Yields Moving Higher Before Supply and FOMC Next Week

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Includes: DIA, DUG, FXE, GLD, OIL, QQQ, SPY, TLT
by: Richard Suttmeier

The US Treasury will announce auctions of 2-Year, 5-Year and 7-Year notes this Thursday for auction next Tuesday, Wednesday and Thursday. The FOMC meets next Tuesday and Wednesday and an unchanged Fed Statement has been hinted in recent Bernanke testimonies. Commodities slump as the dollar firms up. My market call remains; “Sell Strength”, raise cash to 75%, as the Dow is headed for 8,500 before 11,500.

10-Year Note – Yields tend to rise in anticipation of supply, then decline during the auction process, as demand remains strong for the international safety of US Treasuries. Next week the US Treasury will auction $44 billion in 2-Year notes on Tuesday, $42 billion in 5-Year notes on Wednesday, and $32 billion 7-Year notes next Thursday.

  • The 2-Year shows a week’s pivot at 1.02 with semiannual support at 1.089. Quarterly resistance is 0.914.

  • The 5-Year is under the influence of pivots at: 2.529 semiannual, 2.487 weekly and 2.464 quarterly.

  • The 7-Year is cheaper than quarterly and semiannual pivots at 3.173 and 3.107.

  • The 10-Year held 4% recently and this week’s resistance is 3.735 with that semiannual pivot still lurking at 3.675.

Courtesy of Thomson / Reuters

The Beige Book for next week’s FOMC meeting showed that many Districts reported increased activity in housing markets, but from low levels. Commercial real estate market activity remained very weak in most Districts. Activity in the banking and finance sector was mixed in a number of Districts, as loan volumes and credit quality decreased. While labor markets generally remained weak, some hiring activity was evident, particularly for temporary staff. Wage pressures were characterized as minimal or contained. Retail prices generally remained level, but some input prices increased. This backdrop will leave the federal funds rate at zero to .25% for an “extended period.”

Comex Gold – Annual, quarterly and annual supports are $1115.2, $1052.8 and $938.7 with weekly and semiannual pivots at $1131.3 and $1139.7, and daily, semiannual and monthly resistances at $1149.3, $1186.5 and $1202.5. Gold will stay in the trading range shown.

Courtesy of Thomson / Reuters

Nymex Crude Oil Annual and quarterly supports are $77.05 and $58.41 with a daily pivot at $82.39, and weekly and monthly resistances at $84.30 and $84.54, and annual and semiannual resistances at $97.29 and $97.50. The trading range has been moved upward, but that annual pivot remains a magnet at $77.05.

Courtesy of Thomson / Reuters

The Euro – Quarterly support is 1.2450 with a weekly pivot at 1.3507 and daily, monthly and quarterly resistances at 1.3695, 1.4081, 1.4145 and 1.4478. The euro remains vulnerable versus the dollar.

Courtesy of Thomson / Reuters

The Major Equity Averages

Dow Annual and quarterly supports are 10,379 and 7,490 with daily, weekly, monthly, annual, and semiannual resistances at 11,196, 11,169, 11,228, 11,235 and 11,442.

S&P 500 Annual supports are 1179.0 and 1014.2 with semiannual and monthly pivots at 1194.6 and 1199.6, and daily and weekly resistances at 1214.0 and 1218.9. Quarterly support is 805.4 with semiannual resistance at 1281.1.

NASDAQ Monthly and semiannual pivots are 2415 and 2392 with a monthly pivot at 2465, and daily and weekly resistances at 2519 and 2539. Semiannual, annual and quarterly supports are 2258, 2250 and 1833 with annual support at 1659.

Dow Utilities Daily, weekly and monthly pivots are 381.27, 380.10 and 384.78 with monthly resistance at 394.36. Annual and quarterly supports are 315.38 and 307.70 with annual and semiannual resistances are 456.73, 471.95 and 492.05.

Dow Transports Semiannual, monthly and annual supports are 4488, 4397 and 4324 with daily and weekly resistances at 4772 and 4731. Quarterly supports are 3447 and 3142 with annual and semiannual resistances at 4955 and 5218.

Russell 2000 Semiannual and monthly pivots are 673.50 and 672.65 with an annual pivot at 717.69, and daily, annual, weekly and annual resistances at 722.48, 723.54, 732.87 and 748.99. Quarterly support is 509.08.

The SOX– Monthly and semiannual supports are 361.9 and 358.89 with weekly and daily pivots at 388.57 and 395.82. Quarterly, semiannual and annual supports are 278.30, 271.90, 259.45 and 241.05.

Disclosure: No positions

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