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					TECHNICAL RESEARCH                                                                                                                           4 January 2011

Jordan Kotick     +1 (212) 412 1137      Dhiren Sarin       +44 (0) 20 7773 5429
Philip Roberts    +44 (0) 20 7773 2246       Jay Govender       +1 212 412 7656
Lynnden Branigan +44 (0) 20 3134 3017

A happy New Year
We started last year with a cautiously optimistic mood, and the same applies to 2011. Rising prices throughout 2010 support the case for
building inflationary rather than deflationary pressures and the markets are responding accordingly. In US fixed income markets,
November 2010 was a Reversal Month for both 2y and 5y year yields, implying an end to the bullish rates cycle. We believe those technical
signals marked the point at which investors concluded that the evidence for global growth, coming from equity and commodity markets,
could no longer be ignored. An attempt to normalise rates will not be easy given continued quantitative easing programmes; however, we
expect bearish pressure on bonds to be a notable theme for 2011.

Although we expect further gains for risk, we do not envisage a return to the heady days of 2006. The US equity market can push 15-18% higher
this year, but it is unlikely to revisit its 2007 high and later in the year, downside risks could increase. As yields adjust higher, something well short
of curve inversion (the typical prelude to equity market weakness) may prove sufficient to peg back equities this time around.

The signs of growth are obvious but we are not blind to continued problems in the eurozone and we are also concerned that, unlike at this
stage in previous cycles, the US curve is still steepening. However, for the time being, we prefer to remain optimistic. Overall, we see the
risk recovery off the 2008/09 lows as a corrective move: a cyclical recovery rather than the resumption of the secular equity uptrend, but
still a move that has further to run.

Figure 1: Market cycle model points to higher rates in 2011

             1                   2                          3                                            S 5                        6
      Yields                 Stocks                   Commodity
      fall                   recover                  prices rise

                                     4                                             You are

                                                                             Yields rise              Stock                   Commod
                                                                             again                    market                  prices fall
                                                        C                                             tops out

      B                     S

Source: JJ Murphy – Intermarket Analysis, page 183.

Barclays Capital | TOP TEN CHARTS FOR 2011


Twelve months ago, we suggested that the bearish trend for 2010 should take tens towards the pivot and support zone at
“3.90%-4.27%” and potentially “4.67%-4.75%”. While the market tested the initial target, our aggressively bearish call was
incorrect given that latter targets were never approached. We are once again, bearish, but taking a more cautious tone this time
around. We believe Treasury yields will continue higher based on the rare but effectual monthly bearish reversal (outside-up) in
2s and 5s in November and the change in trading tone into the end of the year.

Into the end of Q2, we look for 10s to once again test ongoing pivots and upside targets at 3.90%-4.27% (multi-year value area).
Similarly, this should focus 5s on 3.00% (upside chart support as shown), with 2s testing the important 98-100bp trendline and
pivot area. This should coincide with a Q3 top in equities and provide a buying opportunity for Rates. Only through these
important chart fulcrums would a medium-term bearish change in trend for Treasuries be confirmed.

Figure 2: US Rates

Source: CQG

4 January 2011                                                                                                                 2
Barclays Capital | TOP TEN CHARTS FOR 2011


We are bullish copper in 2011 and expect it to continue to outperform the base metals complex. The breakout above the
important 9000 level extends the two-year bull channel to our initial target at 10,500 in Q1. A monthly momentum breakout
underpins our view for gains towards an equality target at 11,250 and then the 12,000 area. In light of the strength of copper,
we are also bullish for the copper/aluminium ratio. Given the lagging advance in aluminium and layered resistance that shields
the all-time high at 3380, we look for the ratio to extend gains through 4.00. For aluminium, we expect an eventual break above
2580 to target 3000 as the base metal complex advances.

Figure 3: Copper, aluminium and the ratio

Source: CQG

4 January 2011                                                                                                                3
Barclays Capital | TOP TEN CHARTS FOR 2011


Gold has posted higher highs and higher lows for nine consecutive years. This consistency keeps the yellow metal on an upside
footing this year. We have been bullish gold for seven years and we remain bullish in 2011, looking for a push to 1460/1500
(Fibonacci projections/26-month bull channel top) but eventually to 2000. Our longer-term bullish view is underpinned by both
bull channel support and 200-dma in the 1250 area and the incomplete impulsive ascent, which typically sees its strongest
upside move in the fifth wave (though currently only in the early stages of that sequence).

Silver continues to outperform gold. We look for it to make further headway above resistance at 31.00 (the 61.8% retracement of
the fall from 48.00) and press on to the 37.30/40.00 area in 2011. This fits with our bearish view of the gold/silver “mint” ratio,
which is threatening to break lower out of a 15-year range. Below 45.00/46.00 would confirm the move, opening up both the
1998 low at 41.90 and the greater swing target near 30 longer term.

Figure 4: Silver, gold and the mint ratio

Source: CQG

4 January 2011                                                                                                                    4
Barclays Capital | TOP TEN CHARTS FOR 2011


2010 was a milestone year for several AUD crosses. The Australian dollar extended its gains to historic levels against the EUR,
GBP, NZD, and also the USD. While the drop below a multi-decade range in EUR/AUD (using DEM history prior to 1999) is
significant, it may be argued that the move is a reflection of general euro weakness. However, this is not the sole catalyst.
GBP/AUD dropped below a trendline from the 1970s and the secular trend for AUD/USD has turned higher. Our 2010 AUD/USD
targets are near 1.06 and 1.10. The run higher in AUD/NZD is also impressive as it approaches its peak from 2000 near 1.3640.
Despite the increasingly volatile moves seen over the past three years, the market is firmly eroding resistance one by one and we
cannot rule out a push beyond this peak for a move towards the next important high from 1992 at 1.4210.

