1.50 in the Friday session. The stochastic indicator is issuing a fresh sell-signal as is our own indicator and the Thomas DeMark Expert indicator. The RSI is going sideways near overbought levels. We are inside the Ichimoku clouds for the daily and monthly time-frames but are above the clouds for the weekly time-frame. The 5-day moving average is at 1818.16. The top of the Bollinger band is at 1893.15 and the lower edge is seen at 1673.11. The market looks heavy and could use some time to back and fill or retreat. The Market Profile chart tells us that should the NASDAQ 100 close above 1819.75; it likely will quickly rally to 1841.50.

The Russell 2000 was the best performer in the Friday session. This index close up 2.50 for the day while the S&P 500 closed up 0.70 and the NASDAQ 100 lost 1.50 on the day. The stochastic indicator and the Thomas DeMark Expert indicator are both issuing a sell-signal. Our own indicator looks as though it might issue a sell-signal in the next session. The RSI is sitting at the overbought line going sideways. We do have signs of exhaustion, on this, the sixth day up. The Russell 2000 closed above the Ichimoku Clouds for the daily time-frame and remains above the clouds for the weekly time-frame as well. The 5-day moving average is at 612.62. The top of the Bollinger band is at 633.05 and the lower edge is seen at 583.13. We could see some follow-through buying early in the Monday session but we believe that a rest is warranted now and that we likely will see some backing and filling or a decline in the coming days.

Crude Oil rallied in the Friday session taking it above the upper edge of the Bollinger band and above the Ichimoku Clouds. The stochastic indicator is overbought and continues to point higher. The RSI is pointing higher with plenty of room to the upside. The 5-day moving average is at 76.09. The top of the Bollinger band is at 79.41 and the lower edge is seen at 70.57. We suppose that the Feds recent action inspired the crude oil bulls into believing that the economy is expanding and thus will need more crude oil. We are not entirely sure that the expansion will be as robust as crude oil is forecasting. So far so good, the market looks as though it has further to run to the upside.

Gold is going sideways and is below the Ichimoku Clouds for the daily time-frame. The stochastic indicator is overbought but continues to point higher. The RSI is not overbought and has plenty of room to the upside. The 5-day moving average is at 1101.58. The top of the Bollinger band is at 1133.98 and the lower edge is seen at 1053.29. The chart looks as though the market is consolidating at these levels. The weekly chart looks like there is plenty of room to the upside and that gold is breaking above the downtrend line. We find gold above the Ichimoku clouds for the weekly time-frame. We will remain on the sidelines until gold trades above 1140.30 at which point, we will go long.

So far this week the precious metals have shown extreme resiliency as economic news
globally has tested the patience of the most disciplined traders. The recent global economic data has analysts divide and therefore the markets are seeking an indicator and a direction.

Much of the news this week has been the European Unions dilemma in regards to Greece. It has become apparent that Greece's debt crisis was much worse than originally thought. The Greek budget deficit has affected everything from European Stock Markets, Central banks and certainly devaluing the Euro versus the Dollar. Despite a weaker Euro I believe that global Investors are tired of the fiat currencies
Non stop woes and are flocking to Gold and Silver as a flight to a "safer haven". There is certainly proof there has been a jump in physical demand lately.

The U.S Economy took another punch to the stomach as the U.S Labor Department announced that initial Jobless Claims rose by 31,000....(473,000) This should be priority one!!!!!

Also the IMF announced it would be selling its remaining 191.3 tons of Gold. This pressured the Gold and Silver markets early. I believe investors thought the selling of this massive amount would over whelm the existing demand. But as we have seen over and over the Asian sector has bought every price dip and considers it to be bargain hunting....

We also know the Chinese look to boost their gold Reserves to 10,000 metric tons over the next decade. The remaining IMF Gold would be a good start to that achievement...I believe if a Central Bank purchases any or all of the IMF Gold it will signal a Bull RUN
similar to rally after the central Bank of India purchased 200metric tons. 4 months ago.(rallied almost $180.00)..... The resiliency of the precious metals is real...

Feel free to call...Lets talk Gold !!!

