YAMADA S INTERVIEW ON JUNE 1ST

LOUISE YAMADA, MANAGING DIRECTOR, LOUISE YAMADA TECHNICAL RESEARCH ADVISORS, LLC: Thank you Tom. It's a pleasure.

KEENE: And you've got your chart here 1937 to 1943, the Guadalcanal bottom in 1942, are we still mimicking the late '30s? And is this is a fake out bull market rally?

YAMADA: Well, I think that it's intriguing that we have tracked the entire 1929 to present, to '38, at least to '39 period, from 2000, which happens to have been our alternate cycle if you think of the Elliott Wave Theory that each cycle is not like the immediately prior cycle, but more like the alternate, and that was the tact we took in 2000 in anticipation of a structural Bear market.

What would ours be like? It would be less like '66 to '82, which was inflation and rising rates, and a regular, rather symmetrical pattern, and more like the alternate, which was an irregular pattern with a crash, and we've tracked it quite amazingly. It's hard to think that it's going to continue, but so far we're in that 1938 up leg.

KEENE: Well, let's frame the -- I've got the weekly chart of the SPX out here. I use a different chart than Ms. Yamada uses. I'm going to call it technical soup right now. Is there a clear picture right now?

YAMADA: Well, we titled our outlook piece, `Muddy Waters, Foggy Weather,' and I think that there are days when we still feel that way, very considerably. I think there has been improvement. There's no question that there has been some improvement. Obviously, the rally has been generous. There have been a lot of twists and turns, and whipsaws and rotations under the surface.

But at the moment, I would say that things are probably more a glass half full than half empty, at least from the way this individual's chart patterns look, because, what's happening right now looks like a bit like further consolidation, and if you get enough of that, it becomes a more positive profile.

KEN PREWITT, HOST, `BLOOMBERG SURVEILLANCE': So, further consolidation, Louise, for how long?

YAMADA: Well, that's a very good question. Hard to tell. What's been happening here is that at least for the major indices bucking up against the declining 200-day moving average, and we'd like to see if it's going to turn out to be a consolidation that goes higher.

We'd like to see the Dow and the S&P get out above their January '09 peaks and the November '08 peaks -- which the November '08 peaks were down 96.25 and the S&P was 1,005. Now, the NASDAQ on the S&P 400 midcap have already moved out, so they're a little bit better looking.

KEENE: Well, Louise, I'm looking at the Standard & Poor's 500 buttressing right up against a 200-day -

YAMADA: Yes.

KEENE: What is significance of the 200-day moving average? Is that a Louise Yamada or a John Murphy or a John Meggy (ph)? Who made that rule?

YAMADA: It's an observation that's been noted over time, and it's interesting that the 200-day moving average is generally placed, more or less, identically with the downtrend line from the peak. And, it's a coincidence that those two move in tandem, but I think that's why the 200- day has become significant. Now, ideally, you'd like to see the 200-day move up, and then see the 50-day cross over the 200-day. There's progressive improvements that come along step by step, just like we saw in the 2002 to 2003 period.

KEENE: Well, Louise, and folks, if you'll hear me use this phrase every once in a while, and if you're just joining us, Louise Yamada with us, always elegant, as I look at an elegant chart, which is the Standard & Poor's 500 with a 200-day moving average, nicely in order, moving downwards. Louise Yamada, do you see something different in those commodities on a tear? Can you call bottom in the commodities sector?

YAMADA: Well, I think that certainly you had a very nice run in oil. The lift through $55 put in target some of which we've already hit, $62, $67, now we have $68, $70 still out there. Ideally, one would like to see the price come back and consolidate more, because the longer something consolidates, the greater the potential for a sustained advance. Gold, similarly, looks like it's getting ready to lift - excuse me, through the prior peak, which would be very compelling. We have targets out there toward $1,300 and higher if we get through the $1,032 level, which it looks like might be -

KEENE: And, your target on oil, please.

YAMADA: We had the oil is, well we hit $62. $68, $70 is next. Ideally, it would be nice if it came back and consolidated in the mid to upper $50's for a bit, rather than just striking out on an accelerated advance.

But the dollar is breaking down. There's no question about it, and we've been concerned about that, and clearly it's back down toward $80, which is that critical 34 plus year support level that it violated a year ago, and then, of course, we went into the financial crisis, and people rushed back into what you could call the least worst currency. The dollar had a nice rally.

