March 28th 2011

End of QE2?
Philadelphia Federal Reserve Bank President Charles Plosser hinted at the reversal of Fed‟s monetary
policy in the “not-too-distant-future” to avoid inflationary pressure. He also said that Japan‟s recent
disaster and the stubbornly high oil prices will pose only small and short-term risk to the US economy.
US economy is currently supported by the expansion of consumer spending and the improvement in
the labor market.

According to Plosser, if the Fed does not reverse its monetary policy, the consequences will be on the
inflation front and the economic stability in the future. Raising rates and shrinking the balance sheet
are Plosser‟s proposed strategy which should be conducted simultaneously. In addition, an explicit
inflation target should be established to ensure that inflation expectations to remain well anchored.

Plosser was not alone in delivering a fresh hint at the possible end of QE2 in June. Elsewhere, Chicago
Fed President Evans said that he does not see the needs to add more amounts to the QE2 as he
previously thought. Dennis Lockhart, the Atlanta Fed President also said on Friday that it‟s a high bar
for the Fed to do more. Minneapolis Fed President Narayana Kocherlakota also said on Friday that it
would take a significantly worsening economic condition in the US for the Fed to consider further
bond-buying.

US stocks ended the week up 50.03 points or 0.41% to 12,220.59, while the tech-heavy Nasdaq
Composite finished at 2,743.06, up 6.64 points or 0.24 higher. S&P 500 index edged 0.32% higher
as it added 4.14 points to 1,313.80.

Earnings from ORCL boosted market sentiment, while the upward revision of the Q4 GDP also
provided firm footings for stocks. Consumer sentiment however, dipped as pricey gasoline put a dent
to the consumers‟ mood. In Europe, Portugal crisis continued to weigh although the impact on US shares
so far has been limited.

Nevertheless, the upcoming week will feature the key nonfarm payrolls for March. The figure is
expected to show a dip to 178K after a reading of 192K in February. Unemployment rate is seen
inching higher to 9% in March from 8.9% a month earlier. Accompanying the payroll data is the ISM
for March. It is seen slightly higher from 61.4% to 61.6% while the auto stocks will find March US
sales report to be an interesting piece to watch. Sales however, are seen lower from 13.4 million in
February to 13.1 million in March.

The recent week belongs to AA and BA with 6.08% and 6.14% of gains. AA was boosted by the
assumption of rising commodity demand especially to rebuild Japan, while BA‟s promise of dividend
and positive updates on its order book have managed to keep the stock strong even in the aftermath
of Japan‟s triple disasters. BAC on the other hand, was the only loser this week as the Fed rejected its
dividend proposal.

1 .DJI 12,220.59 (+50.03 ● +0.41%) .SPX 1,313.80 (+4.14 ● +0.32%) .IXIC 2,743.06 (+6.64 ● +0.24%)
 March 28th 2011

Corporate News
 BA won yet another contract from Australia. This one for MHFCS support services worth $15.5M.
 CVX‟s issuer default rating (IDR) has been affirmed by Fitch at AA, with senior unsecured notes at
AA. Commercial paper is placed at F1+ while short-term IDR at F1+. Fitch set the outlook to
Stable.
 Collins Stewart analyst reiterated his stances on IBM and HPQ at BUY with price targets at $185
and $53, respectively. The analyst, Louis Miscioscia said that there has been correlation between
ORCL and Accenture‟s results and IBM and HPQ‟s. So, strong results from both CAN and ORCL
point at also strong results coming from IBM and HPQ, although HPQ has been „less correlated‟.
 INTC‟s market share edged higher to 81% in 2010, up 0.4% from 2009. AMD was at the second
place with 11.4%.
 JNJ‟s Ethicon is yet another recall from JNJ‟s portfolio as multiple lots of BLAKE Silicone Drain Kits
have been withdrawn.
 JPM led the M&A deals with $170B in Q1, well ahead GS which fell to the tenth place with $71B
deals.
 MRK expects more than 25% of its revenue to be gained from China by 2013 as the Chinese
government has put $125 billion through the end of 2011 to reform its healthcare systems which
cover 1.3 billion people. Currently, MRK has three facilities with more than 5,100 employees
there. Ken Frazier, MRK CEO said that MRK‟s biggest drugs Zocor are to be placed on the
Chinese essential drug list.