Mike Daly / Gold Specialist
PFG BEST
mdaly@pfgbest.com
877-294-4669
312-563-8029
312-775-3014

*there is extreme risk trading futures, options, and forex*

Interest rates will be going higher! No, that is not a question but rather a statement. Just think about it, as states and countries find themselves in budget deficit, they will have to pay more to borrow money because of the slippage in their ratings. This leads to higher interest rates all around as people value risk more carefully. The thought being that if the states and countries have to be bailed out.....oh we forgot, refinanced, that cost will be borne by the larger entity, here in the states, it is the government, in Europe it is member of the European Central Bank. We have seen wealthy countries bail out their poorer, more leveraged relatives, case point Dubai.

Here in the states we, the home owners, find that our real-estate taxes are increasing. House values continue to retreat and yet, we must pay more in real-estate taxes. Why, because we are paying for those neighboring homes that have gone into foreclosure. Crime is on an up-tick. Even on safe streets, we have an increase in break-ins and robberies as the desperate become more desperate and brazen. What is to be done? The world is becoming a less friendly place to work in and to live in.

People today, who are employed, continue to have trouble making their bills. The tax increase felt by the increase in real-estate taxes along with high utility bills and other increases are causing the steady earner to fall behind. Credit card companies, instead of understanding that some money is better that no money on a bill, are recklessly raising the rate that they charge on their cards. We noticed one of our cards charging almost 26%! Naturally, we will be closing that account permanently. You would think the financial wizards that run the credit card companies would understand that higher rates on already stressed balances will likely lead to default which will lead to additional write-downs on their financial statements. Why not reduce interest rates on the cards so that the balance can be paid. It seems like moronic behavior, wonder why people are getting into credit card trouble, look at the way those companies are run. So where is the spending going to come from? Certainly apparel is cheap enough and electronics seem to be cheap as well, but with the current flock of cost increases just to live, who can afford a new outfit or another gadget that you really don't need?

Tuesday: E-commerce sales for 4th quarter are released at 10:00, Kansas City Fed President Hoenig speaks, Minneapolis Fed President Kocherlakota speaks and U.S. credit-card defaults are reported.
Wednesday: January housing starts and building permits are released at 8:30, the minutes of the January FOMC meeting are released at 2:00, and industrial production/ capacity utilization is released at 8:30.
Thursday: January leading indicator index is released at 10:00, PPI is released at 8:30 and February Philadelphia Federal Reserve Survey is released at 10:00.
Friday: CPI is released at 8:30.

The US Dollar index rallied in the Friday session, but was unable to remove the high seen in the February 5th session. Friday marked the third day in which the US Dollar index opened lower than it closed leaving three bullish candles on the chart. It looks, however; as though the US Dollar bulls are a little skittish rejecting the highs as they occur leaving large upside shadows on the chart. The stochastic indicator is overbought and is issuing a buy-signal. Our own indicator and the RSI are both issuing a buy-signal. Only the Thomas DeMark Expert indicator is issuing a sell-signal. The 5-day moving average is at 80.053. The top of the Bollinger band is at 81.109 and the lower edge is seen at 77.368. So long as the US Dollar index remains above 79.65, we will remain bullish the US Dollar index. Looking at the weekly chart, we see signs of exhaustion. On the weekly chart, we have an inside candle for the week. All of our indicators on the weekly chart are issuing a sell-signal. Remember, the run to the upside in the US Dollar index has been pole-like and some backing and filling would be in order and would not be negative longer-term for the US Dollar index. We are above the Ichimoku Clouds for the daily time-frame, but below the clouds for the weekly and the monthly time-frames. The uptrend line on the weekly chart is at 78.68 for next Friday and 78.66 for this coming Monday.

