Created in MetaStock from Equis International

A Treasury Note is a marketable U.S. government debt security with a fixed interest rate and a maturity between one and 10 years. Treasury notes can be bought either directly from the U.S. government or through a bank. Treasury notes are popular investments as there is a large secondary market that adds to their liquidity.

Support and Resistance represent key levels where the forces of supply and demand meet. In the financial markets, prices are driven by supply and demand. Support is the price level at which demand is thought to be strong enough to prevent the price from declining further. Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further.

The chart above is the historical prices of the 10-Year U.S. Treasury Note between 1985 and 2008. The prices are trending upwards in a clear parallel trend channel. The boundaries of the parallel trend channel define the support and resistance areas. The 10 Year U.S. Treasury Note's cyclical behavior in the parallel trend channel resulted in several tests of the upper boundary (resistance) and the lower boundary (support). In 2007, the 10 Year Note rebounded from the support level around 105 levels and rallied towards 125-130 range. 125-130 range is the upper boundary of the parallel trend channel. We are now very close to an important resistance in the 10 Year U.S. Treasury Notes.

LIGHT CRUDE OIL

Created in MetaStock from Equis International

The chart above is for Light Crude Oil future prices during the last 6 months. The year of 2008, has been unique with the volatility we have experienced in the financial markets. The volatility in the markets can also be seen in the analysis and commentaries of the analysts. What are the technical facts for the Light Crude Oil? 1) The downtrend continues in a parallel trend channel. 2) Both the 20 period moving average and the upper boundary of the trend channel is at $45 levels. $45 is a strong resistance. 3) MACD formed a positive divergence, signaling a weakening in the downward momentum. We will watch the important resistance at $45 levels and the prices in the parallel trend channel.

Aksel Kibar
Assistant Vice President/Portfolio Management
Abu Dhabi Investment Company
www.adic.ae

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