Birkelbach-Current Market Comment

Time For Caution

Markets have risen some 40% since the March 06, 2009 low of 6,470 for the Dow, 1,268 for NASDAQ and 666 for the S&P 500. Ready for a correction? Maybe. 1) Our Strategy Index is showing a top; 2) The current market rise is only in a limited amount of stocks; 3) The economy is still falling; 4) By giving TARP money back the top 10 banks will have less to lend (but more for top salaried executives) and 5) Consumers are still broke, as increasing underemployment and lower home prices have a downstream effect. However, investors seem not to be worried and seem confident that the Great Recession is over. Could be. If the Dow can break above the old January high of 9,065 we are headed for 10,000. However, I think it is time to be cautious and to take profits. Maybe put some money on the sidelines or hedge and go with the short ETFs (Exchange Traded Funds). I prefer SDS for the S&P and DXD for the Dow. A break of the Dow below 8,238 could see next support at about 7,791.

We expect continued volatile markets causing “Buy and Hold” philosophies to be replaced with “Buy Low, Sell High”. We believe Proper selection and market timing are the better investment strategies. For many, more flexible ETFs (Exchange Traded Funds), long or short, have replaced mutual funds.

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 Price	Dow	NASDAQ	S&P 500
Current Price	8,504	1,796	911
Current Trends	DJIA	NASDAQ	S&P 500
Short Term	Up	Up	Up
Int. Term	Sideways	Up	Sideways
Long Term	Down	Down	Down

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

Breakout Points	DJIA	NASDAQ	S&P 500
Short Term Up (Resistance)	9,065	1,896	1,000
Short Term Down (Support)	8,238	1,664	883
Int. Term Up (Resistance)	9,653/11,867	1,896	1,007
Int. Term Down (Support)	7,791/6,470	1,598/1,268	832/666
Long Term Up (Resistance)	14,198	2,861/4,256	1,312/1,576
Long Term Down (Support)	6,470	1,268/1,108	666