The Vardon Report By Bob Ecob For April 28, 2011 REPORTS: (all times central daylight savings)

TODAY: Q1 Advance GDP at 730 am, expected at 1.7%. Weekly Jobless Claims at 730 am, expected at 395,000. March Pending Home Sales at 9 am, expected up 1.0%. FRIDAY: Q1 Employment Cost Index at 730 am, expected up 0.4%. March Personal Income/Spending at 730 am, Spending expected up 0.5%. April Chicago PMI at 845 am, expected at 67.0. University of Michigan Consumer Sentiment at 855 pm, expected at 69.5. MONDAY: April ISM Index at 9 am, expected at 61.0. March Construction Spending at 9 am, expected up 0.3%. TUESDAY: March Factory Orders at 9 am, expected up 1.5%. WEDNESDAY: April ADP Payroll Employment at 715 am. ISM Services Index at 9 am, expected at 58.0. THURSDAY: Weekly Jobless Claims at 730 am, expected at 385,000. Q1 Productivity and Labor Unit Costs at 730 am, expected up 0.4% and 2.0% respectively. FRIDAY: April Unemployment at 730 am, expected unchanged at 8.8%. Non-farm Payrolls expected up 200,000. TURNING POINTS: None. RECOMMENDATIONS: None. TEN YEAR NOTES : June ten year notes closed with a modest loss on news that quantitative easing would end as planned in June, and Fed Chairman Bernankes comment the economy is recovering at a modest pace. On the plus side, the Fed will maintain its very accommodative monetary policy for an extended period, taken to mean through the remainder of this year, and Bernanke said inflation should return to normal soon. However, there was nothing in the Fed comments to trigger a sustained move. The chart favors a rally to 121.00. Support (basis June): 120.09, 119.26, 119.17, 119.06, 118.27, 118.16, 118.05. Resistance: 121.00, 121.11, 121.22, 122.01, 122.13. Turning Points: None. EURODOLLAR: Sep Eurodollars recovered from a midday slump triggered by news the Fed would end QE as planned in June, supported by continuation of the Feds very accommodative monetary policy. Prices appear headed higher; the next target is 9970 resistance. Support (basis September): 9956, 9945, 9934. Resistance: 9967, 9979, 9990. Turning Points: None. S&P 500: Good news from the Fed- it will keep the very accommodative policy in place for an extended period (thought to mean into next year- and a report GE will increase its dividend kept June S&P moving higher. Basically, concerns that high energy costs are hurting the economy have faded away and this market appears to be discounting strong growth later this year. The chart favors a rally to 1400. Support (basis June): 1339, 1327, 1316, 1305, 1294, 1282, 1271, 1260. Resistance: 1361, 1372, 1384, 1395, 1406, 1417, 1429, 1440, 1451. Turning Points: None.

DOLLAR: The dollar fell sharply as the Fed said it would maintain its very accommodative monetary policy for an extended period (thought the mean through the remainder of the year), meaning European interest rates are likely to keep gaining on the US. Theres also been a loss of confidence in the US currency, and European debt concerns have faded into the background, again. Based on all of that, the dollar is likely to stay in a downtrend. The main plus is the chance of a pause to consolidate around 7350 support basis the June dollar index. EURO: The June euro rallied sharply for the reasons mentioned above, and now appears headed to 150.00. The main negative is the chance of a pause to consolidate around 147.50 resistance. Support (basis June): 146.70, 145.80, 144.90. Resistance: 147.60, 148.50, 149.40. Turning Points: None. SWISS FRANC: The June Swiss franc ended firm in sympathy with the euro but lagged due to less need of a safe haven. However, the Swiss is likely to garner support from investment flows into risky currencies and keep trending higher. The next target is 114.00. Support (basis June): 112.50, 111.60, 110.70. Resistance: 115.20, 116.10, 117.00. Turning Points: None. JAPANESE YEN: The June yens downturn was blamed on a move into higher yielding currencies. There was also talk that carry trade pressure is picking up. And we wouldnt be surprised to see further weakness based on the outlook for Japans economy to take nearly a year to recover from the earthquake. Support (basis June): 120.60, 119.70, 118.80. Resistance: 123.50, 124.40, 125.30. BRITISH POUND: The June British pound rallied sharply on signs of a stronger UK economy as the purchasing managers services index jumped the most in four years, reinforcing expectations for the BOE to raise interest rates sooner rather than later. The upside breakout probably signaled the start of a rally to 168.00. Support: (basis June): 165.60, 164.70, 163.80. Resistance: 166.50, 167.40, 168.30. Turning Points: None. CANADIAN DOLLAR: The June Canadian dollar stayed firm on renewed investment flows into risky currencies, favoring further gains, particularly since it looks like the Dow