Treasuries survive auction deluge, Mixed trading for Commodities, Dollar ranges persist, and the daily and weekly charts for the S&P 500

The yield curve flattened this week on tepid demand for 2-year and 5-Year Notes, but strong demand for 7-Year Notes.

The key for the 7-Year was that 62% of the $28 billion auction went to what’s called Indirect Bidders, which are foreign and institutional buyers.

The decline in yields at the longer maturities was a sigh of relief, but the supply deluge will return in the second week of August with new 3-Year, 10-Year and 30-Year issuance. This will total at least $77 billion.

The weekly chart for the 10-Year is neutral, which suggests a continued trading range between 4% and 3.25%. Semiannual support is 4.176 with up trend resistance soon to stretch above 3%.

Comex Gold is stuttering, while copper is stretched. Nymex crude oil becomes range bound.

Gold has declining momentum and strong overhead resistance. A close below the five-week modified moving average at 937 indicates risk to my annual support at 891.

Copper is becoming overbought on its weekly chart with my annual pivots at 240.20 and 225.88 and the 200-week simple moving average as resistance at 287.63.

Mixed technicals and questionable demand for crude oil sets a trading range between the recent low of $58.32 and its 200-week simple moving average that has been the ceiling at $74.55.

My annual pivots at $66.51 and $68.81 have provided strong magnets since the end of May.

It appears like the Euro and British Pound will remain range-bound, as the dollar stabilizes.

The euro is just below being overbought on its weekly chart and my annual pivot at 1.4036 has been a magnet. The 200-week simple moving average is support at 1.3520 with my quarterly and semiannual resistances at 1.5296 and 1.5394.

A close on today below my annual pivot at 1.4036 would signal a failed breakout attempt.

The British Pound is overbought on its weekly chart with annual resistance at 1.8049. Key support is the five-week modified moving average at 1.6183.

The daily and weekly charts for the S&P 500

After a new high for the move at 996.68 on Thursday, daily MOJO is 9.4 on a scale of zero to ten. You can’t get much more overbought than that with momentum pinned near the max.

My annual pivot is 967.1 with today’s resistances at 998.8 and 1001.6.

The weekly chart for the S&P 500 is a week away from returning to overbought status. Chart resistance is the 38.2% retracement of the 1982 to 2007 Bull Run at 1007.44, last tested on Election Day.

If you have any comments or questions send them to Rsuttmeier@Gmail.com. For more information on our products and services visit www.ValuEngine.com

This week we launched two new newsletters: The weekly ETF Trader shows Value Levels and Risky Levels for thirty ETFs. ValuTrader shows a model portfolio of twenty stocks, with both long and short positions. Sign up today to receive Monday’s reports.

That’s today’s Four in Four. Have a great day.

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. Daily, Weekly, Monthly, and Quarterly newsletters are available to track a variety of equity and other data parameters, as well as my interpretation of what is going on in world markets. An ETF and ValuTrader portfolio Newsletters are the newest offerings. I hope that you take a look and review some of the sample issues."

My Policy is to have No Positions in stocks that I cover.

Richard Suttmeier
ValuEngine.com

The Fed’s Beige Book – Deceleration at Best, but No Turnaround - Treasury Supply is a Burdon.

The Beige Book shows that economic activity continued to be weak as summer began.

The pace of the decline in economic activity decelerated, but more recently data points towards a re-acceleration to the downside for sensitive economic data.

The Jobless Rate for June was worse than expected with unemployment at 9.5%, and hours worked at a record low of 33.

This week we saw Durable Goods Orders down 2.5% when a flat reading was expected. Consumer Confidence at 46.6 was down for the second straight month.

The Districts that suggest some stability, describe it as at a low level. Retail activity remains soft, and manufacturing was mixed. Remember that Capacity Utilization is at a record low.

Residential real estate markets stayed soft in most Districts, although many noted some signs of improvement.

Commercial real estate markets weakened further in recent months in two-thirds of the Districts and remained slow in the others.

Commercial real estate leasing markets were described as either "weak" or "slow" in all 12 Districts.

Commercial real estate sales volume remained low, even "non-existent" in some Districts, reportedly due to a combination of tight credit and weak demand.

Construction activity was limited and / or declining in most Districts, with few exceptions. Tight credit was cited as an ongoing factor in the dearth of new construction activity.

This morning I read that according to Real Capital Analytics, that “About $2.2 trillion of U.S. commercial properties bought or refinanced since 2004 are now worth less than the original price, raising the threat of more foreclosures.

Overall lending activity was stable or weakened further for most loan categories.

