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Are Bubbles Popping As QE2 Comes to an End?

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
ValuEngine.com
(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.”