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Bank Failure Friday

|Includes: iShares China Large-Cap ETF (FXI), SPY
ValuEngine’s “Four In Four”
Featuring Richard Suttmeier, Chief Market Strategist
 
 
Welcome to ValuEngine’s “Four In Four”. I’m Richard Suttmeier, Chief Market Strategist.
 
Bank Failure Friday! Stocks declining in China are reflected in the China 25 Index Fund (NYSEARCA:FXI). The $8,000 Tax Rebate Check for first time home buyers. Weekly and daily charts for the S&P 500!
 
Three private banks failed on Friday bringing the total for the first eight months of 2009 to 84.
 
Missing in the Q2 FDIC Quarterly Banking Profile is the fact that 39 banks have failed since the 24 reported for the second quarter.
 
The FDIC reported that the Deposit Insurance Fund ended the second quarter at $10.4 billion, but when you subtract the costs of the 39 failures since then the fund is in the hole by $442 million.
 
The culprit in the three failures from Friday was overexposures to Construction and Development Loans and Nonfarm, Nonresidential real estate loans, the Achilles Heel of the banking system.
 
The FDIC non-list of Problem Banks moved up significantly to 416, while the ValuEngine List of Publicly Traded Banks consists of 764 banks by name.

At ValuEngine we are preparing the Quarterly ValuEngine FDIC Evaluation Newsletter which is based upon the Q2 FDIC Quarterly Banking Profile, and my unique analysis of this data.
 
FDIC Chair Sheila Bair called the Quarterly Banking Profile a lagging indicator. Find out why I disagree, and call the report the most important leading indicator for the US economy.
 
Today’s ValuEngine Weekly ETF Report tracks thirty ETFs including the China 25 Index Fund.
 
The weekly chart for the FXI is the first of the market-related ETFs that shows declining weekly MOJO with a close below its five-week modified moving average at 39.97. Chart courtesy of Thomson / Reuters
 
Support is the 200-week simple moving average at 36.42. Market bulls in the US cite China as providing economic leadership. So far it’s not the expected upside leadership.
 
If you trade ETFs, the ValuEngine Weekly ETF will give you Value Levels at which to Buy and Risky Levels at which to sell. Pivots are included when markets are expected to be reversal-oriented.
 
More on those $8,000 tax rebate checks, which are set to expire at the end of November?
 
On Friday I indicated that the US Treasury is taking 12 to 16 weeks to get the cash to the first time home buyer. Feedback from a Four In Four reader lengthens the time delay for Five to Six months.
 
Most of the new home sales are to first time home buyers, and they may be depending upon that $8,000 to make mortgage payments. Six months from now we will discuss first time home buyer new mortgages going into default.
 
The Weekly and Daily Charts for the S&P 500 from Thomson Reuters
 
The weekly chart for the S&P 500 is extremely overbought with the Ascending Wedge support at 952 and the Ascending Wedge resistance at 1047.
 
The daily chart for the S&P 500 shows rising momentum with the 21-day simple moving average as support at 1008, and the uptrend resistance is at 1043.
 
My Bearish Call Remains the Same – From 1000 the next 20% is down not up. So my target is 800 before 1200 with the timing likely to be by year end.
 
Send me your comments and questions to Rsuttmeier@Gmail.com. For more information on our products and services visit www.ValuEngine.com
 
That’s today’s Four in Four. Have a great day.
 
As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. Daily, Weekly, Monthly, and Quarterly newsletters are available to track a variety of equity and other data parameters, as well as my interpretation of what is going on in world markets. An ETF and ValuTrader portfolio Newsletters are the newest offerings. I hope that you take a look and review some of the sample issues."
 
My Policy is to have No Positions in stocks that I cover.