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Richard Suttmeier is the Chief Market Strategist at
www.ValuEngine.com.ValuEngine is a fundamentally-based quant
research firm in Princeton, NJ. ValuEngine
covers over 5,000 stocks every day.
A variety of newsletters and portfolios containing Suttmeier's
detailed research, stock picks,and commentary can be found
HERE.
Suttmeier's Four in Four video and ForexTV Markets Review can be
watched on the webHERE.
December 2, 2009 Multi-Year Bear Market Testing Key
Resistance
The S&P 500 tested its down trend that connects the highs
going back to October 2007 with theDow about 100 points away. The
multi-year bear market is close to an end technically, but Iexplain
why its not a new bull market. The 10-Year yield is still below its
200-day simple movingaverage. The Dollar Index remains above its
weekly pivot, and the totem pole remains forequities.
The weekly chart for the S&P 500 is testing Snake Eyes.
If the S&P makes a clear move above 1111 it would be above
the down trend that connects the highsgoing back to October 2007.
Charts courtesy of Thomson / Reuters
The risk / reward profile is not favorable as my annual pivot is
967.1 with weekly resistance at 1133.
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The Dow remains positive but overbought on its weekly chart with
a daily pivot at 10,373 today. Thefive-week modified moving average
is lower support at 10,090. Ascending Wedge Resistance is
10,612with down trend resistance at 10,581, and weekly and monthly
resistances at 10,685 and 11,035.
I do not view the breaking of the down trends as a new bull
market as the overall risk / reward isbetween my quarterly support
at 6,550 and semiannual resistance at 11,500.
I can not blindly buy ValuEngine BUY rated stocks because of
unfavorable one year price targets.
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Take Apple Inc (AAPL) for example The stock is rated a BUY
according to ValuEngine with fair valueat $242.50, which makes the
stock 17.6% undervalued versus its fair value price.
Fair Value is where the stock could trade at in an ideal world.
However, the ValuEngine Forecast Modelshows 7% downside risk over
the next twelve months. There are many fine buy rated companies
with asimilar profile, which indicates that stocks have outrun
their projections given economic uncertainties.
When stocks are not cheap you cannot have a new bull market.
The yield on the 10-Year Treasury remains below its 200-day
simple moving average.
Risk aversion remains as long as the 10-Year yield stays below
its 200-day simple moving average,now at 3.307. This yield was
above the 200-day since May 18 th until last week. Todays
resistance is3.217.
Comex gold reached another new all time high at $1218.4 this
morning as the parabolic bubblecontinues to inflate. My weekly
pivot is $1200.4. When a market goes parabolic you dont know
howhigh it can go.
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The Dollar Index remains just above this weeks pivot at $74.26.
Below is risk to monthly support at$70.62, which would intensify
the dollar carry trade and continue inflating the parabolic bubble
for gold.If $74.26 holds the upside is to my quarterly resistance
at $78.65.
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