Market Outlook for Week Beginning
May 3, 2010

Note: - All earnings dates listed below are tentative and subject to change.

Tuesday – The March factory orders report.

Wednesday - Weekly U.S. petroleum supplies, the ISM Services Index for April and the ADP employment report for April.

Thursday – Weekly initial jobless claims and the preliminary nonfarm productivity report for the first quarter of 2010.

Friday - The government's nonfarm payrolls report and the unemployment rate for April.

Tuesday –Archer Daniels Midland Co. (ADM), ArvinMeritor Inc. (ARM), Beazer Homes USA Inc. (BZH), CVS Caremark Corp. (CVS), Duke Energy Corp. (DUK), Fresh Del Monte Produce Inc. ( FDP), Marathon Oil Corp. (MRO), MasterCard Inc. (MA), Merck & Co. Inc. (MRK), Molson Coors Brewing Co. (TAP), Tenet Healthcare Corp. (THC), Suncor Energy Inc. (SU), Thomson Reuters Corp. (TRI), Vornado Realty Trust (VNO), Cephalon Inc. (CEPH), Chesapeake Energy Corp. (CHK), Evergreen Solar Inc. (ESLR), SBA Communications Corp. (SBAC), and True Religion Apparel Inc. (TRLG).

Wednesday - Allegheny Energy Inc. (AYE), Alpha Natural Resources Inc. (ANR), American Financial Group (AFG), BMC Software Inc. (BMC), Brightpoint Inc. (CELL), CBS Corp. (CBS), Vale S.A. (VALE), Prudential Financial Inc. (PRU), and Quest Software Inc. (QSFT).

Thursday –CIGNA Corp. (CI), Cincinnati Bell Inc. (CBB), DIRECTV (DTV), Dr Pepper Snapple Group Inc. (DPS), El Paso Corp. (EP), Fuel Systems Solutions Inc. (FSYS), SandRidge Energy Inc. (SD), Hyatt Hotels Corp. (H), MGM MIRAGE (MGM), Plains Exploration & Production Co. (PXP), Omnicare Inc. (OCR), Scripps Networks Interactive Inc. (SNI), Sara Lee Corp. (SLE), Warner Music Group Corp. (WMG), bebe stores inc. (BEBE), Blue Nile Inc. (NILE), Consolidated Edison Inc. (ED), Crocs Inc. (CROX), General Cable Corp. (BGC), Kraft Foods Inc. (KFT), Leap Wireless International Inc. (LEAP), and STEC Inc. (STEC).

Friday - CF Industries Holdings Inc. (CF), Edison International (EIX), and PG & E Corp. (PCG).

It would appear that we are undergoing some corrections in the market place, with some short-term concerns to consider, but for the longer term I feel that there is still plenty of bullish potential left.

The bulls were definitely contained last week with some very unpleasant news items that greatly affected the investor’s psyche, to send the markets tumbling globally, but not dramatically. Some positive reports from the economic side as well as the company’s quarterly reports helped to contain the downward spiral somewhat!

For full details refer to Market Update for Week Ending April 30, 2010.

The negative aspects of last week:-

• The banking sector caused a ripple in the market as the U.S. Treasury announced plans to begin selling off its massive stake in Citigroup (C).

• The continued drama over Greece’s debt weighed heavily on markets globally.

• Goldman Sachs faced a U.S. Senate subcommittee to answer charges of investor fraud.

• Standard & Poor's slashed its rating on Greek government debt to junk status.

• Portugal was also downgraded due to debt concerns.

• Standard & Poor's slashed its credit rating on Spain.

• Federal prosecutors are considering criminal charges against Goldman Sachs (GS).

• S&P Equity lowered its rating on GS from "hold" to "sell," and Bank of America-Merrill Lynch dropped its rating from "buy" to "neutral."

Some positive aspects of last week:-

• The Federal Open Market Committee reported that "economic activity has continued to strengthen" and "the labor market is beginning to improve."

• The Fed left unchanged its language that it would maintain record-low interest rates for "an extended period" of time.

• Some encouraging reports on the employment front.

• The E.U. was putting together a bailout package for Greece.

• A gross domestic product report showed that the U.S. economy grew at a brisk 3.2% pace in the first quarter.

• Some good quarterly earnings reports from companies.Reaching the “optimistic stage” or “acceptance stage”, as some people know it by, is now becoming harder to achieve (Refer to the Bull and Bear Markets ). However, this does not mean that we are on a downward spiral again, but are experiencing some corrections or range-bound price action after a very bullish year that has just past.

According to history, the bull market is here for awhile as trends tend to be around for a good length of time. According to Sam Stovall, at Standard & Poor's, since World War II, the average bull market has averaged just over four years, and no bull market has collapsed before its second year.

Areas that support the bullish environment are:-

• Analysts are adding more and more "buy" ratings.

• Sentiment is moving toward "acceptance”.

• The recent Investors Intelligence poll showed that 54% of those polled were bulls and 18% were bears.

• Reports showing that housing, manufacturing, and jobs have all greatly improved in the past few months.

• Very little inflation occurring.

• The Fed keeping the rates low and/or unchanging.

• A major improvement in credit markets.

These positive aspects all point to a good economic recovery which in turn will support the growth of the bull market.

Having said this, for the short-term, we need to bear in mind the following negative aspects:-

• Options traders sentiment is a concern at the moment where the customer-only buy (to open) call/put volume ratio on the International Securities Exchange (ISE) has spiked to a record high of 2.49, exceeding the previous July 2007 peak of 2.45.

• Levels of bullishness are consistent with short-term peaks which, according to history, could cause a quick drop.

Pullbacks will occur, as evidenced by previous “bad news/good news weeks,” which should be continued to be viewed as buying opportunities, with an emphasis on consumer discretionary, real estate, financial and small-cap names.

Caution is always the by-word, but, there is also a need to take any opportunities that the market will throw your way, and we are in a market that is providing this opportunity at the moment.

Profit-making in the week ahead should be good!

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