THE CHAPMAN REPORT. Charts and commentary by David Chapman NOVEMBER 30, 2009

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1 THE CHAPMAN REPORT Charts and commentary by David Chapman NOVEMBER 30, Wellington Street East, Suite 900, Toronto, Ontario, M5E 1S2 phone (416) or (toll free) , fax (416) US INDICES S&P 500 Intermediate Trend: Up Short-term Trend: Up Week: Down S&P 500 STRATEGY: LONG HOLD (for definitions of terms, see end of report) - The S&P 500 lost.4% this past week the 2 nd consecutive weekly decline. - The decline in the S&P 500 occurred at the end of the week primarily due to fears that Dubai might default thus impacting negatively the financial system once again.especially hard hit was a fall in US banks. Goldman Sachs, Morgan Stanley and Bank of American each lost more than 3.4%. - Weekly indicators are rolling, however, there are no negative divergences being seen at the highs. - Daily indicators are moving to the downside with negative divergences being seen at the recent highs. - If Dubai is a concern the fact that 23% of US mortgage holders are underwater as a result of the sale value of their property falls below the cost of settling the mortgage should be of bigger concern. This translates into some 10.7 million US households with negative equity in their homes. It is estimated that 5.3 million households a home value is at least 20% below the value of the mortgage. Over 500 thousand of these households have received default notices. Offsetting this is of course is that most US households still have equity and 24 million have no mortgage. It is estimated that there are in the area of 112 million US households. - Early indications are that Black Friday retail sales may be robust. If so this may a good sign for the coming Xmas season. On the other hand it may also be a one day wonder. - The market fall on Black Friday however portends poorly for the market on Monday as the record indicates that the odds increase for a larger fall on the Monday following a down Black Friday. - December is the 2 nd best performing month for the year for the S&P 500. With a gain of 4.9% thus far for the month of November the record of solid Novembers continues. This offset the negative November seen in December 2008 also saw a decline. - The January effect is shown to start in mid December. Given the fall this week there is some possibility that weakness could be seen into mid December. The Chapman Report for November 30, 2009 page 1 of 24

2 - The best recorded December was 1991 when the S&P 500 gained 11.2%. The worst was December 2002 as the S&P 500 lost 6%. - Since 1950 the record is 43 up and 15 down for December. - Small cap stocks tend to outperform once the January mid month effect kicks in. - If the prognosis of a mid December low is correct this would suggest that there is a possibility we could see new highs in the market into the 1 st quarter of Major potential targets remain up to 1200/ Any correction now has potential targets down to 1000 and even Support for the S&P 500 is seen at 1070 then again at Resistance is firm now at 1110/ A break of 1070 would be significant and set the market for a drop to 1035 and Only new highs now above 1120 can change this potential course. - Overall the potential now is for a correction only and not the start of a new bear market. The real potential for a resumption of the bear market that got underway in October is not until after the 1 st quarter of Longer term the markets remain in a secular market that got underway in January/March Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. The Chapman Report for November 30, 2009 page 2 of 24

3 NASDAQ Intermediate Trend: Up Short-term Trend: Neutral Week: Down NASDAQ STRATEGY: LONG HOLD (for definitions of terms, see end of report) Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. - The NASDAQ Index fell.35% on the week. - Gains were seen in the early part of the week; however, the failure to approach the old highs above 2200 saw the market put in a sharp drop on Friday in reaction to the Dubai news. - The VXN Volatility indicator gapped up sharply on Friday. This appears as a breakaway gap on the charts and is a negative for the NASDAQ index going forward.the jump in the VXN was the sharpest since October. - The NASDAQ found support at the converging 20 and 50 day MA near 2130/ A breakdown through this level would target next support at the 100 day MA near Trend line support from the March 2009 lows can be seen at That level will also provide support. - The NASDAQ continued to fail over the past few weeks below the 4 year MA near Weekly indicators are turning down with no major negative divergences. - Daily indicators are firmly turned down with negative divergences seen at the recent highs. - The failure to break firmly above the October highs was a negative coupled with the major resistance seen at The Chapman Report for November 30, 2009 page 3 of 24

4 - The key weekly lows are seen at A break under this level and under 2000 could imply a much deeper correction. Key for the bull market that got underway in March 2009 is that these levels hold. The Chapman Report for November 30, 2009 page 4 of 24

