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

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November 23, 2010 – The Dow is between its 50-day at 11,020 and annual pivot at
11,235.

The yield on the 10-Year note is trading around my annual pivot at 2.813 with my annual value
level at 2.999 and my weekly risky level at 2.656. Gold trades between its 50-day simple moving
average at $1338.0 and my monthly pivot at $1373.0. Crude oil is between my annual value level
at $77.05 and my semiannual pivot at $83.94 with a weekly value level at $78.51. The euro
remains oversold and flipping back and forth around its 50-day at 1.3709. The Dow is above its
50-day at 11,020 with annual and semiannual pivots at 11,235 and 11,296 and this week’s risky
level at 11,405. Home Builders want to increase inventories. Bernanke defends QE2. Other
housing and banking data!
10-Year Note – (2.806) Annual and daily levels are 2.999 and 3.002 with my annual pivot at 2.813,
and weekly, monthly, quarterly and semiannual risky levels at 2.656, 2.380, 2.265 and 2.249.

Courtesy of Thomson / Reuters

Comex Gold – ($1365.5) Daily, quarterly, semiannual and annual value levels are $1322.7, $1306.4,
$1260.8, $1218.7 and $1115.2 with monthly and weekly risky levels at $1373.0 and $1412.1.

Courtesy of Thomson / Reuters

Nymex Crude Oil – ($81.63) Monthly, daily and annual value levels are $78.51, $78.22 and $77.05
my semiannual pivot at $83.94, and weekly, semiannual and annual risky levels at $89.06, $96.53 and
$97.29.

Courtesy of Thomson / Reuters

The Euro – (1.3620) Daily, quarterly and monthly value levels are 1.3455, 1.3318 and 1.2709 with
weekly and semiannual risky levels at 1.4205 and 1.4733.

Courtesy of Thomson / Reuters

Daily Dow: (11,179) Daily, monthly, semiannual, annual and quarterly value levels are 10,965, 10,848,
10,558, 10,379 and 8,523 with annual, semiannual, and weekly risky levels at 11,235, 11,296, and
11,405.

Courtesy of Thomson / Reuters

Home Builders want to Increase Inventories - According to the National Association of Home
Builders the annual production of single-family homes in 2008 and 2009 were a million short of what’s
needed in a normal economy. In my opinion the home builders have a window of opportunity to
increase sales as perspective home buyers shun the foreclosure sale market, which is in disarray. The
problem is that community banks, which fund construction and development loans, remain stuck with
non-performing loans, and thus do not want to lend new money to the home builder community.
Republican Leaders Grilled Bernanke on QE2 - Republicans in Congress say that the $600 billion
Fed program to jump-start the economy will ignite inflation and invite speculative buying on Wall
Street. In my opinion “the Great Credit Crunch” began with the overbuilding of new homes, as flippers
never took title, but simple ran up prices in a bubble induced by the ridiculous low interest rate policy
of the Federal Reserve. So far, QE2 has not addressed the issue of getting money to the home
builders to pick up the shovels and begin to complete some of the sparely populated communities on
Main Street, USA. QE2 must filter down to Main Street with money at lower interest rates, and
according to the NAHB that’s not happening.
The anticipation of QE2 inflated bubbles in commodities prices, hurt the US dollar, but then on the
event of QE2 US Treasury yields are higher, commodities are consolidating and the Dow fell from just
under 11,500 to just under 11,000, setting up a 500 point trading range, as we await evidence that
QE2 will work. I don’t see it and believe that the risks totally out-weight the rewards.
Bernanke told Congress that QE2 will create 700,000 jobs over two years. Back in 2008, then
Treasury Secretary Hank Paulson said that the Bush Stimulus would create 500,000 jobs by the end of
that year. Then President Obama claimed that his $788 billion stimulus would create or salve three to
four million jobs. We’ve been down this road before and it’s a dead end.
The Fed supplies billions to the banking system who are reluctant to lend to borrowers who are afraid
to take on more debt. With all 50 state attorney’s general leaning on banks with regard to the
foreclosure mess, banks face fines and the risk of having to buy back mortgage backed securities
laced with bad mortgage loans. This is an environment where QE2 can’t possibly work, but could help
Wall Street reap the benefits on speculation that QE2 will work. I say its time to replace Bernanke!
Adding to the Mess The Federal Reserve wants Fresh Stress Tests - Can the “too big to fail”
banks weather another recession? That’s what the Fed wants to know, and banks that pass this test
can boost dividends to investors. The bigger banks face increased Deposit Insurance Fund
assessments from the FDIC, and still face some uncertainties from the new Financial Reform
regulations.
The Mortgage Foreclosure Situation - The Mortgage Bankers Association reports that 9.1% of
homeowners have missed at least one mortgage payment in the July-September quarter down from
9.9% in the April-June period. At these levels delinquencies and foreclosures remain elevated and
should stay that way as unemployment remains elevated and home values decline.
The Status Obama’s Foreclosure Prevention Programs - The program was aimed at helping three
to four million troubled homeowners, but only 1.4 million actually enrolled. Of these 755,000
borrowers, or 54% left the program without even a trial mortgage modification. Only 36,500
homeowners received permanent loan modifications and are making their reduced mortgage
payments on time.
That’s today’s Four in Four. Have a great day.
Richard Suttmeier
Chief Market Strategist
ValuEngine.com
(800) 381-5576
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