The S&P 500 has been up for three of the past five sessions. The action seen in the Friday session looks as though the bears had the ball, but badly fumbled it letting the bulls run toward the highs of the day, closing near those highs. All of the indicator that we follow herein continue to issue a buy-signal with plenty of room to the upside. The downtrend line for the Monday session is at 1087.73. The uptrend line for the Monday session is at 1060.12 and for the Tuesday session is at 1061.94. We are below the Ichimoku Clouds on the daily chart and the monthly chart, but above the clouds for the weekly time-frame. Both the weekly and the daily indicators are issuing a buy-signal. The 5-day moving average is at 1072.91. The top of the Bollinger band is at 1139.74 and the lower edge is seen at 1038.75. We likely will feel some stiff resistance at 1086 and 1090. It is likely that we will see some continued buying in the indices as the dilemma of Greece is sorted out. Remember, there are others not far behind Greece with ample deficit problems. Here in the USA we need not be too smug, we have California, New York and other states that are in budget deficits that continue in trouble. Meanwhile those troubles some states are being forced to pay more for borrowing as their risk of failure increases. This brings us to wonder why anybody would be satisfied with the yield of the 5 and 10 year treasury securities when there are other alternatives. True the treasuries are safe but are they safe? For now, they are safe.

The NASDAQ 100 closed right near the highs of the day in the Friday session. All the indicators that we follow herein are issuing a continued buy-signal with plenty of room to the upside. The first area of resistance should be seen at 1792. We are in the Ichimoku Clouds for the daily and the monthly time-frames, but are above the clouds for the weekly time-frame. The indicators for the weekly time-frame are about to give a buy-signal. The 5-day moving average is at1758.25. The top of the Bollinger band is at 1880.41 and the lower edge is seen at 1695.93. It looks as though this market wants to rally.

The Russell 2000 was the best performing financial index in the Friday session. Not only did the market turn from a negative day to a positive day, but the index closed very close to the highs of the day. The 5-day moving average is at 599.12. The top of the Bollinger band is at 642.97 and the lower edge is seen at 578.17. We closed just above the 20 day moving average in the Friday session. We are inside the Ichimoku Clouds for the daily time-frame, but above the clouds for the weekly time-frame. The indicators on the daily chart are all pointing higher and beginning to near overbought levels. The weekly indicators are just about to issue a buy-signal. We expect to see some resistance as we rally towards 617.50. We may be setting up for some range bound trading between 648.90 and 578.40.

Crude oil declined in the Friday session leaving a very bearish red candle on the chart. The indicators that we follow are issuing sell-signal from just above the neutral level. We will see a point of inflection on Wednesday. Do not fight that trend, just go with it. We are below the Ichimoku Clouds for the daily time-frame but in the clouds for both the weekly and the monthly time-frames. It is important that crude oil stay above 69.50 or risk a trip to 68.59 and lower. On the other hand, if the market rallies above 78.04, the door will be open to the early 80's. The 5-day moving average is at 74.23. The top of the Bollinger band is at 78.97 and the lower edge is seen at 70.84. The uptrend line is at 72.60 and the downtrend line is at 75.70. The point of inflection will be seen at 74.67.

Gold has a point of inflection on Thursday at 1099.70. The uptrend line is at 1074.45 and the downtrend line is at 1108.55. The indicators are giving us mixed signals and are neither overbought nor oversold. We have a doji candle as a result of the Friday session. Doji's indicate that the market is in transition and could likely change direction. In this case it would be from up to down. We are below the Ichimoku Clouds on the daily time-frame, but are well above the clouds for the weekly and the monthly time-frames. The 5-day moving average is at 1082.81. The top of the Bollinger band is at 1137.52 and the lower edge is seen at 1049.83. This market is going to make a major move by the end of the week so, fasten your seatbelt and go with the move.

Today was a slow news week, but things pick up a little in the next few days. Traders are awaiting another round of record Treasury auctions as well as Wednesday's Bernanke testimony on "exit strategies". The Fed has made it clear that they will slowly reduce their accommodative policy in regards to lower interest rates before actually hiking the Fed Funds target.

The U.S. dollar ran into some selling pressure and that worked against the Treasury bulls. It seems as though the positive correlation between the domestic currency and government backed fixed income securities is becoming a little more obvious. Although there is some room for error, we are looking for the near-term direction in both assets to be lower.

Bulls and bears will battle tomorrow over the significance of market supply and safe haven buying and the auction results could be the deciding factor. We are approaching the week with a "sell on rallies" mentality but caution that the absolute highs might not be in. We see some risk (based on the week's events) of a run in the long bond to the 120 area but at such levels we would be bears. In the meantime, support in the March T-bond lies at 118. If you are trading the 10-year note, look for resistance at 119 and then again at 119'20. However, we favor a pullback to support near 117'20.

