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A look at the monthly charts as 2011 begins

|Includes: DIA, DUG, GLD, iShares 20+ Year Treasury Bond ETF (TLT)
In reviewing 2010 we know that the yield on the 10-Year US Treasury rose and unexpected 123.4 basis points from 2.334 on October 8th to 3.568 on December 16th. We know that Comex gold reached an all time high at $1432.5 on December 7th. Nymex crude oil traded at a multi-year high of $92.06 on the last day of the year. The euro established a trading range in November declining from 1.4281 on November 4th to 1.2972 on November 30th. US stocks ended 2010 in what’s termed by some as a December melt-up. The euro correlation had been that a stronger euro led US stocks higher, but that did not hold in the last two months of 2010.
10-Year Note – (3.288) Daily, weekly, annual and semiannual value levels are 3.350, 3.714, 3.791 and 4.268. Annual, semiannual and monthly risky levels are 2.690, 2.441, 2.322 and 2.150. There is a wide range between value levels and risky levels. Slipping to value levels indicates that QE2 is failing. Rallying to risk levels is a sign of QE2 success. The monthly chart shows the 120-month simple moving average as important support for 2011, beginning the year at 4.135.
Courtesy of Thomson / Reuters
Comex Gold – ($1421.4) Weekly, annual, semiannual and annual value levels are $1380.0, $1356.5, $1300.6 and $1187.2. A daily pivot is at $1417.2. Monthly, quarterly and semiannual risky levels are $1439.0, $1441.7 and $1452.6. A weekly close above $1452.6 continues the parabolic. The monthly chart shows an extreme overbought condition for gold.
Courtesy of Thomson / Reuters
Nymex Crude Oil ($91.38) Weekly, semiannual and monthly value levels are $88.50, $87.52 and $75.74. A daily risky level is $92.83. Weekly closes above $87.52 targets annual, semiannual and quarterly risky levels at $99.91, $101.92, $107.14 and $110.87. The monthly chart shows the 120-month simple moving average as support for 2011, beginning the year at $56.59.
Courtesy of Thomson / Reuters
The Euro – (1.3384) Monthly and weekly value levels are 1.2805 and 1.2703 with quarterly and daily pivots at 1.3227 and 1.3294, and semiannual and annual risky levels at 1.4624, 1.4989, 1.6367 and 1.7312. The monthly chart shows the 120-month simple moving average as support for 2011, beginning the year at 1.2302.
Courtesy of Thomson / Reuters
Monthly Dow: (11,578) shows rising MOJO with December’s close above 61.8% Fibonacci Retracement of the decline from October 2007 to the March 2009 low with the 120-month simple moving average as support at 10,457. My annual, quarterly and semiannual value levels at 11,491, 11,395 and 10,959, and semiannual value level at 9,449. My annual risky level is 13,890. With 15 of 16 sectors overvalued according to ValuEngine it’s difficult to bet on Dow 13,890.  
Courtesy of Thomson / Reuters
That’s today’s Four in Four. Have a great day.
Richard Suttmeier
Chief Market Strategist, (800) 381-5576
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