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Reaction to Payrolls, the Bear Roars or the Ranges Widen

|Includes: DIA, DUG, GLD, iShares 20+ Year Treasury Bond ETF (TLT)
US Treasury yields rose on Thursday, but are lower this morning on weak euro. Gold is trying to hold $1200. The euro is below its 120-month simple moving average at 1.2084 this morning. Crude oil remains below its annual pivot at $77.05. The Dow is below its 200-day simple moving average at 10,295, as the weekly chart remains negative on a weekly close below 10,479.
 
US Treasury Yields –My quarterly support is 3.467 with a daily pivot at 3.376 and weekly resistance at 3.192. This favors a reversal-oriented reaction to the Payroll Data Friday morning. Next week the US Treasury auctions $36 billion 3-Year notes on Tuesday, $21 billion 10-Year notes on Wednesday and $13 billion 30-Year bonds on Thursday June 10th for a total $70 billion. On March 31st when the Federal Reserve stopped buying mortgage securities the 30-Year fixed rate mortgage was at 4.99% at Freddie Mac. Yesterday it was 4.79%. This is great on the surface, but the spread versus the 10-Year note widened from 115 basis points to 144 basis points.
 
Courtesy of Thomson / Reuters
 
Comex Gold – has rising MOJO on its daily chart. My semiannual pivot is $1186.5 with weekly and monthly resistances at $1245.8 and $1265.9. Gold is back above $1200 the Troy ounce as currency of last resort as the euro weakened to a new 52-week low of 1.2114 on Tuesday.
 
Courtesy of Thomson / Reuters
 
Nymex Crude Oil shows rising MOJO on its daily chart with the 200-day simple moving average and my annual risky level at $76.74 and $77.05. This week’s support is $71.64. The modest rebound can be attributed to the beginning of the Hurricane Season.
 
 
Courtesy of Thomson / Reuters
 
The Euro – shows declining MOJO on its monthly chart despite with the currency below it’s 120-month simple moving average at 1.2084 for the first time since September 2003. Today’s support is 1.1954 with weekly and quarterly pivots at 1.2187 and 1.2450.
 
Courtesy of Thomson / Reuters
 
Daily Dow:Looking at the daily charts for the Dow and S&P 500 the key will be whether or not these major averages open with a price gap above their 200-day simple moving averages at 10,295 for the Dow and 1106 for SPX. The Dow is below its 21-day, 50-day and 200-day simple moving averages at 10,402, 10,756 and 10,295. A move above the 200-day would be a positive in reaction to a positive employment report on Friday. It’s been my near term theme that US fundamentals would trump euro contagion this week until the Employment Report.
 
Courtesy of Thomson / Reuters
 
Weekly Dow:Even with a breakout on the daily charts, the weekly charts stay negative given weekly closes below the five-week modified moving averages at 10,536 Dow and 1132 SPX. A weekly close above my annual pivot at 10,379 extends the trading ranges to the upside. If the Dow and SPX close below the 200-day simple moving averages the nearest support is my annual support at 1014 SPX.
I still predict Dow 8,500 before Dow 11,500.
 
 
Chart Courtesy of Thomson / Reuters
 
That’s today’s Four in Four. Have a great day.
 
Richard Suttmeier
Chief Market Strategist
(800) 381-5576
 
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. I hope that you will go to www.ValuEngine.com and review some of the sample issues of my research.
 
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