5 BONDS US TREASURY BONDS Intermediate Trend: Neutral Short Term Trend: Up Week: Up US BOND STRATEGY: STAND ASIDE (for definitions of terms, see end of report) Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. - US Treasury bonds rose 1.9% this past week as concerns over the Dubai meltdown resulted in a flight to safety. - This offset any concern about improving economic numbers. US bonds broke out of a downtrend and out of a possible symmetrical triangle pattern. This pattern, if correct projects bonds to rise to 137^16. This would be short of the all time highs seen in Dec 08 at 142^21. (Current level 123^06). - Two year notes fell in yield for the 5 th consecutive week falling to their lowest levels in 11 months as the perception that the Fed will maintain a low interest rate policy continues to take hold.two year notes closed a.68% down from.75%. 10 year note yields fell to 3.21% from 3.36%. The 2-10 spread fell to 253 bp from 261 bp. - The US sold $118 billion of 2, 5 and 7 year debt this past week. - As noted the fall in note and bond yields came despite continued signs of economic improvement. US 3 rd quarter GDP was 2.8% revised down from 3.5%; existing home sales for Oct came in at 6.1 The Chapman Report for November 30, 2009 page 5 of 24

6 million above the expected 5.85 million and above the 5.54 million for Sep; the case-shiller index of home prices was down 9.36% for Sep. This is an improvement on the drop of 11.3% for Aug. Despite the ongoing improvement it is not likely the market will recoup the 30% decline recorded at the highest levels. Still the slowing decline in the case-shiller index is reflecting improving conditions in the housing market. Consumer confidence for Nov was 49.5 above the expected 46.3 and above Oct s Personal income for Oct rose.2% but personal spending rose higher up.7%. This was a sharp turnaround from the.6% decline recorded for both in Sep. Durable goods for Oct fell.6% one of the few blights on the week. Initial claims continued to improve at 466 thousand well below the expected 510 thousand and below the previous week s 501 thousand. - The FOMC is as noted maintaining the low interest rate policy.forecast growth for 2010 is 2.5% to 3.5%. - Key numbers this coming week include: Nov ISM 54.8 vs. Oct 55.7; non-farm payrolls for Nov a decline of 120 thousand vs. Oct decline of 190 thousand; unemployment for Nov 10.2% vs. Oct 10.2%. A reminder that the BLS U6 number shows unemployment at 17.5% (includes discouraged workers and marginally employed workers who wish full time employment). - The sharp jump in bond prices this past week was the Dubai effect. The Fed s interest rate policy of maintaining low interest rates will also help bond prices going forward. Seasonal strength in bond prices can often be seen in Dec. Offsetting this is ongoing improvement in economic numbers. - Technically as noted bonds appear to have broken out of a large symmetrical triangle with projections up to 137^16. - Officially the bond model remains on the sidelines although there are other buy signals being triggered. The Chapman Report for November 30, 2009 page 6 of 24

7 CANADIAN BONDS Intermediate Trend: Neutral Short-term Trend: Up Week: Up CANADIAN BONDS STRATEGY: STAND ASIDE (for definitions of terms, see end of report) Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. - Canadian bonds advanced 1.4% this past week firmly busting out of the downtrend that had been in place since the highs of March Canadian bonds benefited along with US$ securities as a safe haven from the financial meltdown in Dubai. - The bond market ignored the strength in retail sales (up 1% for Sep following a.8% gain in Aug) as the Dubai concerns overshadowed economic strength. - The Cdn current account deficit widened to $13.1 billion for Q3. This was a record. Imports have been exceeding exports. - The Teranet Home Price Index fell 1.8% from a year ago Sep. The decline, however, has lessened over the past few months. - Key economic numbers this week include: 3 rd quarter GDP +1% vs. 2 nd quarter decline of 3.4%: November employment - +5 thousand vs. a loss of 43.2 thousand in October; November unemployment rate 8.7% vs. October 8.6%. - Cdn bonds could be breaking out of a double bottom pattern. The close this week (122.75) was over the neckline of the double bottom pattern. The pattern projects up to 126. The Chapman Report for November 30, 2009 page 7 of 24

8 - The breakout is potentially significant as bonds go on a rally that could last a few months. The highs of March 2009 were near 129 and this level may be challenged, however, expectations are that the level will remain intact and no new highs should be seen. Potential economic growth should more than offset scares such as the Dubai meltdown. The Chapman Report for November 30, 2009 page 8 of 24

