Update #1/ Week of 10/18/2010/ COMMUNICATION FROM ARA MELKONIANS

Good Morning Everyone and Happy Monday! Last week was another positive week for the 3 major equity indices. The Dow continues its trek upward gaining altitude almost every week since Sept. 1st. Last week's gains were minimum -- less than half of 1%, but a positive number nonetheless. Friday's trading volume was robust amid all of headline news and the expiration of monthly options. The 1.4B shares traded on the NYSE was the 2nd highest total since July.

The NASDAQ is now up 200 points for the year, a gain of nearly 9%. This improvement for the NASDAQ in 2010 is largely due to Google's topping $600 a share and Apple's 49% gain in stock price this year, topping $300 a share last week. The Dow is up a whopping 678 points for 2010 representing a 6.5% improvement.

Also on Friday, former Countrywide Financial Chairman Angelo Mozilo and two defendants reached an agreement with federal regulators to settle civil fraud and insider-trading charges. The SEC alleged that the defendants hid from the public the problems in Countrywide's portfolio of risky sub prime loans. Those problems eventually forced the mortgage giant's 2008 sale to Bank of America, which isn't involved in the SEC suit. Mozilo agreed to $67.5 million in penalties and disgorged profits, the largest-ever settlement between the SEC and a public company's senior executive. It would be interesting to find out what portion of Mozilo's net worth is represented by $67.5M. Painful, I'm sure it was, but I doubt he'll have to sell the yacht to pay the penalty.

Earnings season continues this week with Citigroup posting better than expected earnings this morning. In economic news, the only report worth noting is the Industrial Production report which showed a decrease of 0.2%, which contrasts with the consensus call for a 0.2% increase. Treasuries, however, are rallying today and pricing should be improved over Friday on your favorite rate sheet this morning. Look for this trend in credit markets to continue through the first part of this week.

I hope you all have a terrific Monday and a very profitable and productive week!