This Week in the Markets

by: Richard Suttmeier
The yield on the 10-Year note ended last week on my annual pivot at 2.999. Any strength in gold should remain shy of my semiannual pivot at $1218.7. On crude oil a daily close above my monthly pivot at $79.36 targets semiannual risky level at $83.94. This week’s pivot for the euro is 1.2797. The Dow shows a weekly value level at 10,212 with my annual pivot at 10,379 and my semiannual risky level at 10,558. If April’s price pattern repeats in July, stocks should peak this week. Bank Failure Friday closes seven banks.
10-Year Note – (2.993) This yield has returned to my annual pivot at 2.999 with my weekly, daily and annual risky levels at 2.875, 2.817 and 2.813. Semiannual and quarterly value levels are 3.479 and 3.486 with quarterly and semiannual risky levels at 2.495 and 2.249. The low yield for the move was 2.853 set on July 21st, and was a failed test of my 2.999 and 2.813 annual risky levels. (Click to enlarge)
Courtesy of Thomson / Reuters
Comex Gold – ($1187.9) Daily, quarterly and annual value levels are $1177.3, $1140.9 and $1115.2 with my semiannual pivot at $1218.7, and weekly, semiannual and monthly risky levels at $1222.3, $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 ($79.02) Weekly, daily and annual pivots are $77.89, $77.63 and $77.05 with a monthly pivot at $79.36 and semiannual risky level at $83.94. My quarterly value level is $56.63.
Courtesy of Thomson / Reuters
The Euro – (1.2915) My weekly value level is 1.2797 with a daily risky level at 1.3042. Monthly and quarterly value levels are 1.2035 and 1.1424 with semiannual risky level at 1.4733.
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Daily Dow: (10,425) Weekly and daily value levels are 10,212 and 10,193 with my annual pivot at 10,379, and semiannual and monthly risky levels at 10,558 and 10,891. The 200-day simple moving average is 10,395. My quarterly value level is 7,812 with my annual risky level at 11,235, which was tested at the April 26th high at 11,258. This test 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. The 120-month simple moving average is 10,453.
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Key Levels for the S&P 500 and the NASDAQ: The S&P 500 ended Friday above my semiannual risky level, now a pivot at 1100.7 after holding my annual value level at 1014.2 on July 1st. SPX has the 200-day simple moving average as resistance at 1113.42 on Monday. The NASDAQ is back above its semiannual and annual pivots at 2242 and 2250.
Bank Failure Friday – The FDIC closed seven banks last Friday bringing the total for the month of July to 17 and 103 for the year. Month to date bank failures have drained the FDIC Deposit Insurance fund by $925.7 million brining the year to date today to $18.5 billion well above the $15.33 billion prepaid assessments for all of 2010. I estimate that the DIF is now in arrears by $32.7 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.
  • In the first quarter of 2010 there were 41 failures, in the second quarter there were 45 failures, and so far 17 for the third quarter for a year to date total of 103.
  • 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 267 banks on the way to my predicted 500 to 800 by the end of 2012 into 2013.
Two of the seven bank failures last Friday were publicly-traded and both were on my List of Problem Banks; Crescent Bank & Trust and Home Valley Bank. All seven banks had overexposures to C&D and / or CRE loans with loan pipelines that were 85.1% to 100% funded.
The FDIC used four publicly-traded banks as the consolidators of assets for four of the closures. All four have overexposures to C&D and / or CRE loans. I profile two that have some trading volume.
Renasant Bank (NASDAQ:RNST) ($14.23) has a C&D risk ratio of 113.1% and a CRE risk ratio of 399.8% versus the regulatory guidelines of 100% and 300% of risk based capital. RNST has a real estate loan pipeline that’s 83.8% funded. My semiannual value level is $9.55 with my monthly pivot at $14.96 an d quarterly risky level at $16.30.
IberiaBank (NASDAQ:IBKC) ($50.21) has a C&D risk ratio of 130.8% and a CRE risk ratio of 298.2% versus the regulatory guidelines of 100% and 300% of risk based capital. IBKC has a real estate loan pipeline that’s 82.4% funded. My semiannual value level is $41.10 with a semiannual pivot at $48.98 and quarterly risky level at $55.21.
Courtesy of Thomson / Reuters
Disclosure: No Positions

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