D & D Securities Inc.

Morning Call: Thursday, May 14, 2009

Good morning. The Dash to Trash is over. Toronto closed down a whopping 370 points and was 7 to 1 on the downside. The Dow was 185 points lower and the S&P down 24. The bear has put on weight and came out swinging. Oil bounced off resistance at $60 (it’s a magic number) and closed at $58 which deflated the energy stocks. Down came the C$. The wakeup call was April retail sales (yesterday's morning call) down 0.4% and suddenly the market was asking: Why Buy? Where are the bullish catalysts? Suddenly the cupboard is bare!

Where are we going? The S&P will test 875 or close to it. However, were it to break below 865-870 then we are going down another 40-50 points. We have to make a call: Buy or Sell. Everyone predicted the pullback and wanted it. Now what? There's all that cash to invest. Is it coming in or is it going to hug the sideline.

There are two things tugging at that decision. Euroland Industrial Production was down 2% month over month and down 20% year over year. That's looking like Japanese numbers. Then there's the US$ which for now looks like it has broken support and is heading lower (Remember those US stocks you bought and while they went up, in C$ you just broke even?). The offset is higher commodity prices and their related stocks. Well that used to work but because of the Hedgies, there are a significant number of financial players in those markets. Commodities have become an asset class and it’s very important to remember that. They now trade like an asset class and old relationships loosen. Think of them as just another asset class and rotate into and out of them like you would with Staples or Utes.

What we do next? Follow the market lead and rotate from economically sensitive to the early cycle stocks like Staples and the Consumer Right now it pays to do nothing. Gartman saying that the Dow should go to 7900 is helping. We are going to have to make a call soon.

We are looking for sign.

Not So Sunny and Solar Thursday

Sustainable Energy Technologies (STG:V)* launched its ‘Paralex™’ Inverter at the Genera ’09 Trade Show in Madrid Spain. A Spanish video describing the benefits can be viewed at http://www.paralexsolar.es/index.php?id=12.

We attended the ARISE Technologies (APV:T)* annual general meeting on May 12^th 2009 proudly showing off their first module using their cells.

With regards to the Feed-In Tariff program in Ontario, the rumors are that the 1^st phase of legislation (Residential roof top less then 10 kW at 80.2 cents per kW hour) will be tabled in the house on the 1^st week of June. The other phases will be tabled in later tranches.

But for now……………………………………………… Take the money.

(*D&D Securities has acted as agent in a private placement deal in the last 12 months. The firm’s principals currently own this stock.)

BDIY Index (Bloomberg): The Baltic Dry Index (replaces the Baltic Freight Index). A composite of Baltic Capesize, Panamax, Handysize and Supramax indices. The index is designed as the successor to the Baltic Freight Index and was first published on 1 November 1999.

Quote of the Day:

“Obstacles are those frightful things you see when you take your eyes off your goal.”

-Henry Ford

Ed Pennock, CFA, Managing Director
416-369-6921, epennock@dominick.ca

Kris Fisher, Institutional Equity Trading
416-369-6924, kfisher@dominick.ca

Graham Farrell, Institutional Equity Trading
416-369-4208, gfarrell@dominick.ca

The above note is prepared by an Institutional Salesperson based on morning meeting comments and general Institutional desk discussion and should not be construed as a research report or a solicitation. For information purposes only. D&D Securities, its clients, and principals may have positions in these securities.