Seasonality DJIA

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A short term peak in early January

· Favourable anticipation of fourth quarter results

A brief correction into February

· Triggered partially by negative earnings guidance related to currency translation by international companies

· More political turbulence in Europe and the U.S.

· Increasing political rhetoric by Iran

A recovery into April

· Mildly improving economic news in North America and first signs of a bottoming in Far East economies (particularly China).

· Talk of Quantitative Easing (QE 3)

A significant correction into May

· Political rhetoric in the U.S. ramps up when the Republican presidential candidate becomes apparent. Economic uncertainty increase due to questions about future direction of the next Administration.

· Recognition of a slow-down in corporate earnings growth in the first and second quarters

A significant recovery from June to August

· The recovery in the Far East (particularly China) becomes more apparent. Commodity prices and related stocks move higher.

· If equity markets perceive that President Obama is to behttp://www.blogger.com/img/blank.gif replaced by the Republican candidate, corporate spending in North America starts to ramp up. Investors begin to anticipate strong economic growth in 2013. If markets perceive a re-election of Obama, a mid-year recovery is weak at best.

A brief correction into October if replacement of Obama is over-anticipated

· Also “End of world” jitters similar to the correction in October 2000 before Y2K

Higher equity market following the Presidential election on the first Tuesday in November regardless of who wins the Presidency

· Investors move into sectors that will benefit from the President’s new mandate