The five year note could see 117'18 should things get out of hand in equities, but if these levels are seen they should be a good place to be bearish.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

Treasury Bond and Note Option Trading Recommendations

**There is unlimited risk in naked option selling.

Flat

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Crude will close down about $1.50 on the day and about $6 off its highs intra week highs. The fact that prices did not break down and heavy buying came in below $70/barrel this correction may be close to over. Clients are still holding their May call spreads and are under water but we expect this trade to be profitable. We have NO opinion here until the dust settles. We have no long or short exposure in natural gas with clients.

We started to buy June RBOB call spreads this week and will most likely be adding to this position in the coming weeks. We expect to see a rally in Indices to start next week. That being said we're not saying to get long but rather to use this rally to exit positions or to sell; ideally we get a window of 1105/1115 in the ES and SP to sell. Softs were crushed today with cocoa losing 3.8%, sugar down by 5.3%, cotton by 3.4%, OJ by 2.4% and coffee by 2%. Sugar closed just below the 50 day moving average; we are pricing out July bullish plays but have yet to make a move. Prices are down 13% just this week but remember prices were at a 29 year high so there could be more downside...stay tuned.

We suggested a buy in cotton if we saw a drop which we have seen but re-evaluating we think it is possible to fill the downside gap from October which would take prices about 3 cents lower so hold off for now. As Treasuries make their way closer to 121′00 in the March contract we are more interested in gaining short exposure for clients; at the moment we are flat. We misspoke about the USDA report; it is next Tuesday not Monday. Clients are lightly long May soy meal and hold calls in May and July corn. As for the December corn futures clients are long and have bought March puts for protection into the USDA report. The delta neutral strategy is allowing us to stay about even in the live cattle even with prices moving higher; clients are short April futures and Long (3) April 92 calls. Originally the trade was expecting to see prices down in the short term and higher in the medium to longer term. The 100 day moving average held today in April gold but to determine if the bleeding is over will be up to the dollar next week. We think it is aggressive but after the near $85 break in prices one could wade back in futures lightly. We see support in April at $1140 followed by $1125. The $14.75/14.90 level is a buy in March silver in our opinion, today's low was $14.65.

Traders may need to risk down close to $14 so trade accordingly. We still prefer $2 call spreads in May or out rights in July. Today some clients bought $18 July calls for just over $2000/per. We think a trade back over $20/ounce in 2010 is likely so buying at these levels though painstaking in the short run could prove to be very profitable. The Euro/yen trade hit clients a little today but we think the worse is behind them. We will treat this as 2 different trades and on rally above 1.38 exit the Euro next week. Over the weekend if we get rhetoric out of Euro-zone DO NOT rule out a quick trade to 1.39/1.40.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Some pockets of shoppers are returning to the market. We notice that the current flock of shoppers are the more well-to-do shoppers who, had the cash, but who were saving it in case things got worse. Today, they are no longer worried about things getting worse and are again beginning to spend their cash. After all, the government has said that the recession is over, so, we guess they believe the propaganda that the current administration is publishing. Will this be enough to restart the economy? Probably not, because the middle class earners are still under financial waters and struggling to stay afloat. Purchases that are being made are based on need, discretionary spending is limited. Worse yet, those who have been burned by the decline in the wake of the Lehman mess are scared to do anything at all. Thus, they are, for the most part, not investing and sitting on negative returns in CD's or money markets.

Greece, Portugal and Spain all are having financial problems and, as members of the European Union, are pressuring the Euro. Perhaps this is why the US Dollar has been in rally mode. Remember, as the dollar rises, dollar based commodities and the US equities markets will fall. This is vintage John Murphy stuff. Re-read your Murphy books: The Visual Investor and his book Intermarket Technical Analysis. The market is behaving as he described it and the relationships are holding true.

Monday: December personal income/consumption is released at 8:30, December construction spending is released at 10:00 and January ISM index is released at 10:00.
Tuesday: pending home sales and home vacancies are released at 10:00.
Wednesday: January ISM non-manufacturing index is released at 10:00, and Challenger Gray & Christmas January layoff report is released.
Thursday: Both the European Central Bank and the Bank of England release statements and interest rate decisions, 4th quarter productivity is released at 8:30 and December factory orders are released at 10:00.
Friday: January non-farm payrolls and unemployment are released at 8:30 and consumer credit is released at 3:00.