has embarked on a new major up leg. A bullish continuation pattern appears to be forming. The next target now is 107.00. Support (basis June): 104.40, 103.50, 102.60. Resistance: 105.30, 106.20, 107.10. Turning Points: None. AUSTRALIAN DOLLAR: The June Australian dollar rallied sharply as further strength in the Dow boosted economic optimism and generated aggressive investment in risky currencies. The next target is now 110.00. Support (basis June): 107.10, 106.20, 105.30. Resistance: 108.90, 109.80, 110.70. Turning Points: None. COPPER: July copper fell early on news the Fed would end quantitative easing in June, then turned strong late after the Fed said it will keep short term interest rates near zero for an extended period, thought to mean until next year. Chinese rate hike worries remain a negative, although another tightening move isnt likely to slow growth any more than previous rate hikes have. In our view, the best bearish excuse is rising LME copper supplies, up 3825 tonnes on Tuesday, implying slowing demand. However, the funds/specs are likely to key on the weak dollar and strong Dow, and start investing. The chart is neutral, and a close outside of the 420.00-450.00 range is likely to signal the direction of the next major move. Support (basis May): 423.00, 418.50, 414.00, 409.50. Resistance: 432.00, 436.50, 441.00, 445.50, 450.00. Turning Points: None. SILVER: Fed Chairman Bernanke said that inflation should return to normal but July silver rallied sharply on ideas inflation will get worse due to continuation of the Feds very

accommodative monetary policy. Basically, traders, funds, specs feel the Fed doesnt know what its talking about. In addition, another solid decline in the dollar generated demand for alternative investments. The action may have signaled an end of the down correction, but we wouldnt be surprised to see another day or two of volatile two-sided action, probably resulting in a bullish continuation pattern. Support (basis July): 4715, 4680, 4625, 4590, 4545, 4500, 4455, 4410, 4365, 4320. Resistance: 4850, 4900, 4940, 4985, 5030, 5075, 5120, 5165, 5210. Turning Points: None. GOLD: June gold rallied sharply on renewed investment and inflation hedging on ideas the weak dollar and continuation of the Feds very easy monetary policy will cause inflation to surge. The Fed thinks otherwise, but traders figure the Fed doesnt know what its talking about. The upside breakout signaled a rally to 1550. Support (basis June): 1508, 1496, 1485, 1474, 1462, 1451, 1440. Resistance: 1530, 1541, 1552, 1565, 1575, 1586. Turning Point: None. CRUDE OIL: DOE crude supplies surged 6.2 mln barrels due to strong imports but June crude rallied fairly sharply because refiners continued to scale back output (down 6% from a year ago), resulting in declin ing gasoline and distillate stocks. Traders tend to view that as a sign of strong demand, but its not. In fact, weekly distillate demand fell more than 9% from the previous week. Gasoline usage rose slightly. Basically, the funds/specs are still betting that an improving economy will boost demand and tighten crude supplies down the road. A bullish continuation pattern appears to be forming, favoring a rally to 117.50. Support (basis June): 110.70, 109.80, 108.90, 108.00, 107.10. Resistance: 113.40, 114.30, 115.20, 116.10. Turning Points: 5/5. RBOB GASOLINE: June reformulated rallied sharply in reaction to a larger than expected 2.5 mln barrel drop in DOE gasoline stocks, which reinforced anticipation of tighter supplies due to strong demand, although much of the supply drop was due to reduced gasoline production, down 3.6%. Weekly gas demand rose a little less than 1%, and remained at a seasonal level. The chart favors a rally to 340.00. Support (basis June): 333.00, 328.50, 324.00, 319.50, 315.00. Resistance: 337.50, 342.00, 346.50, 351.00. Turning Points: None. HEATING OIL: June heating oil firmed with crude and in reaction to a larger than expected 1.8 mln barrel decline in DOE distillate stocks, which was due to reduced refinery output, not demand, whic h fell more than 9% last week. The upside breakout from a bullish continuation pattern probably signaled the start of a rally to 340.00. Support (basis June): 319.50, 315.00, 310.50, 306.00. Resistance: 328.50, 333.00, 337.50, 342.00. Turning Points: None. NATURAL GAS: June natural gas modest downturn was blamed on the benign weather outlook for the South and Southeast, although below normal temps forecast across the northern then eastern portion of the country over the next two weeks will marginally increase consumption. The action was disappointing in view of expectations for a sub par weekly storage injection of about 38 bcf. However, its best to assume prices are consolidating into a bullish continuation pattern in preparation for further