April 6th 2011

NASDAQ’s Re-Balancing Act

A dip in ISM, a rate rise in China, soaring energy prices, and Moody’s downgrading Portugal only put
a small dent to the Dow Jones Industrial Average. The Dow ended down 6.13 points or 0.05% at
12,393.90, while the S&P 500 index edged 0.24 points lower or 0.02% to 1,332.63. NASDAQ
Composite however, inched 2 points higher or 0.07% to 2,791.19 as its components weightings have
been adjusted.

AA ruled the pack, gaining 2.79% to finish at $18.05, apparently on track to reach our target at
$20.15 (March 30th update). On the second place was INTC with 1.13% increase as it settled at
$19.71. At the third, CVX ended the day at $109.33, gaining 1.02% on the day. CSCO and MSFT
were at the fourth and fifth places, respectively.

The rises of INTC, CSCO, and MSFT owed to the rebalancing of NASDAQ components. INTC’s weight
was raised from 1.75% to 4.2%, MSFT from 3.41% to 8.32%, CSCO from 1.56% to 3.66%. Other
notable changes for non-Dow components were AAPL (from 20.49% to 12.33%), ORCL (3.32% to
6.68%), GOOG (from 4.18% to 5.77%), SBUX (1.79% to 1.08%), AMZN (2.5% to 3.16%), DELL
(0.47% to 1.08%), ADBE (0.78% to 0.67%), EBAY (1.41% to 1.58%), and YHOO (0.49% to 0.86%).

Economic data featured ISM for Non-manufacturing sector, which was reported to have fallen from
59.7 to 57.3, worse than the expected slip to 59.0. Nevertheless, the index stays above 50, the
borderline between expansion and contraction. No economic data to be released on Wednesday.

Despite the various hawkish comments from Federal Reserve board members, Ben Bernanke’s speech
on Tuesday suggested that the Fed may not be that soon to raise interest rates. This dampened the
inflation expectation in the market and in turn, boosted gold prices. China on the other hand, raised
rates on deposit and lending.

Lending rate has been raised from 6.06% to 6.31%, while the deposit rate has been raised from 3%
to 3.25%.

1 .DJI 12,393.90 (-6.13 ● -0.05%) .SPX 1,332.63 (-0.24 ● -0.02%) .IXIC 2,791.19 (+2.00 ● +0.07%)
 April 6th 2011

Corporate News
BA was hit by inspection directive from the FAA on 175 737s. About 80 are in the US while the
others are overseas. Most are operated by Southwest Airlines.
INTC announced its new processor Xeon E7, the first 10-core parts.
BAC sold its MBNA to Barclays Plc. MBNA is a small business credit card portfolio which operates
in UK. No details were provided.
DD has cleared the next hurdle in its bid for Danisco as the deal has been approved by European
commission. Next hurdle is the Chinese government’s approval.
MRK set to buy Inspire Pharmaceuticals, Inc. for $5.00 per share, a 26% premium and a total
cash value of around $430 million.
PFE’s sale of Capsugel may not be the last as Goldman Sachs expects more sales from other units
such as consumer, animal health, and nutritionals.
PG sold Pringles to Diamond Foods for $2.35B in a “split-off” transaction. PG shareholders can
choose to participate in the deal by exchanging PG shares for Diamond’s shares. The deal will
result in a one-time earnings increase of $1.5B after tax or $0.50 per share. The transaction is
expected to be completed by the end of this year. PG’s exit from the snack business is a part of
its portfolio and strategy review.
VZ settled its case with the government by paying $93.53M. VZ was said to have overcharged
the General Services Administration on invoices.

2 .DJI 12,393.90 (-6.13 ● -0.05%) .SPX 1,332.63 (-0.24 ● -0.02%) .IXIC 2,791.19 (+2.00 ● +0.07%)
 April 6th 2011

Stock Focus: Intel Corp.

INTC
Last Apr 5th Resistances 20.38 20.66 21.01 22.21 24.37
$19.71 1.13% Supports 19.36 18.69 17.60 16.76 14.96
WTD MTD Outlook
3.10% 2.33%
NEUTRAL
YTD 12-Month
6.28% 13.70% Strategy Range trade between $24.37 - $17.60

Last month, I pointed out at INTC being in a range trade between $24.37 and $17.60. Things remain
the same at the moment, with the price now being under pressure as indicators suggest that INTC is
heading towards the lower end of the range at $17.60. EMAs are sloping down, MACD is negative
and RSI is fortunately however, providing hope of a bullish convergence pattern to emerge. Still, it’s
too soon to call for a bottom. Upticks may be limited to $20.66-$20.79. Look for more downside as
the INTC heads to $17.60.

