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Off to a strong start – not surprising and not sustainable

|Includes: DIA, DUG, GLD, iShares 20+ Year Treasury Bond ETF (TLT)
QE2 will eventually bring down the yield on the 10-Year US Treasury, but may test my annual value level at 3.791 first. My annual risky level is 2.690. Gold begins the year with monthly, quarterly and semiannual risky levels at $1439.0, $1441.7 and $1452.6. This week’s value level is $1380.0. Crude oil appears headed for my annual risky levels at $99.91 and $101.92, but a weekly close below my semiannual value level at $87.52 makes this strength tougher to achieve. The euro becomes vulnerable on a weekly close below my quarterly pivot at 1.3227. The Dow begins the year with no nearby longer-term risky levels. My annual pivot at 11,491 has an 85% chance of being tested numerous times this year, which makes a rally to my annual risky level at 13,890 a tough call given overvalued fundamentals and overbought technicals. Below 11,491 is my quarterly value level at 11,395. The major equity averages straddle quarterly value levels, pivots and risky levels favoring a reversal-oriented first quarter – 11,395 Dow, 1162.5 SPX, 2853 NASDAQ, 4671 Transports and 765.50 Russell 2000.
 
10-Year Note – (3.342) Daily, weekly, annual and semiannual value levels are 3.399, 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.
 
Courtesy of Thomson / Reuters
 
Comex Gold – ($1414.4) Weekly, annual, semiannual and annual value levels are $1380.0, $1356.5, $1300.6 and $1187.2. A daily pivot is at $1419.8. Monthly, quarterly and semiannual risky levels are $1439.0, $1441.7 and $1452.6. Gold needs to breakout above $1452.6 to continue the longer-term parabolic run.
 
Courtesy of Thomson / Reuters
 
Nymex Crude Oil ($91.61) Weekly, semiannual and monthly value levels are $88.50, $87.52 and $75.74. A daily pivot is $91.97. Weekly closes above $87.52 targets annual, semiannual and quarterly risky levels at $99.91, $101.92, $107.14 and $110.87.
 
 
Courtesy of Thomson / Reuters
 
The Euro – (1.3354) Monthly and weekly value levels are 1.2805 and 1.2703 with quarterly and daily pivots at 1.3227 and 1.3365, and semiannual and annual risky levels at 1.4624, 1.4989, 1.6367 and 1.7312.
 
Courtesy of Thomson / Reuters
 
Daily Dow: (11,671)Annual, quarterly, weekly, semiannual, monthly and semiannual value levels are 11,491, 11,395, 11,334, 10,959, 10,427 and 9,449 with a daily pivot at 11,653, and annual risky level at 13,890.
 
Courtesy of Thomson / Reuters
 
ValuEngine still shows 15 or 16 sectors as overvalued – only36.4% of all stocks are undervalued and readings around 35% are usually followed by a market sell-off.
 
 
That’s today’s Four in Four. Have a great day.
 
Richard Suttmeier
Chief Market Strategist
ValuEngine.com, (800) 381-5576
 
Send your comments and questions to Rsuttmeier@Gmail.com. For more information on our products and services visit www.ValuEngine.com
 
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. You can go HERE to review sample issues and find out more about my research.
 
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.