The Dollar Gets A Pulse

Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com. ValuEngine is a fundamentally-based quant research firm in Princeton, NJ. ValuEngine covers over 5,000 stocks every day. A variety of newsletters and portfolios containing Suttmeier's detailed research, stock picks, and commentary can be found HERE. Suttmeier's Four in Four video can be watched on the web HERE.

October 9, 2009 – The Dollar Gets a Pulse Yields flutter higher on weak bond sale. Gold moves higher and higher. Copper and crude oil are still below 200-week simple moving averages. Dollar Index hits a new 52week low, but longer term up trend for the dollar still shown. The Dow has been flirting with Dow 10,000 since September 16th. Charts courtesy of Thomson / Reuters The $12 billion 30-Year Bond auction tailed, so supply finally trumped demand The 30-Year was just below 4.00% at auction time on Thursday, but a weak auction and follow through selling had this yield testing 4.15% this morning, up 25 basis points from the low yield of last Friday. The daily chart shows that the decline in yield failed at the 200-day simple moving average at 3.92 following the weak employment data last Friday.

A close today above my semiannual pivot at 4.098 indicates risk to monthly support at 4.513. A higher bond yield is a drag on equity valuations, which should sustain the September 23rd equity highs. Comex gold sustains its breakout, but Thursday’s high of $1062.7 is now a resistance. My semiannual pivot is now support at $991.7 with quarterly and semiannual resistances at $1094 to $1102. Gold is becoming overbought on its weekly chart. Comex copper and Nymex crude oil still doubt the global growth story. Copper remains below its 200-week simple moving average at 292.27 with MOJO declining below the overbought reading of 8.0. Strength has stalled since mid-August. Crude oil has been below its 200-week simple moving average at 75.08 since mid-June with MOJO declining with a reading at 6.8. My annual pivots remain magnets at $68.81 and $66.51. The Dollar Index is well above its longer term up trend that goes back to April / July 2008. The dollar index is ending the week with some stabilization. The weekly chart shows the dollar oversold, but a bottom won’t be confirmed until there’s a weekly close above its five-week modified moving average at 77.51.

Each week the five-week MMA will be declining making the dollar buy signal more likely as long as any additional weakness holds the longer term up trend with support rising between 75 and 74. Stocks still strong, but still below September 23rd lows. The Dow held my annual pivot at 9,750, but stayed shy of its September 23rd high at 9,918. My monthly support is 9,306 with annual resistance at 10,012.

The Dow has become within 200 points of 10K since mid-September, and as this scenario moves sideways there’s a negative divergence in MOJO as the overbought reading declines to 8.9 from 9.2. The NASDAQ entered its September 23rd trading range of 2130.34 to 2167.70 on Thursday, but closed below that range. Its overbought MOJO reading slipped to 8.8 from 9.2. The NASDAQ shows monthly resistance at 2183 and the 200-week simple moving average at 2215. The five-week modified moving average is support at 2052. Send me your comments and questions to [email protected]. For more information on our products and services visit www.ValuEngine.com That’s today’s Four in Four. Have a great day. Richard Suttmeier

Chief Market Strategist 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 ValuTrader Model Portfolio newsletter. I hope that you will go to www.ValuEngine.com and review some of the sample issues of my research.

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