9 PRECIOUS METALS AND CURRENCIES Intermediate term trend Short-term trend week trend strategy Gold up up up long (new highs) Gold Bugs Index (HUI) up up down long (new highs) Silver up up down Long (new highs) TSX Gold Index up up down long (new highs) US$ Index down down down stand aside (new lows) CDN$ up down up long (for definitions of terms, see end of report) Gold & Silver Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. - Gold rose 2.47% to a new record high at $1195 while silver fell.75%. Platinum gained 2.6%. While both gold and platinum were off their weekly highs, silver was the only one of the precious metals that closed lower on the week primarily due to the Dubai meltdown. The Chapman Report for November 30, 2009 page 9 of 24

10 - Gold dropped sharply on Friday following the Dubai meltdown and in reaction to the strong up move by the US$ as there was a flight to safety. That gold recovered sharply off the daily lows ($35 off the low of the day) was a testament to gold s staying power as a safe haven as well. Silver closed 60 cents off its daily low. - Nonetheless both gold and silver may be subject to pullbacks in the days ahead as daily indicators have turned down with some negative divergences. Gold is running into its next level of resistance at $1200 while silver is running into resistance at $19. - Major support for gold is at $1000/$1030 the zone of the former highs. Silver has major support at $16. These levels are possible to test on any pullback as they represent the major breakout zones for both gold and silver.interim support zones and other possible pullback targets are seen at $1150, $1100 and $1060 for gold and $18, $17.60 and $17 for silver. Note that Friday s drop tested the first level for gold and tested both the first two levels for silver (low on the day was $17.70). - Long term technical targets remain for gold up to $1300/$1400 and for silver up to $27. - There was no Commitment of Traders (COT) report this week as the release has been delayed until Nov 30 as a result of the holiday. - Both gold and silver are in a period of seasonal strength that often more than counters the seasonal strength seen in the US$ (meaning gold and silver could both rise even as the US$ rises). Seasonal strength in the US$ is often the result of natural seasonal patterns. Gold and silver rising at the same time is a sign that they recognize the temporary seasonal nature of the US$. A breakout to new highs should confirm that gold and silver and overcoming seasonal US$ strength. Gold Bugs Index (HUI) and TSX Gold Index The Chapman Report for November 30, 2009 page 10 of 24

11 Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. - The Gold Bugs Index (HUI) lost.3% and the TSX Gold Index was down 1.5% this past week. - It was, however, a tale of two different indices as the HUI made a new high for the current move to the upside but despite losing still managed to close above its week opening level. The TSX Gold Index on the other hand also made a new high on the week but closed lower and below its week opening level thus registering a reversal week. - At a high of the HUI is not far from its all time high seen in March 2008 at This is a remarkable recovery from the lows of October 2008 at the bottom of the financial meltdown. Recovery since then is a gain of almost 280% based on the weekly low in October The TSX Gold Index is also not far from its March 2008 highs of The high this past week was Based on its close this past week the TSX Gold Index is up 207% from its October 2008 weekly low close. - Both gold indices are the only North American indices to have recouped this much of their financial meltdown losses. - Neither index is showing any signs of topping patterns and there are no significant negative divergences on the weekly charts yet. - The daily charts do have negative divergences so there remains the possibility of a correction setting in especially with any strength in the US$ as noted under the US$ Index discussion below. - The HUI has support down to the 50 day MA near 435. The TSX Gold Index has support down to its 50 day MA near Resistance on the HUI is up to 500. Resistance on the TSX Gold Index has formed near Major support for the HUI is seen at the 100 day MA near 400. The TSX Gold Index has major support down to 320. The Chapman Report for November 30, 2009 page 11 of 24

12 - While testing these key support levels on any pullback is possible the test would not end the major bull market that got underway out of the October 2008 lows. The rise since then has been a series of higher highs and higher lows with frequent pullbacks. This is a sign of strength for a bull market as it has also been accomplished on rising volume. There have been no signs of excess in the rise. - Breaking above resistance levels noted above will put the former highs as the next level to challenge. - Long term projected targets remain for the HUI at 750 and for the TSX Gold Index to 565. These are projected technical targets. Canadian Dollar Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. - The Cdn$ fell gained.8% this past week. - The Cdn$ rose in the early part of the week as Russia announced that they would increase the proportion of Cdn$ held in their international reserves. - The Cdn$ fell sharply on Friday following the Dubai meltdown and the fall in commodity prices. - Support for the Cdn$ ranges down to 93 (close Friday at 94.10). - A break below 93 could trigger a decline to the 4 year MA near Resistance has been building at 95 and up to Above 96 the Cdn$ could rise to par where there remain longer term targets. - The failure at this past week suggests, however, that the current weakness in the Cdn$ could continue. The Chapman Report for November 30, 2009 page 12 of 24

