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SEVEN DAYS AHEAD Page 1 Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573E-MAIL MSTURDY@SEVENDAYSAHEAD.COM  WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness oraccuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold orheld on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.

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Market Update 5th November 2010 

FTSE surges  – but doubts remain 

elsewhere The Technical Trader’s view: 

Sep Oct Nov Dec 2008 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 201

3500

4000

4500

5000

5500

6000

6500

7000

7500

8000

8500

9000

38.2%

161.8%

261.8%

423.6%

61.8%

100.0%

161.8%

261.8%FTSE 100 Index LIFFE Continuous

 

WEEKY BAR CHART

The market has smashed

up through a prior high of

importance (5796) and at

the same time confirmed

a large Head and

Shoulders reversal

pattern suggesting very

much higher around

8500.

Note the small nested

H&S Reversal that began

the recent bull run.

Note lastly, but not

leastly, the cluster of

Fibonacci levels -

resistances – that have

been smashed.

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SEVEN DAYS AHEAD Page 2 Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573E-MAIL MSTURDY@SEVENDAYSAHEAD.COM  WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness oraccuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold orheld on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.

26 2

August

9 16 23 30 6

September

13 20 27 4

October

11 18 25 1 8

November

15

50000

100000

150000

200000

250000

5250

5300

5350

5400

5450

5500

5550

5600

5650

5700

5750

5800

5850

5900

5950

High 5720

5616.50

approximate level

of the weekly cont.

chart neck

5363.50 High

5774.50 High

FTSE 100 Index Dec 10

 

DAILY Dec 10 BAR CHART

The market’s drive up through

the Prior high of 5720, the

completion of the Head andShoulders reversal, and the

smash up through the near High

at 5774.40 today are a heady

mixture leading to the current

overbought levels.

A M J J A S O N D 2008 A M J J A S O N D 2009 M A M J J A S O N D 2010 M A M J J A S O N D 20

700

750

800

850

900

950

1000

1050

1100

1150

1200

1250

1300

1350

1400

1450

1500

1550

1600

1650

1700

38.2%38.2%

61.8%

767.50 Prior Low Pivot from 2002

1253.10 Low1201 Low

1574 prior All Time High 2003

Minimum move from the H&S

S&P 500 Stock Index CME Continuous

 

WEEKLY CHART

The S&P is a far less compelling

prospect. See how the two Head

and Shoulders patterns operating

on the market have theirminimum target closely aligned in

the middle of the band of

resistance from the Prior Lows

from late 2007 and 2008.

Note too that the near Prior High

pivot (from the continuation chart

is at current levels… and may

take a while to properly

overcome…. 

Add to these considerations the

presence of an important

Fibonacci resistance in the

middle of the band of

resistance… and it is clear this

market is far more technically

constrained compared to the

FTSE. 

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SEVEN DAYS AHEAD Page 3 Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573E-MAIL MSTURDY@SEVENDAYSAHEAD.COM  WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness oraccuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold orheld on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.

The Macro Trader’s view : 

After FOMC policy makers openly disagreed about QE2 tactics two weeks ago and un-nerved

the markets, traders were re-assured on Wednesday when the FOMC announced a US$600.B

QE2 program to be implemented by the end of Q2 2011.

This was the option originally favoured by Bernanke and assumed by traders to be the way

forward. As a result stocks globally have taken the policy decision well and rallied. Indeed

markets look far from over-extended as they have only just regained the levels seen

immediately before the Euro zone sovereign debt crisis, which caused panic-selling.

Naturally US equity markets should be the main beneficiaries of the Fed ’s policy action as the

new Central Bank reserves set to be pumped out will enter the US economy, but the globally

economy will be affected too.

For those economies that are struggling to gain traction a hopefully more vibrant US economy

will provide opportunities. But for those economies that are already growing fast, especially

those of China, India et al there is the problem from a potentially much weaker Dollar. Because

they are growing fast, hot money will look to invest there for higher yield. The authorities do not

welcome this as it will drive up the value of their own currencies and hinder growth.

For China the problem is different; the Rinimbi is pegged to the Dollar and isn’t fully convertible,but China has massive US Dollar currency reserves of the order of US$2.0T. A weaker Dollar

will effectively devalue these holdings and China is none too pleased.

But for western stocks the Fed’s move is positive. The UK and Euro zone are important trading

partners of the US and while their currencies will undoubtedly rally against the Dollar, the

potential trade opportunities should outway this.

Moreover, in the Euro zone the lead economy is Germany which is enjoying a fast recovery. Astronger Euro isn’t yet a problem because interest rates set by the ECB for the wider Euro

zone are much lower than they probably would be were they set by the Bundesbank for purely

German domestic needs.

In the UK the Pound was heavily oversold during the recession, so a rally is welcome by the

Bank of England as an offset to persistently higher than expected CPI inflation.

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SEVEN DAYS AHEAD Page 4 Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573E-MAIL MSTURDY@SEVENDAYSAHEAD.COM  WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness oraccuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold orheld on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.

In conclusion, traders have moved on from the original financial crisis and this year’s Euro

zone Sovereign debt crisis and the Feds QE2 is just the shot in the arm equity markets need.

Mark Sturdy 

John Lewis 

Seven Days Ahead