An Alert to Pending Change

Bob Hoye
Institutional Advisors
May 7, 2009

• The "good stuff" has been expected to rally out to April-May.
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• Copper soared 80% from 126 late in the year to 225 on April 15. This registered an Upside Exhaustion on our proprietary model, from which a test of the high was possible. This is being attempted now, but at lower momentum levels. The last such set up occurred at the cyclical peak two years ago.
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• The rally for lower-grade corporate bonds has been outstanding, with the junk yield declining from 42% in early March to 28.4%. The spread, over treasuries, has narrowed from a horrendous 3800 bps to "only" 2930 bps.
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• The S&P has rallied 36% from 667 in early March to 910 on Monday. This is registering a strong overbought on our Summation model. Any loss of momentum with a lower weekly close or a week with a lower low will set the stage for the next decline.
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• Other than natural gas, commodities have enjoyed rallies into the right time window. These include crude oil, grains and soybeans, as well as all base metals.
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• Silver has been expected to outperform gold until around now and the gold/silver ratio has declined to 69.
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• The Dollar Index was also likely to decline into this window.
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• One important event needed to meet all of out targets for the rebound out of a classic fall crash occurred today with Bernanke's statement that "We expect economic activity to turn up later in the year". This matches similar observations made by the establishment in April-May 1930, and was prompted by the same stimulus. The Fed chief explained that the positive note was due to the "Combination of a broad rally in equity prices and a sizable reduction in risk spreads."

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May 5, 2009
-Bob Hoye
Institutional Advisors
email: bobhoye@institutionaladvisors.com
website: www.institutionaladvisors.com

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