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June 30, 2010 – The Dow breaks below 10,000, second half target 8,500
The yield on the 10-Year Treasury is below 3%. Gold continues to consolidate off the June 21st
high at $1266.5. Crude is below my annual pivot at $77.05. The euro is below my quarterly
resistance at 1.2450, which was tested on June 21st. When the Dow was at 11,258 on April 26th I
re-iterated my “Dow 8,500 before 11,500” market call. Consumer confidence plunges, home
prices are stable but ripe for a 50% drop, and housing & financials take the lead lower.
US Treasury Yields – The 10-Year yield traded as low as 2.924 into Wednesday morning as the daily
chart shows MOJO that indicates that the decline in yields is overdone. This yield has tested my zone
of annual levels at 2.999 to 2.813. Investors should consider some profit-taking at these levels.
Tomorrow I will show new monthly, quarterly and semiannual levels for the 10-Year yield.
Nymex Crude Oil – The daily chart shows declining MOJO with the 21-day simple moving average as
support at $75.62 with my annual pivot and 200-day at $77.05 and $77.21.
Daily Dow: Weekly support is 9,483 with today’s pivot at 9,935. The Dow is below the 21-day, 50-day
and 200-day simple moving averages at 10,177, 10,475 and 10,360, and my annual pivot at 10,379.
MOJO is declining on the daily chart. My call remains that the April 26th high at 11,258 ended the bear
market rally since March 2009, and starts the second leg of the multi-year bear market. It’s still “Dow
8,500 before Dow 11,500”.
Just before Memorial Day I wrote about a “June Swoon in Housing & Banking” in a Forbes.com article.
The PHLX Housing Sector Index (HGX) declined 16.6% in June with one day to go and from its April
high to Tuesday’s low is down 32.1%. Year to date HGX is down 11.7%, which to me supports my call
that home prices can decline another 50%.
Courtesy of Thomson / Reuters