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Are Bubbles Popping As QE2 Comes to an End?

May 04, 2011 6:05 AM ET
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Banks, Homebuilders, chartest

Seeking Alpha Analyst Since 2006

I am the Founder & CEO at Global Market Consultants, Ltd. I consider myself as a Financial Engineer with an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. In 1972 I began my career in the financial services industry trading U.S. Treasury securities in the primary dealer community. I became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gave me the insights to be an expert on monetary policy, which I feature in my newsletters, and market commentary. I formed Global Market Consultants Ltd at the end of 1988 and expanded on my analysis to include proprietary analytics. While operating Global Market Consultants I was the U.S. Treasury Strategist at Smith Barney 1991 through 1995, was Chief Financial Strategist at William R. Hough in St. Petersburg, Florida 1997 through 1999, and was Chief Market Strategist at Joseph Stevens 1999 into 2008. I began covering U.S. equities in 1997 and began to use ValuEngine as my stock screening tool in 2002 before joining them as Chief Market Strategist between September 2008 and November 2014. I was the Chief Market Strategist at Niagara International Capital Limited between December 2009 and December 2014. In 2005 through 2007 I wrote columns on RealMoney.com and authored TheStreet.com Technology Report. My unique coverage called for the housing bubble to pop in 2005 and for regional banks to collapse in 2006 and early-2007. This is when my proprietary analytics became known as value levels at which to buy on weakness and risky levels at which to sell on strength. I became an Expert Contributor for TheStreet.com in April 2012 and currently write one or two stories a day covering subjects such as: The housing market, community and regional banks, momentum stocks, earnings profiles both before companies report quarterly results and provide scorecards after reporting results. Many of my stories we include moving averages, momentum readings, analysts’ earnings estimates, and value levels and risky levels. Over the years I made frequent appearances on financial TV beginning in 1993 on CNBC covering the U.S. Treasury auctions and as a substitute for John Murphy on his segment called ‘Tech Talk’. I also occasionally appeared on CNN and Bloomberg. On almost every holiday I appeared for an hour covering stocks on a call-in / email-the-expert ‘Talking Stocks’ show on CNNfn. In 2002 I had my own show on Yahoo Finance TV called, ‘Traders’ Club with Richard Suttmeier’. When Fox Business began in late-2007 I was a frequent guest on ‘Money for Breakfast’. I also made appearances on Reuters TV, Yahoo Finance Breakout and BNN in Toronto. In recent years I shifted my focus to making presentations to various investor groups such as: MBA students at the University of Florida and South Florida, The American Association of Individual Investors, Wells Fargo Advisors, The Executive Form at the National Arts Club in NYC, Investors Roundtable of Wilmington NC, The Market Technicians Association, The Information Management Network when they cover Florida Banks in Ft Lauderdale, and the University of Tampa Investment Club. I was president of the Society for the Investigation of Recurring Events in NYC from 2000 into 2009. My background began on Long Island, New York. I graduated from Bay Shore High School in 1962, and was a member of the Honor Society, Golf Team, Math Team and Band. I graduated from Georgia Tech in Atlanta with a Bachelor of Industrial Engineering Degree in 1966, and was a member of Chi Phi Fraternity, the freshmen Golf Team, and was the captain of the Bowling team. I won the South East Regional Bowling Tournament in 1964 and won the National Intercollegiate Bowling Championship in the Doubles Event that same year. I graduated from Brooklyn Poly in 1970 with a Master of Science in Operations Research, Systems Analysis. My first job out of Georgia Tech was with Grumman Aerospace on Long Island 1966 through 1970 with project assignments on the Lunar Module and F-14 Tomcat Fighter Jet contract proposal. I was with Bank of New York in 1971, as the Senior Systems Analyst for computer applications for the Bank’s International Division. When I shifted my to Wall Street In 1972 I became a U.S. Government securities trader at Briggs Schaedle, a primary dealer where my father was Vice Chairman and my brother was Sales Manager. In 1977 I joined Loab Rhodes as a U.S. Treasury trader. Then my career advanced as noted above. I have been married to Linda since June 1969 and we are the parents of Stephen and Jason Suttmeier. Stephen has been married to Jennifer since 2004 and we have a granddaughter Emily and a grandson Robert. We have been living in Land O’ Lakes, Florida with Jason and his partner James since June 2009.
