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

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June 18, 2010 Dow Holds 200-day Keeping Short-Term Rally Alive

The yield on the 10-Year Treasury remains low while supply looms next week. Gold attempts
test of the record high at $1254.5 set on June 8th. The euro is approaching my quarterly pivot at
1.2450 as expected. Crude oil is trading back and forth around my annual pivot at $77.05. The
Dow holds its 200-day simple moving average at 10,330. FDIC Deposit Insurance tacked onto
the Financial Regulation bill. Mortgage applications post a rise in latest weekly data.
US Treasury Yields The weekly chart shows the decline in yields since the test of the 200-week
simple moving average the week of April 9th when that average was around 4.00%. Annual resistances
are 2.999 and 2.813. The US Treasury auctions $40 billion 2-Year notes on Tuesday, $38 billion 5-Year
notes on Wednesday and $30 billion 7-Year notes on Thursday.

Chart Courtesy of Thomson / Reuters

Comex Gold The weekly chart is overbought, as Thursdays strength came up shy of the June 8th all
time high of $1254.4. Todays support is $1224.1 with monthly resistance at $1265.9.

Courtesy of Thomson / Reuters

Nymex Crude Oil The weekly chart still shows declining MOJO with oil on the cusp of its 200-week
simple moving average and annual pivot at $76.76 and $77.05. Todays resistance is $79.91.

Courtesy of Thomson / Reuters

The Euro is still oversold on its weekly chart. Strength has nearly reached my quarterly resistance at
1.2450 as expected.

Courtesy of Thomson / Reuters

Daily Dow: The Dow moved above its 200-day simple moving average on Tuesday and tested that
level now at 10,330 as support on Wednesday and Thursday. The 21-day is support at 10,148 with the
50-day as resistance at 10,605. Keep in mind that the 200-day on SPX is at 1110 today. MOJO is
rising on the daily chart with my annual pivot at 10,379. I do not expect this short-term rebound to get
back to or above the April 26th high at 11,258. It remains Dow 8,500 before Dow 11,500.

Courtesy of Thomson / Reuters

Deposit Insurance now added to Financial Reform Bill - The Financial Reform bill now has a
prevision to make the $250,000 temporary deposit guarantee permanent. It would have been ludicrous
to have this limit revert back to $100,000.
What I do not understand is why they made the $250,000 ceiling retroactive to any failures that
occurred during 2008. The Increase was upped to $250,000 in October 2008 and was due to return to
$100,000 after 2013. I would like to know what the additional hit the Deposit Insurance Fund is for
January 2008 into October 2008. The biggest beneficiaries are the depositors of IndyMac Bank.
Another feature of the prevision effects how the FDIC replenishes the Deposit Insurance Fund. Under
current law the FDIC can set the target ratio of reserves of 1.15% to 1.50% of insured deposits, but
must begin to give banks rebates it the ration exceeds 1.35%. The ratio ended the Q1 2010 at -0.38%. I
am unsure of the new rulings on raising DIF funds, but higher fees only adds to the stress in member
banks. According to the current law since the DIF dipped below 1.15% in June 2008 and is required to
be back above 1.15% by the end of June 2013, a five year requirement. With fees for 2010 through
2012 already pre-paid, where is the FDIC going to get at least $80 billion to bring the fund back into
alignment by June 2013?
Latest Data on Mortgage Rates and Applications The average rate for a 30-Year fixed rate
mortgage is 4.82, which is 163 basis points above the yield on the 10-Year US Treasury versus 115
basis points on March 31st, when the Federal Reserve stopped buying GSE debt and mortgage-backed
securities. Last week, mortgage applications rose 7.3% for home purchases and 21.1% for home
refinancings. The Purchase Index had fallen for five consecutive weeks.
Thats todays 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
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I Hold No Positions in the Stocks I Cover.