13 - The view is that this is a correction within the context of an uptrend as the fundamentals for Canada remain strong with a debt situation that is not as dire as many other countries and continued strong commodity prices. US Dollar Index Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. - The US Dollar Index fell.9% on the week. - A sharp down day on Wednesday was offset by a sharp up day on Friday. The sharp up day on Friday was due to the Dubai effect as US$ through US Treasury Bonds became a safe haven. - The potential descending wedge triangle was left unresolved for the US$ as the bottom of the triangle near 74 was tested (low 74/27). - The US$ did fall to a 14 year low against the Japanese Yen and had fallen to new recent lows against the Euro as well as the Fed continued to signal that they will support a weaker US$ by maintaining US interest rates at or close to zero. - This will continue to encourage the US$ carry trade as investors borrow US$ convert and invest in higher yielding securities elsewhere. - While the US$ jumped Friday on the Dubai news the jump may not be able to be maintained as investors will continue to focus on the low US interest rates. - However, this can be offset at least temporarily by this current flight into safety of US Treasury bonds. While all of this appears contradictory the long term phenomena of an ongoing low interest rate policy is being temporarily offset by the fears of the Dubai meltdown and its potential global impact. If the fears The Chapman Report for November 30, 2009 page 13 of 24

14 abate then the decline of the US$ should resume. However, in the short term the US$ may see further gains. - The key is the descending wedge triangle. If correct a breakout over could start a run towards potential targets at 80. Interim resistance is seen at If the wedge triangle fails and we breakdown through 74 the targets are down to There have been instances of wedge triangles failing. - The release of the latest Commitment of Traders reports has been delayed until Nov 30 due to the holiday. - The major long term trend of the US$ remains down and the conditions for further losses in the US$ also remain. The question is what the temporary impact of the Dubai meltdown has on the US$ in the short term. As well note that there is often some seasonal strength seen in the US$ late in the year due to repatriation of profits for international corporations. The Chapman Report for November 30, 2009 page 14 of 24

15 ENERGY Intermediate term trend Short-term trend week trend strategy Oil up down down long Natural Gas up up up long XOI Index up neutral up long TSX Energy Index up down down long (For definitions of terms, see end of report) Oil & Gas Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. - Oil prices lost 1% on the week while Natural Gas prices leaped 16.6%. - The Dubai effect oil prices fell primarily because of the perception that the debt collapse in Dubai would curtail global demand for oil as the strength of the global economic recovery was thrown into doubt. Dubai is also a major oil producer. The Chapman Report for November 30, 2009 page 15 of 24

16 - Demand in the USA, the world s largest consumer of oil has fallen 2.9% in the past year. Currently demand is averaging roughly 19 million barrels daily down from almost 25 million barrels daily at its peak prior to the start of the financial meltdown in Demand in the USA has been offset, however, but an uptick in demand from Asia particularly China. - The EIA reported that oil supplies jumped 1 million barrels in the latest reporting period leaving them 17 million barrels above last year s levels; gasoline supplies also rose 1 million barrels and are 9.6 million barrels above last year; and distillates fell.5 million barrels but are 40.2 million barrels above last year. - Oil prices did break above the 4 year MA seven weeks and are now testing that zone at $75. - Oil prices did break the uptrend line from the lows seen in February They are currently holding support at the 50 day MA. - A break below $75 would target next support at $72. Below $72 and especially under $70 a fall towards the $60 level is possible. - Resistance for oil has been firmly built at $80/$82. Above that level a run to $90 or higher is possible. - With the weakness seen in oil prices this week, oil appears to have detached itself from the US$ as the US$ also fell on the week. - Due to the holiday this past week the latest COT will not be released until Nov NG prices jumped sharply on the week as there were some signs that record supplies in storage may be peaking. - The EIA reported that the net increase was only 2 Bcf leaving storage at 3,835 Bcf which was 442 Bcf above the 5 year average. - Despite the recent jump in NG prices they are still below last year s levels. - NG successfully tested support down towards $4 and has once again leaped over $5. We are now back at the highs seen 5 weeks ago and new highs are likely as a result. - The next major level of resistance is at $6. - Support is now at $ While oil prices are demonstrating weakness, NG prices continue to firm. The Chapman Report for November 30, 2009 page 16 of 24