We know that the $600 billion purchases of US Treasuries will come to an end on June 30th. At that time the Federal Reserve will keep their balance sheet stable by reinvesting the proceeds of maturing US Treasuries and mortgage-backed securities. Ending this strategy will come before the Fed ends the extended period for that ridiculously low zero to 0.25 percent federal funds rate. Despite downside volatility since setting highs on Monday, gold, crude oil and the euro versus the dollar remain overbought on their daily charts. All major equity averages except the Russell 2000 are also still overbought on their daily charts. Fundamentally, the ValuEngine Valuation Watch has ended but all sixteen sectors remain overvalued.
10-Year Note – (3.255) Monthly, annual and quarterly value levels are 3.757, 3.796 and 4.016 with a weekly pivot at 3.292, and daily, annual, and semiannual risky levels at 3.217, 2.690, 2.441, and 2.322.  My daily risky level at 3.217 has been tested this morning.
Courtesy of Thomson / Reuters
Comex Gold – ($1538.80) Gold traded to an all time high at $1577.4 on Monday versus my monthly risky level at $1589.3. Weekly and quarterly value levels were tested on Tuesday at $1523.5 and $1523.7. Today’s risky level is $1557.2. My semiannual value level lags at $1452.6.
Courtesy of Thomson / Reuters
Nymex Crude Oil ($111.17) Oil traded to a new multi-year high at $114.83 on Monday. My semiannual value level is $107.14 with my weekly pivot is $112.82, and daily, monthly and quarterly risky levels at $113.50, $119.17 and $120.52.
Courtesy of Thomson / Reuters
The Euro – (1.4828) Weakness on Monday and Tuesday and again this morning tested my weekly pivot at 1.4782 with daily and monthly risky levels at 1.4967 and 1.5144. My semiannual value level is 1.4624.
Courtesy of Thomson / Reuters
Daily Dow: (12,808) YTD high; 12,876.00 on Monday. My weekly value level is 12,574 with daily, monthly, quarterly and annual risky levels at 12,939, 13,663, 13,774 and 13,890. My annual value level lags at 11,491.
Courtesy of Thomson / Reuters
S&P 500 (1356.5) YTD high – 1370.58 on Monday. My Weekly value level is 1332.7 with daily, monthly and quarterly risky levels at 1375.0, 1490.5 and 1500.4. The October 2007 high is 1576.06.
NASDAQ (2842) Multi-year high – 2887.75 on Monday. My weekly value level is 2772 with daily, quarterly, monthly and annual risky levels at 2899, 3209, 3228 and 3243.  
NASDAQ 100 (NDX) (2393) Multi-year high – 2427.75 on Monday. My weekly value level is 2305 with daily and annual risky levels at 2437 and 2590.     
Dow Transports (5478) All time high – 5565.78 on Monday. My annual value level is 5179 with a weekly pivot at 5516, and daily, monthly and annual risky levels at 5614 and 6028.
Russell 2000 (843.77) All time high – 868.57 on Monday. My annual value level is 784.16 with a weekly pivot at 846.16, and daily and quarterly risky levels at 865.07 and 949.02.
The SOX– (439.43) My weekly value level is 414.19 with daily and quarterly risky levels at 447.41 and 498.75. The SOX is well below its July 2007 high at 549.39.
Richard Suttmeier Speaking Event – The Executive Forum at the National Arts Club in NYC
I will be discussing why “The Great Credit Crunch” continues. The event is on Tuesday, May 17th at The National Arts Club, 15 Gramercy Park South (E. 20th St.) Cocktails 5:45 PM, Dinner 6:30 PM, Presentation 7:30 PM. Use this link to register - http://www.execforumnyu.org/events.html
Definition of MOJO – This is my term for technical momentum. I use what’s called “12x3x3 slow stochastic readings” from daily, weekly and monthly charts. The scale is zero to 10.0 where above 8.0 is overbought and below 2.0 is oversold.
That’s today’s Four in Four. Have a great day.
Richard Suttmeier
Chief Market Strategist
(800) 381-5576
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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 to http://www.valuengine.com/nl/mainnl to review sample issues and find out more about my research.
“I Hold No Positions in the Stocks I Cover.”

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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