As businesses remained pessimistic and reluctant to borrow, demand for commercial and industrial loans continued to fall. Consumer loan demand continued to decrease in most Districts.

Banks continued to tighten credit standards in most Districts.

I just don’t see the bottoming process being touted by President Obama or in the media.

Our Primary Dealers are losers so far on $42 billion in 2-Year notes and $39 billion in 5-Year notes.

The 5-Year note was auctioned at 2.689, with a tail of about six basis points. Primary Dealers took down $23.9 billion and Indirect Bidders were relatively light at $14.3 billion

Today, the Primary Dealers will attempt to underwrite $28 billion in new 7-Year notes,

If you have any comments or questions send them to Rsuttmeier@Gmail.com.

For more information on our products and services visit www.ValuEngine.com

Don’t forget to sign up for two new ValuEngine Newsletters – The ValuTrader Model Portfolio of Twenty Stocks and the weekly ETFTrader Report.

That’s today’s Four in Four. Have a great day.


Richard Suttmeier
ValuEngine.com

July 29, 2009 -- US Treasury supple deluge continues, Consumers less confident, Home prices are stabilizing, and A real story from Main Street USA.

The 2-Year auction was so-so yesterday with $39 billion new 5-Year notes on the docket today.

The 2-Year was auctioned at 1.08% versus 1.01% for the current issue at auction time. The bid-to-cover was reasonable at 2.75 times.

Primary dealers took down $26.13 billion with indirect bidders flagging $13.69 billion.

Today the US Treasury Auctions a record $39 billion in new 5-Year notes.

The 5-Year is more of an investment for bank portfolios and State and Local Governments. My weekly support is 2.813 with daily resistance at 2.573.

Notice how Treasury Secretary Geithner entertains counterparts from China during weeks of huge US Treasury supply. The Chinese own $500 billion Treasuries, so they have a vested interest.

Consumer Confidence fell two months in a row according to the Conference Board.

In my opinion deteriorating sentiment in the face of rising equity prices is a key sign that an important green shoot is wilting into tumbling tumbleweeds.

Consumer Confidence at 46.6 is well below the 90 to 120 neutral zone for this data series.

The Case-Shiller Home Price Indices is a green shoot that has not wilted yet.

I have been tracking the 20-City Index, which improved in May for the 4th consecutive month. Even so, the index is down 17.1% year over year.

As on the May survey, home prices across the country are at levels of 2003, after running up significantly into mid-2006. From the peak the twenty-city index is down 32.2%.

A real main street story from Land O’ Lakes, Florida

A new Main Street USA Fish and Meat Market opened on Route 41 and they are beating the Publix Supermarket in terms of both quality and price.

Fresh local fish and meat with the pride of local recipes for prepared salads is like going back to the Fifties, which is a longer-term theme of mine.

The son of the owner of the Fish Market told me that his primary business in pouring concrete. He owns five pumps of which four are capped do to lack of demand.

For his fifth pump he gets low-balled bids for concrete, so low that he can’t make money after insurance and fuel costs. He will close down totally until the economy improves unless he gets his price.

He told me that home builders are putting local subcontractors in stiff competition as new homes have seen improved sales so far this year.

Land O’ Lakes is my new home town where there are green shoots in the market for new homes.

If you have any comments or questions send them to Rsuttmeier@Gmail.com. Let me know what’s happening on your Main Street. For more information on our products and services visit www.ValuEngine.com

Don’t forget to sign up for two new ValuEngine Newsletters – The ValuTrader Model Portfolio of Twenty Stocks and the weekly ETFTrader Report.

That’s today’s Four in Four. Have a great day.


Richard Suttmeier
ValuEngine.com

July 28, 2009 -- Fixed Income markets brace for record supply. Comex copper and Nymex crude oil reflect speculation. Will the weaker dollar intensify? The daily and weekly charts for the S&P 500

Yields are feeling the pinch of supply with a record $42 billion 2-Year notes auctioned today.

The daily chart for the yield on the 2-Year shows a floor around 0.8%, and it appears that the spike to 1.45% in early June is being consolidated.

A higher yield today for the record $42 billion new 2-Year Notes indicate that the flight to quality bid has subsided as investors continue to buy overvalued and overbought US stocks.

My weekly support is 1.25% with resistance today at 0.97%.

The yield on the 10-Year has backed-up to 3.75% area with weekly support at 3.80% and daily resistance at 3.65%. The 30-Year fixed rate mortgage has been fluctuating around 5.5%.

It seems like speculation is the primary driver behind recent increases in copper and crude oil.

Comex Copper is extremely overbought on its daily chart, which is not justified by demand from an economy in Recession. If copper stays too high, the anticipated economic recovery may not occur.