gains due to fund/spec investment buying. The chart favors a rally to 4600. Support (basis June): 4320, 4230, 4140, 4050, 3960, 3870. Resistance: 4500, 4590, 4680, 4770, 4860, 4950. Turning Points: None. COTTON: Dec cottons sharp selloff was blamed on concern high prices are hurting demand, which actually has been true for weeks. We have a feeling the focus will return to drought in West Texas, preventing a sustained down move. As mentioned before, prices are so high that a 25% down correction would leave this market well above historical norms, e.g., 90 cent cotton used to be considered expensive. But that was before the era of the hedge fund. We wouldnt be surprised to see prices level off around 125.00 support. Support (basis Dec): 122.40, 120.60, 118.80, 117.00, 115.20. Resistance: 126.00, 127.80, 129.60, 131.40, 133.20, 135.00. Turning Points: None.

SUGAR: July sugar stayed weak on big Thai production (a record) and a large Brazilian crop, which eased supply concerns and could result in a sizable production surplus next season. If outside markets stay bullish - weak dollar, strong Dow , gold and crude- the funds/specs might start reinvesting in sugar. But for now , the odds favor further declines. The next target is 2200 support. Support (basis July): 2250, 2200, 2160, 2115, 2070. Resistance: 2340, 2385, 2430, 2475, 2520. Turning Points: None. COFFEE: July coffees steady action was disappointing in view of bullish action in outside markets, but its best to assume prices are consolidating in preparation for further gains due to tight supplies and anticipation of strong demand. A bullish continuation pattern appears to be forming, and a close above 300.00 would signal a rally to 312.00. Support (basis July): 292.50, 290.25, 288.00, 285.75. Resistance: 299.25, 301.50, 303.75, 306.00, 308.25. Turning Points: 4/28-4/29. ORANGE JUICE: July OJ held steady and continued to consolidate into what looks like a bullish continuation pattern, favoring further gains. Support was tied to bullish outside markets. Support (basis July): 164.25, 162.00, 159.75, 157.50. Resistance: 168.75, 171.00, 173.25, 175.50, 177.75. Turning Points: None. COCOA: July cocoas strong rally was blamed on bullish outside markets- the weak dollar and strong stock market bode well for demand. On the negative side, theres still a general consensus that Ivory Coast cocoa exports will get back to normal fairly soon. However, as we all know, fund/spec activity in reaction to outside markets is usually the dominant factor. A close above 3200 resistance would turn the chart bullish. Support (basis July): 3100, 3060, 3015, 2970, 2925. Resistance: 3200, 3240, 3285, 3330, 3375. Turning Points: None. SOYBEANS: July soybeans ended with a modest loss in sympathy with corn and wheat. There were also demand concerns tied to ideas China could raise interest rates again, even though its doubtful that would slow Chinas growth by much (if at all). On the plus side, the improved weather outlook for corn planting reduces the chance of acreage shifting to soybeans, and, most importantly, it looks like outside markets will stay bullish i.e., the dollar will remain weak and the stock market strong, which could trigger fund/spec investment buying. Prices appear to be consolidating into a bullish continuation pattern, favoring a rally to 1430 resistance. Aggressive traders could try the long side on violation of 1400 with a stop just below 1368. Support (basis July): 1372, 1361, 1350, 1339, 1327, 1316, 1305, 1294. Resistance: 1395, 1406, 1417, 1429, 1440, 1451, 1462, 1474. Turning Points: None. SOYOIL: July soyoil pulled back with soybeans but still appears to be consolidating/correcting into a bullish continuation pattern, favoring an up leg to 6100 resistance. Support (basis July): 5760, 5715, 5670, 5625, 5580. Resistance: 5900, 5940, 5985, 6030, 6075, 6120. Turning Points: None. SOYMEAL: July soymeal pulled back with soybeans but appears to be consolidating into a bullish continuation pattern, favoring a rally to 375 resistance. Support (basis July): 360, 355.50, 351, 346.50, 342. Resistance: 369, 373.50, 378, 382.50. Turning Points: None. WHEAT: July wheat fell sharply after heavier than expected rain developed in Oklahoma yesterday, which should stabilize the crop over the near term. Despite that, in our view, its a good bet this market will stage another rally since dry weather is forecast to return starting today through May 11, i.e., the drought should continue. Chinas wheat belt is expected to stay mostly dry over the next five days but Russian wheat could see light, scattered rain late in the weekend into early next week. The sharp selloff signaled a near term top but not an end of the uptrend, it takes a close below 775 support for that. Aggressive traders should be out of long positions.

