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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.

July 12, 2010 – Bank Failure Friday Returns Continuing last week’s rebound for stocks depends upon earnings from Alcoa, Intel, JP Morgan, Google, Bank of America and General Electric. Getting the yield of the 10-Year back below 3% depends on auctions today through Wednesday. Will the FOMC minutes of the June 22-23 meeting re-iterate the Fed concerns reflected in the Fed Statement? Evidence builds that home prices are headed lower. The FDIC closes four banks on Bank Failure Friday. 10-Year Note – Semiannual and quarterly supports are 3.479 and 3.486 with my annual pivot at 2.999, and daily, weekly, annual, quarterly and semiannual resistances at 2.935, 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 US Treasury sells $34 billion in 3-Year notes today, $21 billion 10-Year notes on Tuesday, and $!3 billion 30-Year bonds on Wednesday.

Courtesy of Thomson / Reuters

Comex Gold – Daily and quarterly supports are $1184.0 and $1140.9 with annual support at $1115.2. My weekly and semiannual pivots are $1210.3 and $1218.7 with semiannual and monthly resistances 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.

Courtesy of Thomson / Reuters

Nymex Crude Oil – Daily and quarterly supports are $71.05 and $56.63 with weekly and annual pivots at $76.93 and $77.05, and monthly and semiannual resistances at $79.36 and $83.94. The 200-day simple moving average provides a resistance at $77.27.

Courtesy of Thomson / Reuters

The Euro – Weekly support is 1.2422 with my monthly pivot at 1.2670, a daily resistance at 1.2773, and the 200-day simple moving average at !.3731. Monthly and quarterly supports are 1.2035 and 1.1424.

Courtesy of Thomson / Reuters

Daily Dow: Daily and weekly supports are 9,719, 9,635 with the 21-day, 50-day and 200-day simple moving averages at 10,138, 10,304 and 10,365, and my annual pivot at 10,379. MOJO is rising so the daily chart is positive with closes above the 21-day. Semiannual and monthly resistances are 10,558 and 10,891 after my annual resistance 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.

Courtesy of Thomson / Reuters

Weekly Dow: The April 26th high of 11,258 was a test of the 61.8% Fibonacci Retracement of the decline from October 2007 high to the March 2009 low. Note also the failed test of the 200-week simple moving average now at 11,084 and the failed test of my annual resistance at 11,235. MOJO is declining and weekly closes below the 5-week modified moving average at 10,207 keeps the weekly chart profile negative.

Courtesy of Thomson / Reuters

Monthly Dow: now shows declining MOJO after being oversold and monthly closes below the fivemonth modified moving average at 10,144 keeps the monthly chart to negative. The 120-month simple moving average is a resistance at 10,451.

Courtesy of Thomson / Reuters

Increasing Mortgage Defaults Will Result In Lower Home Prices According to real estate analytics firm CoreLogic one in seven mortgages of a million dollars and higher are now seriously delinquent, while one in twelve mortgages below a million bucks is delinquent. These statistics will increase foreclosure sales and short sales in the second half of 2010 and beyond and will begin a second wave down for home prices. As I have mentioned the Case-Shiller Home Price Index is roughly 50% higher than when the 20-City Index began at the end of 1999. I was recently invited to become a member of Robert J. Shiller’s panel of investment strategists, economists, and housing experts and will begin to participate in the monthly survey of expected future home prices, and the latest results will be published on Wednesday, July 14th. (www.macromarkets.com)

Bank Failure Friday – The FDIC was back to closing banks last Friday after taking a weekend off to celebrate Independence Day at the beginning of July. Four small community banks failed, which cost the Deposit Insurance Fund (DIF) only $159.9 million, but the year to date total cost to DIF is $17.8 billion, well above the $15.33 billion prepaid bank assessments for all of 2010. I estimate that the DIF is now in arrears by $31.9 billion. • Only 25 banks failed in 2008, as the FDIC was slow closing community and regional banks. • There were 140 bank failures in 2009 with a peak of 50 in the third quarter.

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In the first quarter of 2010 there were 41 failures, in the second quarter there were 45 failures, and so far 4 for the third quarter for a year to date total of 90. At this pace bank closures in 2010 will be within my 150 to 200 estimate range for 2010. Since the end of 2007, the FDIC has closed 255 banks on the way to my predicted 500 to 800 by the end of 2012 into 2013.

Two of the four bank failures last Friday were publicly-traded and both were on my List of Problem Banks. All for banks including Bay National Bank (BAYN) and USA Bank (USBK) had overexposures to C&D and CRE loans with loan pipelines at 86.2% to 100% funded. • BAYN closed Friday at 30 cents a share after trading above two bucks a share on April 26th. • USBK closed Friday at 20 cents a share after trading at $1.64 back on September 29, 2009. If you want to know the 700 plus specific bank stocks that are vulnerable to failure over the next several quarters you need to subscribe to the ValuEngine FDIC Report available at www.ValuEngine.com. 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 ValuTrader Model Portfolio newsletter. I hope that you will go to www.ValuEngine.com and review some of the sample issues of my research. “I Hold No Positions in the Stocks I Cover.”