PREWITT: Louise, I wanted to ask you kind of a technical analysis 101 sort of question. Going back to what we started out talking about -- when you compare the chart to the late '30s with today. I mean, is that really valid. Things are so much different today than they were back then.

YAMADA: -- They're not different. I mean, you do have the cycle of falling rate. You do have the deflationary pressures, and now everybody's worrying about inflation, but I think that we still have, certainly, some deflationary concerns out there. So, it is valid. I mean, it has been valid up to this point, and it's rather extraordinary.

That was a 60% rally that divided itself into two segments. I think it was up about 43 percent and you had a 10% correction, and then another leg up to equate to a full 60 percent. And then, of course, you came off. And between 38 and 42, you ended up at a slight new low. That was a very volatile period, which I think is a lot of what we've been experiencing here, rotations. One sector goes up. Another one comes off. And then, people quickly take their profits.

PREWITT: What deflationary concerns do you see?

YAMADA: Well, I think you have the ongoing pricing issues. We have the homes, housing coming down. You still have the pressure from foreign developing nations, where you've got a lower labor price, which is part of what's been causing some of our problems here. I mean, if you think about the whole concept of the Internet and global trade, it's been like a global wage and price equalizer. Picture a seesaw. And, the U.S. was at the high end of the wage and price scale, and basically, we had the most to lose in global trade opening.

KEENE: Louise Yamada, I want to come back and continue this discussion. I really want to talk to you, as well, about all these single digit stocks we have. If you can use technical analysis with those stocks under $10, or indeed, under $5, as well. And, of course, General Motors closing at $0.75 per share on Friday. We'll see what that does in this historic Monday.

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KEENE: We continue with Louise Yamada. We look at the technical construction of the market. We see the movements in the Dow, Louise. Do you adapt you're charts when they move companies in and out of the Dow.

YAMADA: Well, they make the adjustment from a devisor perspective, but yes, we obviously do replace those names. And, it's interesting. General Motors, I was just looking at a table that my colleague Jonathan Lin published in our global piece, Bloomberg World Auto Manufacturer's Index, Tom, and General Motors is 0.15 of the weight. Toyota is the lead with 28.84, and Ford is right in the middle at 2.52. I mean, I can't but help of think of Schumpeter's creative destruction, and putting so much money into something that, rather than putting it into something that would be advancing the modern technology.

KEENE: Well, and Ken, that's like Robert Reich's op-ed piece, scathing op-ed piece -

PREWITT: Yes.

KEENE: - about the administration between the F (ph) and the FT.

PREWITT: Louise, about these changes in the Dow here, with the Cisco and Travelers going in, and GM and Citi going out. How does this effect you when you try to chart backwards, so to speak. I mean, GM being a 100-years- old, Cisco, not that old a company.

YAMADA: Well, it's because the Dow Jones Industrial interval adjustment in terms of the weighing, price weighing, it just gets factored right into the ongoing price.

KEENE: Louis, when you look at the single digit world, do you as a technician treat an $8 stock different than an $18 or an $80 stock?

YAMADA: Well, you chart it in a similar fashion, and proportionately, obviously, in the advance on a percentage basis, it's going to be similar to an equal percentage advance on a larger price stock, but it has certainly been discouraging to find out how many we have that have been under $10. I forget exactly what the percentage was, but it was quite large.

KEENE: When you look at -- your gold call, did I hear you say if we break through a certain level, that you're really looking for $1,300 on gold? Is that simply a signal of inflation, or is there something else going on there?

YAMADA: Well, that's a measured moved from a technical perspective. If, in fact, this consolidation that's been taking place turns out to be a rather rare configuration, which is called a head and shoulders continuation pattern, a lift through the $1,032 would be effectively moving price through the neckline of the continuation pattern.

So, you can take a measured move from the low, which was around 7 and project it above, from the head to the neckline, which is about 300 points, and project it from the breakout point forward, which takes you to 13.

KEENE: Louise Yamada, thank you so much. This historic day perspective, not only on General Motors, but on the market, even looking back to the '30s and her hallmark analysis of the Depression decade and lessons to be learned today. Louise Yamada, with Louise Yamada Technical Research Advisors.