This week’s pivot is 250.32 with today’s resistance at 259.18. My annual pivot is key support at 240.20.

Nymex crude oil is a day away from being overbought on its return to my zone of annual pivots at 66.51 and 68.81. The 200-week simple moving average has been the ceiling at $74.56.

Here we are at the end of the second month of Hurricane Season with no named storms.

Continued dollar weakness will be tested versus the Euro and British Pound.

The euro is trying to break-out above its June 3rd high of 1.4336, as the daily chart becomes overbought. A breakout above this chart resistance targets quarterly and semiannual resistances at 1.5296 and 1.5394.

A close on Friday below my annual pivot at 1.4036 would signal a failed breakout attempt.

A similar pattern is noted for the British Pound with the June 30th high of 1.6744. A breakout above targets semiannual and annual resistances at 1.7286 and 1.8049. Quarterly support lags at 1.5416.

The daily and weekly charts for the S&P 500

The daily chart for the S&P 500 is extremely overbought with my annual pivot at 967.1 and today’s resistances at 991.9 and 997.96.

The weekly chart for the S&P 500 stays positive on a close this week above the five-week modified moving average at 934.58. Chart resistance is the 38.2% retracement of the 1982 to 2007 Bull Run at 1007.44.

If you have any comments or questions send them to Rsuttmeier@Gmail.com. For more information on our products and services visit www.ValuEngine.com

Yesterday we launched two new newsletters: The weekly ETF Trader shows Value Levels and Risky Levels for thirty ETFs. ValuTrader shows a model portfolio of twenty stocks, with both long and short positions.

That’s today’s Four in Four. Have a great day.


Richard Suttmeier
ValuEngine.com

Bank Failure Friday adds seven with more to come. The FDIC will struggle with future failures. Fannie Mae and Freddie Mac expand, but must contract in 2010. The daily chart for the S&P 500 remains overbought.

The FDIC closed another seven small banks on Friday.

Friday was the night the lights went out for seven banks in Georgia and one in New York State. All were small banks, and all were overexposed to C&D and CRE Loans.

The number of failed banks for July is up to 19, by far the largest tally for any given month of “The Great Credit Crunch”. Next Friday is another day to add to this dubious record.

With 64 bank failures year to date the total for “The Great Credit Crunch” is up to 89, and the Deposit Insurance Fund is down to just $4.2 billion.

At the current pace of failures we could reach the 500 mark around February 2011, and failures could continue into 2012. The FDIC is closing the low hanging fruit, which are the smaller private banks.

The FDIC is between a rock and a hard place with regard to handing future bank failures.

Instead of relying on banks considered “too big to fail” FDIC Chair Sheila Bair has used consortia of private equity and hedge fund investors, and she is trying to make capital requirements too stiff for them.

Our banking regulators are bickering among themselves on the concept of “too big to fail” and which agency the Federal Reserve or the FDIC should be the super regulator.

I have said that the Federal Reserve and FDIC need to anoint twelve banks that are considered “too big to fail” and use one as the primary consolidator of bank failures for each Fed District when necessary.

I predict that as the Deposit Insurance Fund runs dry, the FDIC will have to tap its temporary $500 billion line of credit with the US Treasury. This line of credit has been recently raised to $100 billion.

Also remember that the FDIC will be opening a satellite office in Jacksonville, Florida in September in anticipation of many more bank failures up and down the East coast.

My update on Fannie Mae and Freddie Mac - the biggest costs to US taxpayers

Freddie Mac reported that their investment portfolio grew to $829.8 billion at mid-year. The growth in June was at a 9.3% annual rate.

Freddie Mac reported that delinquencies jumped to 2.78% of its book of business from 2.62% in May 0.93% a year ago, just before Conservatorship, which was done in September 2008.

Here’s a ticking time bomb. The limit for both Fannie and Freddie is to have a $900 billion portfolio limit at the end of 2009, and that portfolios be reduced 10% per year until being wound down to $250 billion.

As you know it has been my opinion since May 2008 that Fannie and Freddie should have been unwound beginning at that time with new mortgages issued through Government-backed Ginnie Mae.

Fannie Mae recently reported that 18.7 million homes are vacant, which is another failure of the GSEs.

The daily chart for the S&P 500

The daily chart for the S&P 500 is extremely overbought and ended last week above my annual pivot at 967.1. Today’s resistance is the 38.2% retracement of the 1982 to 2007 Bull Run at 1007.44.

If you have any comments or questions send them to Rsuttmeier@Gmail.com. For more information on our products and services visit www.ValuEngine.com

Have a great day.

Richard Suttmeier
ValuEngine.com