The US Dollar index has a 9-count on the daily chart. We are overbought as measured by the indicators that we follow. That said, three of the four indicators are pointing to higher levels. Only the Thomas DeMark Expert indicator is curling over and issuing a sell-signal. The 5-day moving average is at 78.630. The top of the Bollinger band is at 79.46 and the lower edge is seen at 76.50. We are above the Ichimoku Clouds for the daily time-frame but are below the clouds for both the weekly and the monthly time-frames. We are overbought on the daily and weekly time-frames but not on the monthly time-frame. When there is a retreat in the US Dollar index, we expect to see support at 78.77 and at 78.22. There is an uptrend line for the Monday session at 77.801; the weekly uptrend line is at 77.752. We closed above the upper edge of the Bollinger band, for both the daily and the weekly time-frame, and likely will retreat from that level. The charts also tell us that it is likely that on a further rally to see the US Dollar index trade at 80.143. We do believe that this index will retreat or go sideways before the 80.143 level is approached.

The S&P 500 tested and bounced off the 1066.50 horizontal line on the chart. We are massively oversold by most measures. The stochastic indicator continues to issue a sell-signal as does the RSI, both are oversold. The Thomas DeMark Expert indicator is issuing a buy-signal and our own indicator is issuing a fresh sell-signal and is not oversold. We closed below the lower edge of the Bollinger band and likely will bounce from this level. Should the market rally, we will see some resistance at 1081 and 1087. The 5-day moving average is at 1100.63. The top of the Bollinger band is at 1169.05 and the lower edge is seen at 1072.04. We are inside the Ichimoku Clouds for the daily time-frame. We are above the clouds for the weekly time-frame but are below the clouds for the monthly time-frame. The monthly indicators are now issuing a sell-signal, finally agreeing with the weekly and the daily indicators. Should the market not rally here and now, we expect to see a visit to the 1026 area of support, below that level is 1012 and 991.25.

The NASDAQ 100 declined in the Friday session ending the week and the month at very oversold levels. The stochastic indicator, the RSI and our own indicators all continue to issue a sell-signal. The Thomas DeMark Expert indicator is issuing a buy-signal from oversold levels. We closed below the lower Bollinger band and we feel that this index will rebound to climb inside the bands again. The lower edge of the Bollinger band is at 1758.80 and the upper edge is seen at 1939.54. The 5-day moving average is at 1812.13. We closed below the Ichimoku Clouds on the daily time-frame. We are above the clouds for the weekly time-frame but are in the clouds for the monthly time frame. All time-frames are issuing continued sell signals with plenty of room to the downside on the weekly and monthly time-frames.

The Russell 2000 remains above the Ichimoku Clouds for the daily time-frame but is dangerously close to moving inside the clouds. This index has be a little less awful than the other indices. The stochastic indicator, our own indicator and the RSI all continue to issue a sell-signal. The Thomas DeMark Expert indicator is issuing a buy-signal at oversold levels. The 5-day moving average is at 619.57. The top of the Bollinger band is at 657.34 and the lower edge is seen at 602.98, a level we closed below. Naturally, we will either expand our volatility or will rally to close inside that level. When reviewing the point and figure chart, it is obvious that 599.20 has to hold or we will see much lower levels. We would expect to see some stability return to the market in the coming week. Just keep your seatbelt fastened.

Crude oil has been sliding and closed below the Ichimoku Clouds on the daily time-frame. We are inside the Ichimoku Clouds for the weekly and the monthly time-frames. The downtrend line for the Monday session is at 74.12, a level which must be removed to turn crude oil from negative to positive. The 5-day moving average is at 75.27. The top of the Bollinger band is at 85.12 and the lower edge is seen at 71.66. All the indicators that we follow herein are oversold and all are pointing lower. This market is oversold enough to expect crude to rally. The quality of the rally will tell us volumes about this market. Wait before taking a position and re-analyze after the bounce.

