Stretching the Bear Market Rally

8/14/2019 Stretching the Bear Market Rally

1/4

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, stockpicks, and commentary can be found HERE.

Suttmeier's Four in Four video can be watched on the web HERE.

October 8, 2009 Stretching the Bear Market Rally

Yields, the dollar, gold, copper and crude oil convoluted logic continues. Stocks areripe to challenge the September 23rd highs. We will soon find out how muchcamouflage paint regional banks have when they begin to report quarterly results nextweek. Charts courtesy of Thomson / Reuters

If you are bullish on the US economy and stocks yields should be rising, not falling.

The weekly chart for the yield on the 10-Year favors lower yields, but weekly resistance at2.95 should limit the yield decline as the chart will soon show that the yield decline isoverdone.

The daily chart shows that the decline in yields failed at the 200-day simple moving average

following the weak employment data last Friday. The 10-Year yield needs a close below the200-day, now at 3.15.


2/4

If the decline in yields stops between 3.15 and 2.95 the risk is to monthly support at 3.677.

The Dollar Index hits a new 52-week low of 75.68 getting the stock market Bulls fresh

lather.

The dollar versus Japanese yen is well above its 52-week low of 87.15 and the euro andBritish pound are not at 52-week highs, so dollar weakness is not across all crosses.

Look at the weekly chart for the Dollar Index and you see an up trend connecting the lows ofApril and July 2008. This support is between 74 and 75 with the Index extremely oversold withMOJO at 1.6.

Comex gold continues its breakout, but is becoming overbought on its weekly chart.

At this point gold is not worth chasing as the upside for this move should be limited to my

quarterly and semiannual resistances at $1094 to $1102, where profits should be taken.

Comex copper and Nymex crude oil still doubt the global growth story.

The weekly chart for copper shows the metal below its 200-week simple moving average at292.27 with MOJO declining below the overbought reading of 8.0.

The weekly chart for crude oil shows Texas Tea below its 200-day at 75.07 since mid-Junewith MOJO declining with a reading at 6.8.


3/4

Right or wrong, a weak dollar has been pushing US stocks higher.

For the Dow, my annual pivot at 9,750 continues as a magnet with the September 23rd high at9,918. My monthly support is 9,306 with annual resistance at 10,012.

For the S&P 500, holding the 21-day simple moving average at 1052.65 targets theSeptember 23rd high at 1080.15, as the Bear Market Rally can stretch to the daily up trend at

just below 1100.

The NASDAQ lags its September 23rd trading range of 2130.34 to 2167.70 despite the weakdollar. This is a sign that the weak dollar, strong stocks is starting to diverge. Holding myweekly pivot at 2101 indicates potential strength to monthly resistance at 2183, which takesout the key reversal levels.

I am not altering my longer-term bearish view, but showing the divergences as the convolutedbullish consensus continues to defy fundamental logic.

Next week three key regional banks will put on their camouflage paint for Q3 earningsresults.

JP Morgan (JPM) reports Wednesday morning pre-market. Citigroup (C) reports Thursdaymorning, and Bank of America (BAC) on Friday. Goldman Sachs (GS) also reports onThursday.

Send me your comments and questions to [email protected]. For more information onour products and services visit www.ValuEngine.com


4/4

Thats todays Four in Four. Have a great day.

Richard SuttmeierChief Market StrategistValuEngine.com(800) 381-5576

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the websitewww.ValuEngine.com. I have daily, weekly, monthly, and quarterly newsletters available that track a variety ofequity and other data parameters as well as my most up-to-date analysis of world markets. My newest productsinclude a weekly ETF newsletter as well as the ValuTrader Model Portfolio newsletter. I hope that you will go towww.ValuEngine.com and review some of the sample issues of my research.

I Hold No Positions in the Stocks I Cover.

Documents

Stretching the Bear Market Rally