Figure 5: Aussie crosses

Source: CQG

4 January 2011                                                                                                                  5
Barclays Capital | TOP TEN CHARTS FOR 2011


The turn in the US rates cycle could potentially undermine the yen and in particular the risk is for USD/JPY to form a
base. The loss of momentum in the sell-off to the psychologically important 80.00 level (also the 1995 low) and
subsequent bounce warns of further gains in H1 2011. In order for the move to gather pace, however, the JPY
crosses need to respond. We are watching some of the crosses such as CAD/JPY, which is potentially forming a
Double Bottom and EUR/JPY, which is caught in an erratic range where a recovery above 116.00/60 would be a
meaningful bullish development. Until then, the risk is for USD/JPY to maintain a choppy range. Previous bounces
towards the weekly Ichimoku cloud in the past three years were in the magnitude of 12-16%. Similar targets point
to the 90.00/93.00 area, though we note that cloud resistance drops later in H1 2011; a recovery above the
highlighted weekly cloud is needed to suggest that a more important base has formed.

Figure 6: JPY crosses

Source: CQG

4 January 2011                                                                                                       6
Barclays Capital | TOP TEN CHARTS FOR 2011


The difference between our bullish equity view this year and our bullish equity view last year is that we are slightly more
aggressive in 2011. Instead of 10-15% higher, we are looking for closer to 15-18% higher in 12 months. As was the case last
year, breadth (the most important aspect to equity market analysis) remains supportive. For example, the NYSE advance/decline
line is trending higher, with price and other medium-term readings not at extremes that have historically suggested a top.

The general pattern (although potentially a three-wave move higher overall) still has a trending signature for the moment. Given
that 2010 fulfilled the adage of trading as a market of stocks as opposed to a stock market, we will continue to focus on broader
indices like the Wilshire and NYSE. While due for a Q1 correction (given the completing five-wave rally off the June 28 low),
overall our target for the NYSE is 9100/9200. Similarly in the S&P, we are targeting 1400/1440 ahead of ideally a top in Q3.

Figure 7: US equity breadth indicators

Source: Bloomberg

4 January 2011                                                                                                                  7
Barclays Capital | TOP TEN CHARTS FOR 2011


In an environment where the US dollar index has swung sharply in either direction (losing and gaining 18-20%) over the past
two years, the resilience of EM Asian currencies against the USD is impressive. During this period, the Asia dollar index has
maintained an orderly bull trend and recuperated all its credit crisis losses. Although the market is currently oscillating around its
2008 peak, we see this as a setup for further gains in 2011, especially while support at 112.00/40 holds firm. Channel targets are
in the 118.00/119.00 area for later this year, ideally into Q3. With key EM Asian equity markets such as the Shanghai Composite
holding above medium/long-term support and the internals (volume) of this market supportive of further gains, we expect
another strong year for Asian stocks and currencies in general.

Figure 8: JPM Asia Dollar Index (ADXY) and Shanghai Composite

Source: CQG

4 January 2011                                                                                                                       8
Barclays Capital | TOP TEN CHARTS FOR 2011


2010 was a year of consolidation for Japanese equities. We expect this year to be one of recovery for this market. Our view is
swayed by momentum, which in 2006/07 led and called for a downside move. Now, with momentum either bullish, or at least
less negative, we are calling for upside risks. Targets in the Topix lie at the top end of the range at 1003 ahead of the 50%
retracement of the July 07-March 09 move at 1256. We are bullish towards channel highs and the 50% retracement of the
aforementioned move in the Nikkei targeting the 12400-12600 zone. Our positive view is further supported by the lack of a sell
signal from the 6 month Moving Linear Regression.

Figure 9: Japanese equities

Source: CQG

4 January 2011                                                                                                               9
Barclays Capital | TOP TEN CHARTS FOR 2011


Central to our 2011 view is that inflationary expectations in Western markets remain elevated, or will rise further, increasing
bearish pressures on the rates markets. Consequently, inflation breakeven charts are an important focus for us this year.

The trend for rising inflationary expectations, following lows in 2008, continues, although it remains more pronounced in the US
and UK markets than in European markets (where price expectations appear more stable, evidenced by a more triangular trading
pattern and a downward sloping 40-week average). The trend for US 5y, 5y forward breakevens though is up while they remain
above 2.50/2.70%, with 2.87/2.91% the major barrier to overcome. Beyond 3.00% this year would be a strong signal that US
inflationary pressures are intensifying rather than abating.

Figure 10: Western inflation breakevens point to inflationary expectations

Source: Bloomberg

4 January 2011                                                                                                                10
Barclays Capital | TOP TEN CHARTS FOR 2011


Jordan Kotick                                Phil Roberts              Lynnden Branigan
Head of Global Technical Analysis            Technical Analysis        Technical Analysis
+1 212 412 1137                              +44 (0) 20 7773 2246      +44 (0) 78 2537 8945           

Dhiren Sarin                                 Jay Govender
Technical Analyst                            Technical Analysis
+44 (0) 20 7773 5429                         +1 212 412 7656            

4 January 2011                                                                                       11
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We, Jordan Kotick, Philip Roberts, Dhiren Sarin, Jay Govender and Lynnden Branigan, hereby certify (1) that the views expressed in this research report
accurately reflect our personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of our
compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.

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