Gold retreated in the Friday session leaving an inside day on the chart. We held a very import level when gold held 1074.50. The 5-day moving average is at 1098.95. The top of the Bollinger band is at 1161.86 and the lower edge is seen at 1074.50. We are below the Ichimoku Clouds for the daily time-frame but above the clouds for both the weekly and the monthly time-frames. If we do not hold the current lows, we will see the market test 1042 and then1026 on its way to 984. Eventually 865 could be seen. The stochastic indicator is issuing a buy-signal for the daily time-frame. The other indicator are sort of going sideways and not really giving a signal. We will have to wait and see how much lower this market goes before issuing a real buy-signal. We feel that this market has been overdone on the upside and this retreat is a welcome one which will give rise to further rallies in the not too distant future.

Investors who positioned their portfolios thinking the Bull market in commodities was over were proven wrong in 2009. Several commodities saw multi-decade highs & a majority of commodity sectors showed above average returns as seen in the attached chart. There were a few standouts; Copper was higher by 140% trading back to levels seen in the Summer of 2008, sugar was helped by a world deficit and rose by 130% and it has since reached 29 year highs, finally RBOB prices almost doubled. We don't want to cherry pick just the best performing commodities and to be clear there were no clients of MB Wealth that bought these three commodities at their lows and held them throughout the year. The point I'm trying to make is that the commodity bull is alive and well and investors should diversify a portion of their portfolios and allocate anywhere from 5-20% of their investment capital to this asset class.

We feel that with governments around the globe flooding the system with money and as long as some form of a global recovery starts to take foot there could be substantial appreciation in a variety of commodities. I feel it necessary to point out that commodities are not only long investments as well there are a number of trades we did last year that we speculated on commodity price depreciation.

Find below the highlights by sector we saw for 2009.

Agriculture: Corn was a tale of two stories: farmers planted what looked to be the second largest crop in history, however the problem was the crop went in late due to inclement weather and we had one of the latest harvests in three decades. This should translate to a sizeable crop but the quality should be less than present forecasts. As for trading the markets after hitting a 3 ½ year low in the fall, MB Wealth has had a "buy the dips" mentality. Prices have bounced almost $1 off their lows and after a mild correction we expect to see another leg higher. As for the soybean crop, they too went in late, but as opposed to supply being the story in 2009 it was more the considerable demand for soybeans out of China that was the main price driver. Soybeans had a much larger trading range on the year with prices for the most part moving in a $3 trading range between $8 and $11 on the year. Moving forward we would suggest being a buyer closer to the $9/bushel level. The record high prices in wheat in 2008 did their job by causing farmers around the globe to shift more acres into wheat to prevent a re-occurrence of the 2008 price spikes. The high was made last year right around Memorial Day and after that prices traded lower until they bottomed in the fall and started to creep higher. Since then wheat has been range bound and unless scalping it, wheat really has not seen the movement other Ag's have seen. Being there was no defined trend the only large trades we've participated in for clients is long KCBOT wheat against a short in CBOT wheat which has yet to work. We expect KCBOT to trade at a premium to CBOT but to date it has been the other way around. All in all 2009 was a good year in agriculture but it was a tough act to follow after seeing record highs for most products in 2008.

Softs: As we indicated in last year's report this sector remains one of our favorites and commodity investors need to start paying more attention. To steal words from the infamous Rodney Dangerfield "Softs" get no respect. That is not to take anything away from the other markets, but let's get real, a 30 year high in cocoa, a 29 year high in sugar, a freeze in Florida that carried OJ to 2 year highs (this happened in early 2010), this sectors merits your attention. Value investors should love sugar because although 2009 saw a major price increase, sugar has traded double its current price. Are we forecasting that in the immediate future...NO but we do not see a top yet. We've pointed out a number of times that cocoa tends to track the British pound and have an inverse relationship to the US dollar; compare their historic charts and you will find it fascinating. For several years the US planted smaller and smaller cotton crops and though the demand has not really been there, cotton enjoyed a steady rise in price last year. This is one of the markets we did not really take advantage in 2009 and will try to in 2010. After bottoming early in the year cotton did not look back and traded from a low under 50 cents to as high just around 75 cents; a move of 50% with very little give back. Not every trade was a winner but we successfully navigated coffee from the long and short side in 2009 for clients. In 2009 when prices approached $1.20 it was a buy and as prices approached $1.40 it was a sell. What will 2010 bring?