17 Amex Oil & Gas Index (XOI) and TSX Energy Index Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. - The AMEX Oil Index (XOI) gained.2% on the week while the TSX Energy Index fell.4%. - The energy indices continue their downtrend that got underway with the top 6 weeks ago. - Despite the small gain on the week the XOI fell sharply on Friday. - Support for the XOI is now seen at the 13 week MA near 1050 and the 50 day MA at 1070 (close ). - Trend line support for the XOI is seen at A breakdown under 1050 would project a fall to The sideways action of the past few weeks appears to be breaking down. - The TSX Energy Index failed to convincingly break through the 50 day MA (290) resistance and is turning down negatively. The 13 week MA at 286 is currently providing support as we closed on that support. - The 100 day MA is the next level of support (277). Longer term trend line support can be seen at Weekly indicators are turning down; however there are no strong negative divergences. - Daily indicators had broken down with negative divergences. They are currently turned to the downside and they are not as yet at levels that could suggest a low. - The XOI short term trend has turned to neutral while the TSX Energy Index short term trend is pointed down. - The weekly indicators for both indices remain up. The TSX Energy Index weekly indicators are in a weakening trend while the XOI weekly indicators are rolling over but have not as yet firmly turned down. - Another week down would weaken both indices considerably. The Chapman Report for November 30, 2009 page 17 of 24

18 - Indications are that both indices could have further declines ahead. For the major intermediate uptrend to remain intact key support levels should hold. These levels are seen at 1000 for the XOI and the 260/270 zone for the TSX Energy Index. Breakdowns under those levels would indicate further weakness ahead and a probable sell signal for the sector. - Regaining above 1100 for the XOI and 300 for the TSX Energy Index would be positive developments and suggest that new highs were possible. The Chapman Report for November 30, 2009 page 18 of 24

19 TSX Indices - The S&P TSX Composite lost 1% on the week. - Of the 14 sub-indices 4 were up, 1 was flat and 9 were down. - Leading the way to the downside was Industrials down 2.4% followed by Materials down 2.2%. - Leading the gainers was both Health Care and Information Technology up.7%. - Consumer Discretionary was flat on the week. - Some made new highs then reversed and closed down on the week. This constitutes a reversal week - The following made new high reversals Gold, Materials, Metals & Mining and Utilities. The Metal & Mining Index made a new all-time high. The S&P TSX Composite and the TSX 60 Composite also made small new highs before turning lower. - Telecommunications also made new highs for the current move to the upside; however, they ended the week with a small.3% gain. - The Dubai effect The TSX started the week to the upside. The remaining days were down although the TSX did manage a small gain on Friday despite difficulties in numerous other markets. - The TSX Venture Exchange lost.2% on the week. The Venture Exchange also made a new high for the current move to the upside and closed lower. - The S&P TSX Composite found support at the 13 week MA and the 50 day MA. - This area generally between 10,300 to 10,400 should provide initial support this coming week. - A breakdown through that level should set up a test of the weekly lows near 10, A breakdown under the last weekly lows will break the series of higher highs, higher lows seen since the start of this rally in March Weekly indicators are rolling over, however, there were no strong negative divergences seen at the highs. - On the other hand the daily indicators saw considerable negative divergences at the recent highs. - Major support would be seen at 10,300 and the 40 week MA. - Given the failure this past week, resistance has been created at 11,730/11,740. A breakout over that level could set up a run to major resistance at the 4 year MA near 12,000. This target zone remains a possibility if the major support zones hold on this pullback. With only weak negative divergences on the weekly indicators this remains a possibility. - The TSX Venture Exchange remains in a major uptrend despite the weakness seen this past week. - The following sub indices also remain in strong up trends despite the weak close seen this week Gold, Metals & Mining, and Materials. These sectors are candidates for purchase on the dips. - Weakening trends are being seen in Financials, Real Estate and Information Technology. These appear as the sectors to approach cautiously or avoid. - The remaining sub indices appear to be in strengthening trends and could also be considered for purchase on pullbacks. - The conclusions are that the market is embarking on a correction within the context of an up move. The key is that support zones hold. While a break of the weekly lows is a negative this does not ensure an end to the bull market. A breakdown under the 40 week MA would, however, signal an end to the current bull market correction that got underway in March The Chapman Report for November 30, 2009 page 19 of 24

