Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.

ValuEngine is a fundamentally-based quant research firm in Newtown, PA. ValuEngine

covers over 7,000 stocks every day.

A variety of newsletters and portfolios containing Suttmeier's detailed research, stock picks,
and commentary can be found at http://www.valuengine.com/nl/mainnl

January 7, 2011 – Stocks Move into the Twilight Zone of Complacency

Everyone is bullish on stocks today, just like everyone was bearish in March 2009, when I
projected a rally of 40% to 50%. I was wrong - the Dow is now 80.8% above the March 2009 low
with the NASDAQ up 114.1% from those lows.
• In March 2009 91% of all stocks were undervalued, today it’s less than 35%
• In March 2009 76% of all stocks were more than 20% undervalued, today it’s only 16.1%.
• In March 2009 all eleven sectors were extremely undervalued, today 15 of 16 sectors are
overvalued
• In March 2009 stocks were extremely oversold, today the weekly slow stochastic (MOJO) is 9.3
on a scale of 0.0 to 10.0, where a reading above 8.0 is overbought.
The major equity averages straddle quarterly value levels, pivots and risky levels favoring a
reversal-oriented first quarter – 11,395 Dow, 1162.5 SPX, 2853 NASDAQ, 4671 Transports and
765.50 Russell 2000. The key risky level is thus on the NASDAQ, so if the other major averages
start to cascade below their quarterly levels before the NASDAQ leads, the downside on the
Dow is my semiannual value level at 9,449. Two of my eleven predictions for 2011 have come
true already in the first week of 2011.
Comex Gold has gone parabolic and therefore you cannot predict how high gold prices can
climb. Gold needs a weekly close above my semiannual risky level at $1452.6 to continue inflating the
parabolic bubble, which become harder now that my prediction has been achieved. My prediction is
that there will be a test of my annual value level at $1356.5 if not lower in 2011. Gold is below
the 50-day simple moving average at $1380.6 for the first since August 11th.
The euro versus the dollar formed a trading range in November trading range of 1.2972 to 1.4281. My
prediction is that the euro will have a weekly close below my quarterly pivot at 1.3227 resulting in a
trend below 1.2972. The euro traded below 1.2972 overnight and into this morning’s trading.
10-Year Note – (3.417) Weekly, annual and semiannual value levels are 3.714, 3.791 and 4.268 with
a daily pivot at 3.424. Annual, semiannual and monthly risky levels are 2.690, 2.441, 2.322 and 2.150.
My prediction is that yields will decline again with the 10-Year yield declining to my annual risky level at
2.690. My annual value level is 3.791. Wall Street is bearish on US Treasuries. I disagree just like
last year and it appears that the 10-Year yield can fall to a test of its 200-day simple moving
average at 3.057.
 Courtesy of Thomson / Reuters

Comex Gold – ($1371.9) Annual, semiannual and annual value levels are $1356.5, $1300.6 and
$1187.2. My weekly pivot is at $1380.0. Daily, monthly, quarterly and semiannual risky levels are
$1406.1, $1439.0, $1441.7 and $1452.6.

Courtesy of Thomson / Reuters

Nymex Crude Oil – ($88.32) Semiannual and monthly value levels are $87.52 and $75.74 with
weekly and daily pivots at $88.50 and $89.44. Weekly closes above $87.52 targets annual,
semiannual and quarterly risky levels at $99.91, $101.92, $107.14 and $110.87.
 Courtesy of Thomson / Reuters

The Euro – (1.3012) Monthly and weekly value levels are 1.2805 and 1.2703 with quarterly and daily
pivots at 1.3227 and 1.3244, and semiannual and annual risky levels at 1.4624, 1.4989, 1.6367 and
1.7312. The euro is below its 200-day simple moving average at 1.3079.

Courtesy of Thomson / Reuters

Daily Dow: (11,697) Annual, quarterly, weekly, semiannual, monthly and semiannual value levels are
11,491, 11,395, 11,334, 10,959, 10,427 and 9,449 with a daily risky level at 11,732, and annual risky
level at 13,890.
 Courtesy of Thomson / Reuters

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
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As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. I have daily, weekly, monthly, and
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