Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.

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April 6, 2010 – Treasuries get set for a Supply Test

The US Treasury auctions $84 billion in 3-Year and 10-Year notes and 30-Year bonds over the
next three days. Commodity speculation has gold and crude oil attempting to re-inflate their
bubbles. Higher commodities and ISM Prices Paid send inflation worries, but we will see today
that the FOMC sees little inflation risk when they release minutes for their March 16th meeting.
Stocks are overvalued and overbought in all three time horizons as resistances loom.
Today the US Treasury auctions $40 billion in new 3-Year notes. $21 billion 10-Year notes follow on
Wednesday, and then $13 billion 30-Year bonds on Thursday.
For the 3-Year note auction I show tight weekly and daily supports at 1.768 and 1.778.
For the 10-Year note auction the yield is testing levels not seen since June 11, 2009. Today’s support
is 4.104 with a weekly pivot at 3.953. The rise in yields becomes overdone today.

Courtesy of Thomson / Reuters

For the 30-Year bond auction the yield is just above weekly and semiannual pivots at 4.828 and
4.823 with daily support at 4.937.
Comex Gold – Quarterly and annual supports are $1052.8 and $938.7 with annual and semiannual
pivots at $1115.2 and $1139.7, and weekly, semiannual and monthly resistances at $1162.6, $1186.5
and $1202.5.

Courtesy of Thomson / Reuters

Nymex Crude Oil – Annual and quarterly supports are $77.05 and $58.41 with daily and monthly
pivots at $84.18 and $84.54, and weekly resistance at $89.90. Annual and semiannual resistances are
$97.29 and $97.50.

Courtesy of Thomson / Reuters

Non-manufacturing ISM rose to 55.4% in March, but without job creation as the Employment
component came in at 49.8. The Prices Paid component rose to 62.9, so inflationary pressures are
building for both the manufacturing ISM and the service industry ISM.
In the Fed Statement from the March 16th FOMC meeting the Fed said, “With substantial resource
slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is
likely to be subdued for some time.” I don’t believe it, that zero percent funds rate is fueling
commodity speculation, which is showing up first in the ISM surveys.
The housing market remains weak, as I completed my draft of the ValuEngine monthly update
and analysis of housing data and look at FDIC Quarterly Banking Profiles going back to 2002.
The Neighborhood Stabilization Program is another government program to help cities, counties and
state rehabilitate abandoned and foreclosed properties. It was in March 2009 when I suggested the
formation of a Real Estate & Housing Asset Bank (REHAB). The national Neighborhood
Stabilization Program at only $4 billion may not be enough to help foreclosure crisis as only about 100
of 300 local governments have received help to date. Last week the Florida Department of Community
Affairs received $91 million to distribute to 24 cities and counties in the state of Florida.
The National Bureau of Economic Research (NBER) has not yet declared this recession over, but it
probably ended in October, which we will learn in hindsight probably in the 4th quarter of 2010. At that
time we may already be in a Housing-Led Double-Dip.
The higher 30-Year bond yield has made all eleven sectors overvalued:
The Dow is now overbought on its daily, weekly and monthly charts. The “Wall of Resistances” stretch
from 11,202 for this week, 11,228 for April, 11,235 for 2010 and 11,442 until the end of June. A weekly
close below my annual pivot at 10,379 indicates risk to quarterly support at 7,490. Dow 8,500 before
11,500 remains my call.

Courtesy of Thomson / Reuters

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

Richard Suttmeier
Chief Market Strategist
www.ValuEngine.com
(800) 381-5576
As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. I
have daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters as
well as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as the
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