20 TSX COMPOSITE trend close on Nov week high 52-week low intermediate trend shortterm trend Week trend strategy TSX Composite 11, , , up up down long hold (new highs) TSX up up down long hold (new highs) TSX CDNX Venture 1, , up up down long hold (new highs) Energy up down down long hold Financials up neutral down long hold - caution Information Technology up down up long hold - caution Consumer Discretionary up up flat long hold Consumer Staples up up up long hold Healthcare up neutral up long hold Industrials up up down long hold Materials up up down long hold (new highs) Telecommunications up up up long hold (new highs) Utilities up up down long hold (new highs) Gold up up down long hold (new highs) Metals & Mining up up down long hold (new highs) Real Estate up neutral down long hold Income Trusts up up down long hold (for definitions of terms, see end of report) The Chapman Report for November 30, 2009 page 20 of 24

21 EXCHANGE TRADED FUNDS - Markets closed weak on Friday after attempting to rally in the early part of the week. - Changes on the week for the short term trend: XFN up to neutral, FXI up to down, EEM up to neutral, IEV up to neutral, IFN up to neutral and TLT down to up. - Changes on the week for the intermediate trend: TLT down to neutral. The TLT is getting close to a potential intermediate buy signal. - New highs were seen for XGD, XMA, XBB, XSB, XRB and GLD. Our long term buy strategy is based off of intermediate signals only. More aggressive investors can follow the short term trend signals but use stops. ETF intermediate trend short-term trend intermediate strategy XGD/T Gold up up long hold (new highs) XMA/T Materials up up long hold (new highs) XIT/T Technology up down long hold - caution XFN/T Financials up neutral long hold caution XEG/T Energy up down long hold XRE/T REIT up up long hold XIU/T TSX 60 up up long hold XSP/T S&P 500 up up long hold XBB/T Bonds up up long hold (new highs) XSB/T Short Bonds up up long hold (new highs) XRB/T Real Return Bonds up up long hold (new highs) XIC/T Composite up up long hold XMD/T Mid-Cap up up long hold QQQQ NASDAQ up up long hold SPY/NY S&P 500 up up long hold EWJ/NY Japan neutral down long hold - caution FXI/NY China 25 up down long hold EEM/NY Emerging Markets up neutral long hold GLD/NY Gold up up long hold (new highs) IEV/NY Europe up neutral long hold IFN/NY India up neutral long hold TLT/NY 20-year bond for definitions of terms, see end of report neutral up stand aside bottoming? The Chapman Report for November 30, 2009 page 21 of 24

22 NEW - Technical Commentary will now be following the Horizon Beta Pro single ETF s. - Technical Commentary will not be following the Horizon Beta Pro Bull Plus & Bear Plus ETF s. - The HBP Comex Gold, Comex Silver and Winter NYMEX Oil and Winter NYMEX Natural Gas are currency hedged. - The HBP Inverse ETF s can be used as portfolio hedges or as positional trades. - There is insufficient data on the HBP ETF s to determine the intermediate trend. - There were changes on the week. Both the HIX and the HIF changed from down to neutral. Horizon Beta Pro Single ETF s ETF HBP Comex Gold HUG/T HBP Comex Silver HUZ/T HBP Winter NYMEX Crude Oil HUC/T HBP Winter NYMEX Natural Gas HUN/T HBP S&P TSX 60 Inverse HIX/T HBP S&P Financials Inverse HIF/T HBP S&P Energy Inverse HIE/T HBP S&P Gold Inverse HIG/T for definitions of terms, see end of report intermediate trend short-term trend up up up down neutral neutral neutral down intermediate strategy new highs new highs new lows Please note: Horizon BetaPro products are securities of related issuers to MGI Securities. Please note: There is currently insufficient data to determine the intermediate trend. The Chapman Report for November 30, 2009 page 22 of 24

