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September 22, 2010 – The FOMC Downgrades the US Economy, Stocks Rise
The 10-Year US Treasury yield tested my monthly pivot at 2.562 this morning on Fed induced
risk aversion. Gold trades to another all time high at $1295.8 this morning with a daily risky
level at $1296.7. Crude oil is between monthly and annual pivots at $74.45 and $77.05. The euro
moves above its 200-day simple moving average at 1.3218 for the first time since January 19th,
and approached it’s August 6th high at 1.3334. The Dow remains extremely overbought on its
daily chart but grinds higher on its journey towards my annual pivot at 11,235 by Election Day.
The FOMC downgrades the US economy, but Housing Starts rise by 10.5% unexpectedly. “The
Great Credit Crunch” that began in March 2007 continues.
10-Year Note – (2.596) Daily, annual and annual value levels are 2.647, 2.813 2.999 with a monthly
pivot at 2.562, and quarterly, weekly and semiannual risky levels at 2.495, 2.487 and 2.249.
Nymex Crude Oil – ($74.92) Weekly and quarterly value levels are $72.72 and $56.63 with a monthly
pivot at $74.45, and daily and annual pivots at $76.84 and $77.05, and semiannual risky level at
$83.94.
Daily Dow: (10,761) Weekly, annual, monthly and quarterly value levels are 10,445, 10,379, 10,164
and 7,812 with my semiannual pivot at 10,558, and daily and annual risky levels at 10,826 and 11,235.
My annual risky level at 11,235 was tested at the April 26th high of 11,258.01. The Dow has
become extremely overbought.
Back in March 2007 everyone said subprime was contained. I said subprime was the tip of the
iceberg. I said, “Goldilocks Is Getting Wrinkles”! I called for a Recession in 2008 / 2009 and for the
beginning of a Bear Market for stocks by the end of 2007. This is when “The Great Credit Crunch”
began! The home builders had already peaked in July 2005, community banks peaked at the end of
2006, and the regional banks peaked in February 2007 signaling the start of “The Great Credit
Crunch”, which continues today based upon the current Federal Reserve concerns.
Housing Starts Rose 10.5% in August as Builders Struggle to obtain Financing - The National
Association of Home Builders describe the rise as bringing the pace of production more in line with
construction activity before the home buyer tax credit temporarily stimulated sales earlier in the year.
Single home sales increased only 4.3% to 436,000 units still 9.1% below the pace of August 2009 as
builders had difficulty obtaining finance and amidst concerns about sustained demand.
That’s today’s Four in Four. Have a great day.
Richard Suttmeier
Chief Market Strategist
ValuEngine.com
(800) 381-5576
Send your comments and questions to Rsuttmeier@Gmail.com. For more information on our products
and services visit www.ValuEngine.com
As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com.
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