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

February 1, 2011 – New Monthly Value Levels, Pivots and Risky Levels

The US Capital Markets are under the influence of new monthly value levels, pivots and risky
levels from my proprietary analytics. Today I add them to my risk / reward statements for the
markets that I follow; The US Treasury 10-Year yield, Comex gold, Nymex crude oil, the euro,
and the major equity averages focusing on the Dow Jones Industrial Average.
The US Treasury 10-Year Yield – (3.380) The monthly chart favors higher yields with the 120-month
simple moving average at 4.121. The daily chart still shows the trading range set in December
between 3.568 and 3.247. Today’s value level is 3.444.
Comex gold – ($1331.0) The monthly chart continues to dhow an overbought parabolic bubble. The
daily chart shows gold trying to rise out of an oversold condition. This week’s value level is $1319.7
with quarterly and annual pivots at $1331.3 and $1356.5 and new monthly risky level at $1412.4.
Nymex crude oil – ($91.91) The monthly chart favors higher oil prices ahead. Oil traded above $92
per barrel again but closed below that chart resistance. My semiannual value level is $87.52 with
weekly and monthly pivots at $89.91 and $91.83 and annual risky levels at $99.91 and $101.92.
The euro – (1.3685) The monthly chart favors a higher European currency. The daily chart continues
to show an overbought condition. Weekly and quarterly value levels are 1.3265 and 1.3227 with a
daily risky level at 1.3859 and monthly risky level at 1.4225.
Stocks remain overvalued fundamentally according to ValuEngine with 15 of 16 sectors
overvalued and only 38.8% of all stocks undervalued. On December 19th we had a ValuEngine
Valuation Warning with 33.3% of all stocks undervalued, below the important 35% threshold, and all
16 sectors were overvalued.
All major averages remain overbought on their weekly charts and my Proprietary Analytics show
new monthly value levels and weekly risky levels, which should keep stocks balanced in February/
• The Dow Industrial Average shows monthly and annual value levels at 11,759 and 11,491 with
weekly and daily risky levels at 11,959 and 12,005.
• The S&P 500 has quarterly and monthly value levels at 1262.5 and 1247.6 with daily and
weekly risky levels at 1293.7 and 1308.5.
• The NASDAQ has a monthly value level at 2611 with a daily pivot at 2700 and weekly and
quarterly risky levels at 2769 and 2853.
• The Dow Transports has a quarterly value level at 4671 with monthly and daily pivots at 4962
 and 4991 and weekly and annual risky levels at 5104 and 5179.
• The Russell 2000 shows quarterly and monthly value levels at 765.50 and 741.74 with daily and
annual pivots at 777.01 and 784.16 with a weekly risky level at 809.88.
• Following the Dow look for continued strength as long as closes are above my monthly
value level at 11,759. A close below 11,759 targets the annual value level at 11,491.
Bank Failure Friday – The FDIC close four more banks last Friday and one was publicly traded and
on the ValuEngine List of Problem Banks..
• The FDIC closed a total of 157 banks in 2010; 41 in the first quarter, 45 in the second quarter,
41 in the third quarter and 30 in the fourth quarter.
• 25 banks failed in 2008
• 140 banks failed in 2009 with a peak of 50 in the third quarter
• 157 banks failed in 2010
• 11 banks have failed year to date in 2011
• 333 banks have failed since the end of 2007
• I still predict 500 to 800 bank failures in total by the end of 2012 into 2013.
The publicly traded bank was First Community Bank, Taos, New Mexico (FSNM). This bank is on
the ValuEngine List of Problem Banks with overexposures to both C&D and CRE loans: The C&D ratio
to risk-based capital at 651.8% versus the 100% maximum guideline, and 1946.4% for CRE loans
versus the 300% maximum guideline. The bank’s real estate loan pipeline is stuffed at 96.9% where
60% is a healthy pipeline. It’s amazing to me how slow the FDIC has been in closing banks that no
longer deserve to service Main Street USA.

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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