3 .DJI 12,393.90 (-6.13 ● -0.05%) .SPX 1,332.63 (-0.24 ● -0.02%) .IXIC 2,791.19 (+2.00 ● +0.07%)
 April 6th 2011

Price Performance - as of Apr 5th 2011

Code Last Dy WTD MTD YTD 12-Mos
AA 18.05 2.79% 4.70% 2.21% 17.28% 34.40%
AXP 45.42 0.00% -0.66% 0.49% 5.82% -1.52%
BA 73.23 -0.97% -0.10% -0.95% 12.21% 1.10%
BAC 13.47 0.22% 0.75% 1.05% 0.97% -24.45%
CAT 112.31 -0.94% 2.66% 0.86% 19.91% 64.94%
CSCO 17.22 0.94% 0.17% 0.41% -14.88% -36.06%
CVX 109.33 1.02% 3.10% 1.71% 19.81% 34.25%
DD 56.06 0.85% 3.95% 1.98% 12.39% 40.71%
DIS 42.43 -0.47% -0.21% -1.53% 13.12% 15.17%
GE 20.33 -0.97% 2.94% 1.40% 11.15% 7.79%
HD 37.60 0.35% 2.59% 1.46% 7.24% 6.73%
HPQ 40.29 -0.12% -4.39% -1.66% -4.30% -22.47%
IBM 163.99 -0.16% 1.62% 0.56% 11.74% 27.12%
INTC 19.71 1.13% -3.10% -2.33% -6.28% -13.70%
JNJ 59.80 -0.58% 0.95% 0.93% -3.31% -7.00%
JPM 46.58 0.52% 1.35% 1.04% 9.81% 9.39%
KFT 31.49 -0.06% 0.06% 0.41% -0.06% 6.39%
KO 67.47 -0.28% 3.75% 1.70% 2.58% 26.23%
MCD 76.60 0.27% 2.13% 0.67% -0.21% 8.51%
MMM 93.39 -0.27% 1.38% -0.12% 8.22% 5.32%
MRK 33.16 -0.33% 2.19% 0.45% -7.99% -5.37%
MSFT 25.78 0.90% 1.46% 1.54% -7.63% -15.59%
PFE 20.45 -0.44% 0.89% 0.69% 16.79% 22.31%
PG 61.67 -0.95% 1.67% 0.11% -4.13% -0.79%
T 30.70 -0.23% 4.56% 0.29% 4.49% 17.81%
TRV 59.13 -0.84% 0.37% -0.59% 6.14% 16.54%
UTX 85.40 0.20% 2.31% 0.89% 8.49% 13.94%
VZ 38.38 -0.60% 1.67% -0.42% 7.27% 32.80%
WMT 52.74 0.17% 1.05% 1.33% -2.21% -1.68%
XOM 85.42 0.65% 2.34% 1.53% 16.82% 26.04%

4 .DJI 12,393.90 (-6.13 ● -0.05%) .SPX 1,332.63 (-0.24 ● -0.02%) .IXIC 2,791.19 (+2.00 ● +0.07%)
 April 6th 2011

Analysts' Upgrades & Downgrades

Ratings Price Target
Code House
Previous Current Previous Current
CSCO Gleacher - Neutral - $18.00
HPQ Deutsche Bank - Hold - $40.00
INTC Kaufman Bros - Buy - -
INTC Canaccord Genuity Hold Hold $22.00 $19.00
JPM Macquarie - Outperform - $58.00
n Sector-wide n Upgrade n Downgrade n Initiation
US Economic Calendar
Date Time Report Period Actual Forecast Previous
5-Apr 10:00 AM ISM Non-Manufacturing Mar 57.3% 59.0% 59.7%
5-Apr 2:00 PM FOMC Minutes 15-Mar - - -
7-Apr 8:30 AM Jobless Claims 2-Apr 388K
7-Apr 3:00 PM Consumer Credit Feb n/a $5B
8-Apr 10:00 AM Wholsesale Inventories Feb n/a 1.1%

Disclaimer: This report is provided for information purposes only. It is not an offer to sell or to buy any securities. This
report has been prepared based on sources believed to be reliable, but there is no assurance or guarantee regarding its
completeness and accuracy. The author accepts no responsibility or liability arising from any use of the report.

5 .DJI 12,393.90 (-6.13 ● -0.05%) .SPX 1,332.63 (-0.24 ● -0.02%) .IXIC 2,791.19 (+2.00 ● +0.07%)