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Week In Review

Equities Update – the desk continues to note an improved tone from investors; Fri 2/5 increasingly appears to have been an (interim?) low for this pullback, as a steep sell-off that day was stopped at ~1040 and the market was able to rally back into the green. Larger vanillas are starting to nibble on the long side while shorts are increasingly reluctant to lay out fresh exposure and are using any pullback to cover. Whereas for most of late Jan/early Feb the trend was to sell rallies, we are shifting back a bit to the ’09 pattern of buying dips; the market over the last couple weeks has grown much more resilient. Volumes and conviction levels still aren’t all that high and investors are preferring to take action via indices/ETFs vs. individual stocks. Also – the tape drifted higher during a holiday-shortened week in the US when China wasn’t trading (or producing news) – things could get tougher next week as Wall St gets back to full strength and Asia starts trading again. Technically, we made some progress on the upside (finally breaking up above the 1100 resistance level) but couldn’t quite sustain a move north of the 50day MA (1108-1109 on the sp500 cash).