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

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July 15, 2010 – Annual Pivots Rule on the 10-Year, Crude Oil, and the Dow

The US Treasury auctions were successful, but the 10-Year yield is still above 3%. Gold is
trading between my weekly and semiannual pivots at $1210.3 and $1218.7. Crude oil continues
to trade back and forth around my annual pivot at $77.05. Today’s risky level for the euro is
1.2796. My annual pivot at 10,379 for the Dow has been a strong magnet this week. Home
Foreclosures are on the Rise
10-Year Note – (3.050) Today’s neutral zone is between my daily pivot at 3.110 and my semiannual
pivot at 2.999. Semiannual and quarterly value levels are 3.479 and 3.486 with weekly, annual,
quarterly and semiannual risky levels at 2.858, 2.813, 2.495 and 2.249. The low yield for the move
was 2.879 set on July 1st, and was a failed test of my 2.999 and 2.813 annual risky levels. The 30-
Year Bond was auctioned on Wednesday at 4.080 and was a success with a bid to cover ratio of 2.89
times the auction size and Indirect Bids at 37% of the auction size. Indirect Bids includes demand from
foreign investors, and in my opinion 30% to 40% of this type of demand is the neutral range.

Courtesy of Thomson / Reuters

Comex Gold – ($1208.7) My quarterly and annual value levels are $1140.9 and $1115.2 with weekly
and semiannual pivots at $1210.3 and $1218.7, and semiannual and monthly risky levels at $1260.8
and $1279.3. The all time high of $1266.5 set on June 21st was a test of June’s monthly
resistance, as a significant top for gold. Gold is trading between the pivots this morning.

Courtesy of Thomson / Reuters

Nymex Crude Oil – ($76.77) My quarterly value level is $56.63 with weekly, annual and daily pivots at
$76.93, $77.05 and $77.55, and monthly and semiannual risky levels at $79.36 and $83.94. Crude oil
appears stuck in a trading range between $67 and $87.

Courtesy of Thomson / Reuters

The Euro – (1.2742) My weekly value level is 1.2422 with a monthly pivot at 1.2670, and a daily risky
level at 1.2796. Monthly and quarterly value levels are 1.2035 and 1.1424. Daily MOJO (12x3x3 slow
stochastic) is overbought as the euro tests today’s risky level at 1.2796 this morning.

Courtesy of Thomson / Reuters

Daily Dow: (10,367) Weekly value level is 9,635 with my annual pivot at 10,379, and daily, semiannual
and monthly risky levels at 10,511, 10,558 and 10,891. My annual risky level at 11,235 was tested at
the April 26th high at 11,258, which marked the end of the bear market rally that began in March 2009.
We are in the second leg of the multi-year bear market that began in October 2007 targeting 8,500
before 11,500. My annual pivot at 10,379 remains a magnet.

Courtesy of Thomson / Reuters

Home Foreclosures are on the Rise - According to RealtyTrac more than a million Americans will
lose their homes to foreclosure this year, which would be ten times the historical norm, and would
exceed the 900,000 of 2009.
The pace would be higher as banks are allowing delinquent borrowers to stay in their homes longer
rather than to add to the glut of foreclosed properties on the market. This will likely change in the
second half of the year as lenders are stepping up repossessions to clear out the backlog of depressed
home inventories on their books.
In the first half of 2010 approximately 1.7 million homeowners received a foreclosure warning, which is
one in 78 US homes. According to Lender Processing Services it typically takes 15 months to finally
sell a foreclosed property following the first missed payment.
If the US economy stabilizes it will take lenders through 2013 to clear out the backlog. If the economy
slows as the Fed fears in its Minutes released on Wednesday foreclosure problems will intensify. High
unemployment, failed mortgage-assistance programs and another wave of lower home prices will keep
the housing market in the doldrums and more homeowners will walk away.
With more than 7.3 million home loans in delinquency it’s easy to see how the housing dilemma can
worsen in the quarters ahead. Even after trying to modify mortgages, many borrowers simply can not
qualify for help, as they struggle to make other payments such as car loans and credit card debts, while
being worried about the job market.
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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