2 .DJI 12,220.59 (+50.03 ● +0.41%) .SPX 1,313.80 (+4.14 ● +0.32%) .IXIC 2,743.06 (+6.64 ● +0.24%)
 March 28th 2011

Index Focus: Dow Jones Industrial Average

DJIA
Last Mar 25th Resistances 12283.10 12295.71 12391.29 12495.43 12573.34
11,220.59  0.41% Supports 12192.02 12150.09 12116.20 12082.31 12040.38
WTD MTD Outlook
 3.05%  0.05%
NEUTRAL
YTD 12-Month
 5.63%  12.56% Comment > 12,391.29 opens the way to 12,573.34, risk < 11,972.61

DJIA has bounced off low of 11,555.48 and currently aims at regaining the peak at 12,391.29. The
index looks good and with positive RSI, MACD, and EMAs supporting the rise, we may see a shift from
NEUTRAL to POSITIVE soon. Above recent peak at 12,391.29 may offer 12,573.34. Risk will emerge
should the index slip below 11,972.61.

3 .DJI 12,220.59 (+50.03 ● +0.41%) .SPX 1,313.80 (+4.14 ● +0.32%) .IXIC 2,743.06 (+6.64 ● +0.24%)
 March 28th 2011

Index Focus: Nasdaq Composite

NASDAQ
Last Mar 25th Resistances 2762.55 2774.48 2787.72 2815.82 2845.85
2,743.06  0.24% Supports 2738.39 2723.44 2711.36 2699.28 2684.33
WTD MTD Outlook
 3.76%  1.41%
NEUTRAL
YTD 12-Month
 3.01%  14.39% Comment PT at 2845.85, risk < 2660.17

Despite previously weighed with the quake in Japan, Nasdaq has staged a rebound to neutralize the
bearish outlook. Currently it remains NEUTRAL but the road to POSITIVE outlook is not far away as
shown by brightening outlook of RSI, MACD and the EMAs. Nasdaq aims at 2,845.85, while risk is
seen below 2,660.17.

4 .DJI 12,220.59 (+50.03 ● +0.41%) .SPX 1,313.80 (+4.14 ● +0.32%) .IXIC 2,743.06 (+6.64 ● +0.24%)
 March 28th 2011

Index Focus: S&P 500

S&P 500
Last Mar 25th Resistances 1321.65 1332.28 1344.07 1352.67 1440.24
1,313.80  0.32% Supports 1305.76 1300.58 1297.47 1284.05 1249.05
WTD MTD Outlook
 2.70%  1.01%
NEUTRAL
YTD 12-Month
 4.45%  12.35% Comment PT at 1,440.24, risk < 1,284.05

Similar to the other two major indexes, S&P 500 is also building up strength to reclaim the peak at
1,344.07. There is the risk of the rally may fizzle, but this would be the case only if the index drops
below 1,284.05. For now, with MACD is rising, as well as the EMAs and that RSI still showing a plenty
of room to climb, S&P looks set for another rise next week.

5 .DJI 12,220.59 (+50.03 ● +0.41%) .SPX 1,313.80 (+4.14 ● +0.32%) .IXIC 2,743.06 (+6.64 ● +0.24%)
 March 28th 2011

