Supply weighs on risk aversion for US Treasuries. Dollar strength, euro weakness hits gold, copper and crude oil. The weekly chart for the Dow Industrial Average, and housing, and community and regional banks

The US Treasury announced $81 billion in note auctions for next week. Wall Street must underwrite $40 billion in 3-Year notes on Tuesday, $25 billion in 10-Year notes on Wednesday and $16 billion in 30-Year bonds on Thursday.

The yield on the 10-Year is trading around my semiannual pivot at 3.675, which is my line in the sand between supply concern and risk aversion. A weekly close richer than 3.675 continues risk aversion with potential strength to my monthly resistance at 3.504. Otherwise weekly support is 3.858 which may be necessary to absorb all of the supply.

The dollar is strong as the euro remains weak, which hits gold, copper and crude oil.

The weekly chart for the Dollar Index is positive but overbought with quarterly resistance at $80.23 and the 200-week simple moving average at $80.59. A weekly close above these key resistances signals the next wave up for the greenback. Dollar strength has been the wildcard so far in 2010.

The weekly chart for the euro is just below its 200-week simple moving average at 1.3850 this morning. A weekly close below puts the focus on euro country problems such as Greece and Spain.

The stronger dollar lessons the value of gold as currency of last resort. The weekly chart for gold stays negative on a close this week below my annual pivot at $1115.2.

Copper has weakened significantly since peaking on January 7 and a close this week below the 200-week simple moving average at 299.92 is a sign that the global growth story is losing credibility. The risk is to my quarterly support at 265.00.

Crude oil has returned to my annual pivot at $77.05 while alleviating the oversold condition on its daily chart. The weekly chart stays negative on a weekly close below the 200-week simple moving average at $76.21. My quarterly support is $67.22 with monthly resistance at $79.90.

This time it’s different for the Dow and the major equity averages.

When I incorrectly shifted from Bull to Bear in the May to July period last year it was after a rally of around 40% from the March 5th low. The 21-day simple moving average crossed below the 50-day in July and this cross-over proved false as the 200-day provided stability. This time the 200-day is at 9,460. Today’s support is 10,236 with weekly and annual resistances at 10,341 and 10,379. The 21-day at 10,434 will be crossing below the 50-day at 10,431 today or tomorrow.

The July low established the Ascending Wedge support on the weekly chart, and this trend held until three weeks ago. This time it’s different as the breaking of an Ascending Wedge is technically significant. My quarterly support lags at 6,705, which can be temporarily blocked by weekly support next week.

The Housing Market, and Community and Regional Banks have held up, but appear vulnerable.

The Housing Market Index (HGX) up 3.3% in 2010 shifts to negative on a weekly close below 103.00.

The America’s Community Bankers Index (ABAQ) up 1.5% in 2010 shifts to negative on a weekly close below 150.25. My semiannual support is 146.67.

The Regional Banking Index (BKX) up 8.2% in 2010 shifts to neutral on a weekly close below $40.76. My semiannual support is $40.76.

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

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Richard Suttmeier
Chief Market Strategist
www.ValuEngine.com