23 DEFINITIONS OF TERMS Intermediate-term trend (weekly trend): Of interest to conservative long term investors. As long as the intermediate trend is up, conservative long term investors can continue to hold. But watch the short-term trend for possible trend changes coming. Short-term trend (daily trend): Of interest to more aggressive investors and traders. When the short term trend turns up more aggressive investors and traders may wish to go long. Note though that all strategy signals are based on the intermediate trend only. Strategy: Buy: All buy signals relate solely to the intermediate trend. A buy signal is issued when the intermediate trend turns up. Sell: All sell signals relate solely to the intermediate trend. A sell signal is issued when the intermediate trend turns down. Stand aside: intermediate strategy is in stand aside mode following a sell signal. Long or long hold: intermediate trend is up following a buy signal and investors can continue to remain long. Long or long hold topping or caution: short term indicators are diverging negatively and there are other indicators indicating to us that the market may be topping out. Confirmation will only come when the intermediate trend turns down and issues a sell signal. Stand aside - bottoming: short term indicators are diverging positively and there are other indicators indicating to us that the market may be about to change from stand aside to buy. Confirmation will only come when the intermediate trend turns up and issues a buy signal. Stand aside accumulate: similar to stand aside bottoming above except investors may wish to consider accumulating. Confirmation will only come when the intermediate trend turns up and issues a buy. (New highs, new lows): market or index is making new highs or new lows. Trend Signals: Up Trend is up. Down Trend is down. Neutral Trend has entered a transition phase before either resuming the current trend or changing trend. This is a caution zone and signals that a trend change may be in the offing. Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. Copyright 2009 All Rights Reserved David Chapman The Chapman Report for November 30, 2009 page 23 of 24

24 General Disclosures The information and opinions contained in this report were prepared by MGI Securities. MGI Securities is owned by Jovian Capital Corporation ( Jovian ) and its employees. Jovian is a TSX Exchange listed company and as such, MGI Securities is an affiliate of Jovian. The opinions, estimates and projections contained in this report are those of MGI Securities as of the date of this report and are subject to change without notice. MGI Securities endeavours to ensure that the contents have been compiled or derived from sources that we believe to be reliable and contain information and opinions that are accurate and complete. However, MGI Securities makes no representations or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to MGI Securities that is not reflected in this report. This report is not to be construed as an offer or solicitation to buy or sell any security. The reader should not rely solely on this report in evaluating whether or not to buy or sell securities of the subject company. Definitions Technical Strategist means any partner, director, officer, employee or agent of MGI Securities who is held out to the public as a strategist or whose responsibilities to MGI Securities include the preparation of any written technical market report for distribution to clients or prospective clients of MGI Securities which does not include a recommendation with respect to a security. Technical Market Report means any written or electronic communication that MGI Securities has distributed or will distribute to its clients or the general public, which contains an strategist s comments concerning current market technical indicators. Conflicts of Interest The technical strategist and or associates who prepared this report are compensated based upon (among other factors) the overall profitability of MGI Securities, which may include the profitability of investment banking and related services. In the normal course of its business, MGI Securities may provide financial advisory services for issuers. MGI Securities will include any further issuer related disclosures as needed. Technical Strategists Certification Each MGI Securities technical strategist whose name appears on the front page of this technical market report hereby certifies that (i) the opinions expressed in the technical market report accurately reflect the technical strategist s personal views about the marketplace and are the subject of this report and all strategies mentioned in this report that are covered by such technical strategist and (ii) no part of the technical strategist s compensation was, is, or will be directly or indirectly, related to the specific views expressed by such technical strategies in this report. Technical Strategists Trading MGI Securities permits technical strategists to own and trade in the securities and or the derivatives of the sectors discussed herein. Dissemination of Reports MGI Securities uses its best efforts to disseminate its technical market reports to all clients who are entitled to receive the firm s technical market reports, contemporaneously on a timely and effective basis in electronic form, via fax or mail. Selected technical market reports may also be posted on the MGI Securities website and davidchapman.com. For Canadian Residents: This report has been approved by MGI Securities which accepts responsibility for this report and its dissemination in Canada. Canadian clients wishing to effect transactions should do so through a qualified salesperson of MGI Securities in their particular jurisdiction where their IA is licensed. For US Residents: This report is not intended for distribution in the United States. Intellectual Property Notice The materials contained herein are protected by copyright, trademark and other forms of proprietary rights and are owned or controlled by MGI Securities or the party credited as the provider of the information. Regulatory MGI SECURIITES is a member of the Canadian Investor Protection Fund ( CIPF ) and the Investment Industry Regulatory Organization of Canada ( IIROC ). Copyright All rights reserved. All material presented in this document may not be reproduced in whole or in part, or further published or distributed or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express written consent of MGI Securities Inc. The Chapman Report for November 30, 2009 page 24 of 24