Metals: Gold to silver, palladium to copper, metals surely grabbed the headlines last year and rightfully so. Gold was higher by 24%, silver by 48%, palladium 116% and copper a whopping 139%. Prices of copper, even at their highs, were a far cry from their 2008 highs but if the global recovery continues and the infrastructure build out picks up, this market could have further upside. I learned several years ago when I felt copper looked toppy at $1 that I am incapable of picking a top. We trade very little copper for clients but we do use it for a barometer on the overall health of the economy. Translation - we use copper as a guide to help navigate in other commodity markets. Gold started the year off high and only got more expensive as the year progressed trading to an all-time high in the first week of December. We remain bullish gold, but now with prices at elevated levels expect larger swings; a 10% move from $1200/ounce is much different that a 10% move from $700/ounce. Silver tends to follow the same trajectory of gold but it is a bumpier ride. Silver is not viewed solely as a precious metal but also as an industrial metal which could contribute to its amplified volatility. Silver's appreciation in 09' was impressive but being we've yet to get back to levels seen in early 08' we think silver needs to play catch up to the "yellow metal." The gold to silver ratio which will be discussed in more detail in our 2010 outlook still remains out of whack compared to historical norms. Past performance is not indicative of futures results. We trade very little palladium but after seeing the movement in recent years it will be a goal of mine to perhaps delve in, at a minimum give this market more attention. Looking at the weekly chart over the last few years it appears palladium may be a good candidate for trend followers. For much of 2008 the trend was down and for much of 2009 the trend was up...what will 2010 bring? Like palladium, platinum was on a track higher last year with virtually every 7-12% correction being bought. This market is too thin for our liking but we thought it deserved at least mentioning.

Energies: When most investors think commodities they think Crude oil. 2008 was a tough act to follow as prices of Oil soared past most forecasts but 2009 did not disappoint. What makes oil a great market to trade is there were opportunities for both longs and shorts to profit from last year. With prices bottoming in Q1 your bias would have needed to be long but oil is a market that does not move in a straight line. Oil prices have most likely gotten ahead of themselves now being 160% off their lows, but it is our opinion that in 2010 we will see triple digits once again so brace yourself. Oil is always a demand story but one cannot make light of the situation that the refinery utilization levels are so low. If this does not pick up and real demand comes back into this market BULLS will be in the driver's seat. Though RBOB and heating oil markets have their own dynamic really and one needs to pay attention to Crude as it is the dog and the distillates are the tail. Rarely will you ever see a big disparity in directional moves. There is no denying that once RBOB and heating bottomed in Q1 the trends have been up but what is the most alarming thing to me was the divergence in pace; heating oil is 83% off its lows while RBOB is just over 150% off its lows. The RBOB wildcard that we're still trying to work through here in the US is how big of a part alternative fuels will be in the equation. We have just started what could be a brutally cold winter so a demand spike in home heating oil use could be the wildcard for heating oil.

Currencies: There is so much negative media attention on the dollar and how the US dollar is being called into question as the world's reserve currency which may in fact be an accurate insight but based on its performance in 2009 I think the naysayers may be premature being the dollar only depreciated 5% last year. The longer the Fed keeps interest rates at 0% the more risk we see in the dollar; it is pretty straightforward. Well I guess I'm being too elementary it also boils down to what other Central banks do with their interest rates. Deeper than just interest rates, investors need to pay attention to the overall risk appetite of other investors and the flow of money between different asset classes, i.e. debt, stock, commodities, forex. We continue to think there is just as much if not more problems to come in Europe and in the UK, so although both crosses were higher last year we expect both to be a sell rallies market into 2010. It is no surprise that the top three performing crosses last year were the commodity currencies; the Loonie gained 16%, the Aussie higher by 29% and finally the Kiwi profitable by 26%. If commodities trend higher these three currencies should reap the benefits, on a correction commodity wide they would be the crosses to suffer the most. For the most part throughout 2009 international currencies behaved with an inverse relationship to the dollar. The exception was the Japanese yen which had more of a relationship to equities than the dollar. The rationale we think is the "carry trade" and as investors risk tolerance changed they bought/sold the yen as this currency was used to fund a large number of the recent speculative moves.