Price Performance - as of Mar 25th 2011

Code Last Dy WTD MTD YTD 12-Mos
AA 17.09 -0.12% 6.08% 5.95% 11.05% 20.01%
AXP 45.59 0.00% 3.21% 3.94% 6.22% 10.49%
BA 73.34 0.80% 6.14% 5.94% 12.38% 1.01%
BAC 13.34 -1.04% -4.99% -1.91% 0.00% -25.27%
CAT 109.09 0.66% 3.84% 14.02% 16.47% 73.57%
CSCO 17.28 -0.46% 0.82% -17.44% -14.58% -33.62%
CVX 106.78 1.33% 3.87% 14.36% 17.02% 40.81%
DD 54.10 0.78% 2.09% 7.58% 8.46% 45.27%
DIS 42.97 0.26% 4.22% 10.60% 14.56% 23.09%
GE 19.75 -0.15% 2.60% -2.23% 7.98% 8.52%
HD 37.42 0.16% 3.94% 1.96% 6.73% 15.67%
HPQ 42.53 -1.32% 2.93% -6.55% 1.02% -19.98%
IBM 162.18 1.34% 4.03% 1.87% 10.51% 26.46%
INTC 20.37 -0.05% 2.21% -5.08% -3.14% -8.61%
JNJ 58.98 -0.08% 0.70% -1.72% -4.64% -9.54%
JPM 45.86 0.28% 0.26% 2.96% 8.11% 2.48%
KFT 31.26 -0.06% 0.87% 2.39% -0.79% 3.37%
KO 65.22 0.82% 4.02% 4.84% -0.84% 18.58%
MCD 75.25 0.43% 3.10% 2.69% -1.97% 12.78%
MMM 92.27 -0.33% 3.70% 5.52% 6.92% 10.41%
MRK 32.57 -0.46% 2.07% -1.51% -9.63% -12.80%
MSFT 25.62 -0.74% 3.31% -7.71% -8.20% -12.53%
PFE 20.35 0.25% 0.84% 12.12% 16.22% 18.66%
PG 60.88 -0.43% 0.46% -5.17% -5.36% -3.78%
T 28.85 1.09% 3.26% 4.95% -1.80% 11.65%
TRV 58.98 0.25% 1.58% 5.68% 5.87% 9.34%
UTX 83.52 0.92% 4.19% 2.57% 6.10% 13.46%
VZ 37.29 0.30% 4.05% 4.66% 4.22% 20.21%
WMT 52.35 -0.46% 1.61% -7.67% -2.93% -5.85%
XOM 83.62 1.08% 3.43% 5.86% 14.36% 24.84%

6 .DJI 12,220.59 (+50.03 ● +0.41%) .SPX 1,313.80 (+4.14 ● +0.32%) .IXIC 2,743.06 (+6.64 ● +0.24%)
 March 28th 2011

US Economic Calendar
Date Time Report Period Actual Forecast Previous
21-Mar 10:00 AM Existing home sales Feb 4.88 mln 5.1 mln 5.36 mln
22-Mar 10:00 AM FHFA home prices Jan -0.3% n/a -1.0%
23-Mar 8:30 AM New home sales Feb 250K 290K 301K
24-Mar 8:30 AM Jobless claims 19-Mar 382K 380K 387K
24-Mar 8:30 AM Durable goods orders Feb -0.9% 1.5% 3.6%
24-Mar 8:30 AM Durables ex-transport Feb -0.6% 2.5% -3.0%
25-Mar 8:30 AM GDP revision Q4 3.1% 3.1% 2.8%
25-Mar 9:55 AM Consumer sentiment March 67.5 68.0 68.2

US Economic Calendar
Date Time Report Period Actual Forecast Previous
28-Mar 8:30 AM Personal income Feb 0.4% 1.0%
28-Mar 8:30 AM Consumer spending Feb 0.6% 0.2%
28-Mar 8:30 AM Core PCE price index Feb 0.2% 0.1%
28-Mar 10:00 AM Pending home sales Feb n/a -2.8%
29-Mar 9:00 AM Case-Shiller home prices Jan n/a -0.4%
29-Mar 10:00 AM Consumer confidence March 63.0 70.4
30-Mar 8:15 AM ADP employment March n/a 217K
31-Mar 8:30 AM Jobless claims 26-Mar 380K 382K
31-Mar 9:45 AM Chicago PMI March 68.9% 71.2%
31-Mar 10:00 AM Factory orders Feb 0.5% 3.1%
1-Apr 8:30 AM Nonfarm payrolls March 178K 192K
1-Apr 8:30 AM Unemployment rate March 9.0% 8.9%
1-Apr 8:30 AM Average hourly earnings March 0.2% 0.0%
1-Apr 10:00 AM ISM March 61.6% 61.4%
1-Apr 10:00 AM Construction spending Feb 0.4% -0.7%
1-Apr TBA Motor vehicle sales March 13.1 mln 13.4 mln

Disclaimer: This report is provided for information purposes only. It is not an offer to sell or to buy any securities. This
report has been prepared based on sources believed to be reliable, but there is no assurance or guarantee regarding its
completeness and accuracy. The author accepts no responsibility or liability arising from any use of the report.

7 .DJI 12,220.59 (+50.03 ● +0.41%) .SPX 1,313.80 (+4.14 ● +0.32%) .IXIC 2,743.06 (+6.64 ● +0.24%)