Birkelbach-Current Market Comment

Stagflation Market

This volatile “whipsaw” market is reflecting higher material prices and a slowing economy (stagflation). The short term trend of the market is difficult to determine, as the market is giving us mixed messages. Some days the market starts down and ends up (positive), while other days it starts up and ends down (negative). Also, some days there is increased volume on up days (positive) and sometimes on the downside (negative). No bottom formation has yet to be tested successfully. It is clear that the Intermediate Trend of the market is down since October 2007. This downtrend will be in effect until a bottom formation can be established. Also as the market has broken below the neckline of a “head and shoulder” top. We have given the Downside Support Zones on the markets as follows: Dow 10,900; NASDAQ 1,940 and S&P 500 1,166 with Upside Resistance as follows: Dow 14,198, NASDAQ 2,834 and S&P 500 1,576. The markets may trade between these two levels for as much as a year. A year from now the credit crisis and recession should be behind us, and a new President will be established. In the meantime, it appears we need to be more careful in selection and timing.

Dow 12,145 NASDAQ 2,260 S&P 500 1,312

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST
This report has been prepared from original sources and data we believe reliable but make no representations as to the accuracy or completeness. Birkelbach Investment Securities, Inc., its affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold or sell a position in the securities discussed in this report, we may act as principal for our own account or as agent for both the buyer and the seller.

Past performance is no guarantee of future success. Also, while the above suggested prices are as listed on our reports and the sell dates and prices are as issued by our research department, our brokers operate independently and as each individual client has a unique risk tolerance level, the above list should not be deemed as a representation of our clients purchases and sales. Some of our suggestions are volatile and speculative. Therefore, these stocks are only for those investors willing to assume risk. In addition, there may not be enough information available in these reports to make an informed decision. Upon request, we will supply additional information. Purchases should not be made until enough information is obtained and risks understood.

Current Trends	DJIA	NASDAQ	S&P 500
Short Term	Sideways	Sideways	Sideways
Int. Term	Down	Down	Down
Long Term	Up	Up	Up

Forecasted Trends	DJIA	NASDAQ	S&P 500
Short Term	Up	Up	Up
Int. Term	Down	Down	Down
Long Term	Up	Up	Up

Breakout Points	DJIA	NASDAQ	S&P 500
Short Term Up (Resistance)	12,743/13,625	2,413/2,706	1,395/1,504
Short Term Down (Support)	11,700	2,210	1,276
Int. Term Up (Resistance)	14,198	2,834	1,576
Int. Term Down (Support)	10,900	1,940	1,166
Long Term Up (Resistance)	14,309	2,892/4,250	1,576
Long Term Down (Support)	7,416/7,197	1,253/1,108	788/768