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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.

August 19, 2010 – The Dow traded on Wednesday below my annual at 10,379 then
above my monthly pivot at 10,439 then closed between them yet again.

The yield on the 10-Year US Treasury tested 2.559 and is now trending higher above this week’s
pivot at 2.598. Gold reaches $1234.4 during Wednesday’s trade. Crude oil remains below my
annual pivot at $77.05. The euro declined to 1.2737 on Monday. The Dow remains influenced by
annual, monthly and semiannual pivots at 10,379, 10,439 and 10,558. More information about the
mortgage markets!
10-Year Note – (2.638) My annual pivot is 2.813 with a weekly pivot at 2.598 and daily risky level at
2.564. My annual value level is 2.999 with quarterly and semiannual risky levels at 2.495 and 2.249.
Note that the decline in yield is extremely overdone.

Courtesy of Thomson / Reuters

Comex Gold – ($1231.1) Weekly, quarterly, monthly and annual value levels are $1159.3, $1140.9,
$1133.2 and $1115.2 with semiannual and daily pivots at $1218.7 and $1228.4, and semiannual risky
level at $1260.8. Note that gold is overbought on its daily chart.
Courtesy of Thomson / Reuters

Nymex Crude Oil – ($75.24) My daily value level is $72.95 with weekly and annual pivots at $76.86
and $77.05. My monthly and semiannual risky levels are $80.02 and $83.94. My quarterly value level is
$56.63.

Courtesy of Thomson / Reuters

The Euro – (1.2856) Daily, quarterly and monthly value levels are 1.2551, 1.2167, 1.1486 and 1.1424
with weekly and semiannual risky levels at 1.3223 and 1.4733.
Courtesy of Thomson / Reuters

Daily Dow: (10,416) Daily and weekly value levels are 10,210 and 10,055 with my annual pivot at
10,270, my monthly pivot at 10,439, and semiannual and annual risky levels at 10,558 and 11,235. My
quarterly value level is 7,812. My annual risky level at 11,235 was tested at the April 26th high of
11,258.01.

Courtesy of Thomson / Reuters


The Mortgage Market Needs a Government Guarantee for Qualified Homeowners - Back in May
2008, before Fannie Mae and Freddie Mac were put under Conservatorship I suggested on Fox
Business TV that the GSEs should be liquidated. Instead taxpayers are on the hook for nearly $150
billion dollars and counting until the end of 2012 and potentially beyond. I have been suggesting that
the main entity to use for mortgage security creation be Ginnie Mae, a US government mortgage entity.
Treasury Secretary Timothy Geithner kicked off the Fannie and Freddie debate with the statement that
the housing industry needed some sort of mortgage guarantee. Today the FHA and GSEs collectively
guarantee more than 90% of all mortgages.
The mortgage dilemma is the fact that the private sector cannot be the cornerstone for mortgage
generation without having rates significantly higher, but Ginnie Mae can be central to the mortgage
market. A mortgage contract should require a 20% down commitment, with standard mortgage
structures: one-year adjustable, five-year adjustable, 15-year and 30-year fixed rate mortgages. No
weird structures.
Late Mortgage Payments Spike in the Second Quarter versus a Year Ago - In the second quarter
of 2010 the number of mortgage holders 60 days or more late in making monthly payments was 6.67%
versus 5.81% in 2009 and well above the historic norm of 1.5% to 2%.
Mortgage Applications continue to be a two-headed story. Mortgage Refinancing Applications are up
17.1% on low mortgage rates, but an application is not an actual new mortgage. Mortgage Applications
for purchases continue to decline; by 3.4% last week and down 38.6% year over year.
What is your home worth? According to the bank that services my mortgage my home is worth
between $247,000 and $315,000, so they centered it at $274,000. According to Zillow.com it’s worth
$258,500. The Pasco County Florida Property Appraiser shows my value at $179,429 down from
$250,818 from a year ago. Here’s what you servicing bank will likely do! If you want a principal
reduction they say you don’t qualify as you have equity in your home. However, go to your local branch
for a Home Equity line of credit and they tell you that you are underwater. The homeowner can’t win
until a standard for home appraisals can be set. This standard should be based upon recent property
sales in your community, which is the appraised value used to set your annual property tax base.
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.”