Support (basis July): 799, 788, 776, 765, 754, 743, 731. Resistance: 821, 832, 844, 855, 866, 877, 889, 900. Turning Points: None. CORN: July corn was dragged down by wheat and the improved planting outlook for the western corn belt. The NWS forecast called for below normal rainfall in Nebraska and Iowa next week. On the plus side, cold, wet conditions are expected to continue across the corn belt east of the Mississippi, and significant planting delays for just half of the crop would be bullish based on the need for big production this year just to keep even with demand, i.e., to prevent very tight stocks from going even lower. Its best to assume this market will stay in an up phase. A bullish continuation pattern appears to be forming, favoring a rally to 825. Very aggressive traders should hold long positions with a stop raised to just 750. Support (basis July): 753, 748, 742, 737, 731. Resistance: 765, 771, 776, 781, 787, 792, 799. Turning Points: None. LIVE CATTLE: June cattles moderate bounce, attributed to the oversold condition and (for lack of anything better) strong beef exports, was probably a correction to recent sharp declines. However, weakness in boxed beef (down $0.83 and $1.00) reinforced worries domestic demand is slipping due to high beef prices and energy costs. On the plus side, retailers soon will stock up on beef going into the summer grilling season, and cattle numbers are expected to trend lower over the long term, and high feed costs are likely to hurt beef production. However, the chart favors a selloff to support around 111.00. Support (basis June): 113.00, 112.50, 112.00, 111.60, 111.15, 110.70. Resistance: 113.85, 114.30, 114.75, 115.20, 115.65, 116.10, 116.55. Turning Points: None. LEAN HOGS: June hogs stayed weak on slumping live cash prices, and continued to move lower in late electronic trading on ideas a big $2.38 drop in the cutout signaled a major problem with demand. We feel its best to assume the long term bullish fundamentals are likely to come back into play eventually- potential for pork production to come down while demand stays strong. But right now prices appear headed down to 9500 support. Support (basis June): 9585, 9540, 9500, 9450, 9400, 9350. Resistance: 9720, 9765, 9810, 9855, 9900, 9945. Turning Points: None. THE INFORMATION CONTAI NED HEREIN IS GATHERED FROM SOURCES WE BELIEVE TO BE RELIABLE BUT CANNOT BE GUARANTEED. OPINIONS EXPRESSED ARE SUBJECT TO CHANGE WITHOUT NOTICE. THOSE USING THE INFORMATION HEREIN FOR TRADING PURPOSES ARE RESPONSIBLE FOR THEIR OWN ACTION AND NO CLAIM IS MADE THAT THE RECOMMENDATIONS WILL BE PROFITABLE OR THAT THEY WILL NOT RESULT IN LOSSES. TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SIGNIFICANT RISK AND IS NOT SUITABLE FOR ALL INVESTORS. REPRODUCTION OR REBROADCAST OF ANY PORTION OF THIS MARKET COMMENTARY IS STRICTLY PROHIBITED.