just another 2% to dow 11,235 by election day

8/8/2019 Just another 2% to Dow 11,235 by Election Day

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Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com. ValuEngine is a fundamentally-based quant research firm in Newtown, PA. ValuEnginecovers over 7,000 stocks every day.

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Oct ober 13, 2010 – Just another 2% t o Dow 11,235 by Elect ion Day

Despite QE2, the decline in the yield on the 10-Year note should be limited to my quarterly and

semiannual risky levels at 2.265 and 2.249. Gold remains extremely overbought, but weaknesshas held my monthly pivot at $1343.7. Crude oil is below my semiannual risky level at $83.94and remains overbought. The euro remains extremely overbought and seems to have difficultywith the 1.40 level. The Dow is overbought on its daily and weekly charts, but daily closesabove my weekly pivot at 10,938 targets my annual risky level at 11,235 by Election Day.

10-Year Note – (2.422) Annual and annual value levels are 2.813 and 2.999 with monthly and weeklypivots at 2.555 and 2.509, and daily, quarterly and semiannual risky levels at 2.388, 2.265 and 2.249.

Courtesy of Thomson / Reuters

Comex Gold – ($1350.9) Quarterly, semiannual and annual value levels are $1306.4, $1260.8,$1218.7 and $1115.2 with monthly and weekly pivots at $1343.7 and $1350.2 and daily risky level at$1371.8.




Nymex Crude Oil – ($81.71) Weekly and annual value levels are $79.62 and $77.05 with mysemiannual pivot at $83.94, and monthly and daily risky levels at $84.74 and $84.36.




The Euro – (1.3910) Weekly, quarterly and weekly value levels are 1.3737, 1.3318 and 1.2919 with adaily risky level at 1.4094. My monthly value level is 1.2342 with semiannual risky level at 1.4733.


Daily Dow: (11,020) Semiannual, annual and quarterly value levels are 10,558, 10,379 and 8,523 witmonthly and weekly pivots at 10,857 and 10,938, and daily, annual and semiannual risky levels at11,101, 11,235 and 11,296. My annual risky level at 11,235 was tested at the April 26 th high of

11,258.01, and 11,235 should be tested again by Election Day..




Patterns, Trends and Levels for Yields, Gold, Crude Oil, the Euro and the Dow

The Federal Reserve Minutes reflects the need for QE2 (US Treasury Buying) if the US economycontinues to falter. Here’s an expanded analysis of the US Capital Markets.

US Treasury 10-Year Yield – The Federal Reserve ended QE1 on March 31st and the yield on the 10Year reached 4.013 on April 5th. It was March 31st when the Federal Reserve stopped buyingmortgage backed securities of Fannie Mae and Freddie Mac, and the mortgage spread over the 10-Year Yield was 115 basis points. This set the 30-Year fixed-rate mortgage rate at 5.15. The new Fedpolicy was to replace maturing mortgage securities with US Treasuries keeping the Fed balance sheeunchanged. With this strategy yields declined and with the prospect of QE2 where the FederalReserve buys additional US Treasuries the 10-Year Yield declined to 2.334 into October 8th. The 30-Year fixed rate mortgage widened from 115 basis points to 190, which still set a record low mortgagerate of 4.23.

Outlook - I expect that this dynamic has QE2 factored into the lower yield environment, and anyfurther decline in the 10-Year Yield should be limited to quarterly and semiannual risky levels at 2.265and 2.249. QE2 is the dumbest Fed Policy decision in the history of the Federal Reserve. The Fed is inviting inflation, when Americans cannot keep up with the Cost of Living.

Comex Gold – Since a trading low of $1155.6 on July 28th, gold rallied 18.2% to a high of $1366.0 intoOctober 7th. Since reaching this overbought milestone my monthly pivot at $1343.7 has been amagnet, which held as support Monday and Tuesday.Outlook – My forecast is that gains above $1350 will not be sustained without a correction to myquarterly pivot at $1306.4. Today’s risky level is $1371.8.

Nymex Crude Oil – In May oil set a trading range trading down from $87.15 on May 3 rd to $67.15 on

May 25th. My annual pivot at $77.05 has been a magnet between these two extremes. The rally to$84.43 into October 7th was a failed test of my semiannual risky level at $83.94 and was below mymonthly risky level at $84.74.Outlook – There is no reason to project anything other than the May trading range will continue.

The Euro – On June 7th the euro hit a low of 1.188 on the Euroland sovereign risk situation. The eurorallied to 1.406 on October 7th in anticipation of QE2.Outlook – The euro has had a tough time sustaining gains above 1.40 and today’s risky level is1.4094. I project a correction to my quarterly value level at 1.3318 by the end of the year.

The Dow – The rally from 9,615 on July 2nd to 11,053 into October 12th was not surprising givenValuEngine Sector Valuations. I had forecast “Dow 8,500 before Dow 11,500” and that still stands, butthe ValuTrader model portfolio has been long since July 1st with additional longs added on Sept 8th.Outlook - My near term call has been “Dow 11,235 by Election Day” on the prospect of a RepublicanHouse and the anticipation of QE2. With the additional upside just 2.0% most of this move is factoredinto the current rally. Weakness on Tuesday held my weekly pivot at 10,938.

S&P 500 – Is solidly above my monthly pivot at 1151.5 and is approaching my semiannual and annuarisky levels at 1175.8 and 1179.0. The NASDAQ is just shy of my monthly risky level at 2424. DowTransports is shy of my monthly risky level at 4797. Russell 2000 is shy of my monthly risky level at709.11. The SOX is still shy of my monthly risky level at 378.21.



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

Richard Suttmeier

Chief Market StrategistValuEngine.com(800) 381-5576

Send your comments and questions to [email protected]. For more information on our productsand services visit www.ValuEngine.com

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.comI have daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters awell as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as the

ValuTrader Model Portfolio newsletter. You can go HERE to review sample issues and find out more about my research.

“I Hold No Positions in the Stocks I Cover.”

just another 2% to dow 11,235 by election day

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