Financials Prices going into 2009 were in the process of falling off a cliff but just as the bearish sentiment reached a new paradigm BEARS were stopped in their tracks and either a bear market rally occurred or a new bull market like no other got under way. The move higher in all three US indices; the NASDAQ, Dow and S&P have been nothing short of spectacular. The only problem I see is that unless you bought at that low with new money you may not be much better off then you were 1 ½ years ago. This violent move proves that market timing is not the answer as some jumped out on the way down, others failed to get back in while others did nothing but gripe about the volatility. I am not trying to overanalyze what we just experienced, my lone point is that the S&P for example traded down 58% in 18 months from its highs in 07' to the low in 09' to only do an about face and gain 65% in less than 8 months and I just don't feel those massive swings are an accurate reflection of the overall economy. The market has changed and it has become a stock pickers market, we maintain that buy and hold does not work like it used to and that investors need to be much more nimble. We have been thinking a 10% correction is long over due and though as of now it has yet to materialize we are confident that early in 2010 it will; our only hope is we are positioned with clients to take advantage. 2008 was said to be one of the most disorderly and irrational years in modern history in the Treasury complex but looking back at 2009 was it really much different? As for 30-yr bonds the trading range in 2008 was 29'0 points while the H/L in 2009 was virtually the same just in the opposite direction. As for 10-yr notes the trading range in 2008 was almost 20'0 points while the H/L in 2009 was still 14'0 but like 30-yr bonds in the opposite direction. The overwhelmingly bearish trend that existed throughout 2009 was that money flowed out of Treasuries and into other asset classes, namely commodities and equities. Also there were rumors spreading that foreigners were less interested in buying US debt, but who could blame them at these rates. We were early on the Euro-dollar trade in 2009 and although we were able to navigate shorts a number of times, the main trend was up in Euro-dollars. A bulk of the 2009 trades we put on will not come to fruition and will be losers for our clients, thankfully we're scale trading and only have a small percentage of their capital in this play. Our clients will continue to allocate a portion of their commodity portfolios in this trade essentially speculating that interest rates will be moving higher in the months and quarters to come. Look for more detail in our 2010 Outlook.

Livestock: Watching paint dry would be an accurate description of the action we saw in the cattle market in 2009. Prices in live cattle stayed contained within an 8 cent trading and for the most part did not wonder too far from the 83 cent level. This was of course after a 20% correction off the 08' highs into the beginning of 09'. Looking at the weekly and monthly charts puts things more in perspective and a buy in the mid to low 80's would be the way we continue to play this market. As for feeder cattle the trend was sideways from Q1-Q3, but around September prices started to taper off losing 12% until mid-December when prices rallied 7%. We are not as in tune with feeder cattle and though we sporadically trade them for clients we're more interested in trading live cattle. This has a lot to do with open interest and the cattle traders we speak to, with much more experience then us, who tell us to trade live cattle not feeders. Going into 2009 the hog market had 2 bearish factors to contend with; surging supplies and a sharp drop in export demand and because of these, prices started the year on a sour note losing virtually 30% before they bottomed in mid-August. As things started to improve in the economy and supply & demand constraints started to normalize, prices caught a bid and through out the rest of the year found there way back to almost where they started in 09'. Prices may have a bit more upside but things appear to have gotten ahead of themselves and being that lean hogs never got the typical seasonal correction we get in December this could be a ripe candidate to short. We will explore this in more detail in our 2010 outlook.

Conclusion: It seems almost impossible but with another year behind us I've been trading commodities for almost 1 decade and although this makes me a seasoned veteran by definition, I am still learning almost on a daily basis. I consider myself fortunate because the bull market in commodities started around the same time I got into the marketplace. That is not to say it is easy and that prices are always moving higher but the demand from emerging markets, the industrial revolutions in the BRIC countries coupled with the loose monetary policies of Central banks around the globe, most likely will ensure another 10 years to you and I. We hope this brief summary helps outline the main points of 2009 and would suggest to all inventors that were captivated in this piece to instead of looking in their rear view mirror look out in front of you and read our 2010 outlook.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.