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The Dow remains overbought with 10,558 as key support

|Includes: DIA, DUG, GLD, iShares 20+ Year Treasury Bond ETF (TLT)
The 10-Year US Treasury yield tested my quarterly and weekly risky levels at 2.495 and 2.487 on Thursday. Gold traded above $1300.0 the Troy ounce this morning with today’s risky level at $1318.4. Crude oil traded around my monthly pivot at $74.45 on Thursday. The euro remains above its 200-day simple moving average at 1.3202 as key support with today’s risky level at 1.3450. The Dow remains overbought on its daily chart. As long as weekly closes are above my semiannual pivot at 10,558 I predict a test of my annual pivot at 11,235 by Election Day. Existing Home Sales were up but remain depressed.
10-Year Note – (2.562) Annual and annual value levels are 2.813 and 2.999 with monthly and daily pivots at 2.562 and 2.563, and quarterly, weekly and semiannual risky levels at 2.495, 2.487 and 2.249.
Courtesy of Thomson / Reuters
Comex Gold – ($1293.2) Monthly, semiannual, quarterly and annual value levels are $1263.8, 1260.8, $1218.7, $1140.9 and $1115.2 with a weekly pivot at $1283.5 and daily risky level at $1318.4.      
Courtesy of Thomson / Reuters
Nymex Crude Oil ($74.89) Daily, weekly and quarterly value levels are $72.74, $72.72 and $56.63 with a monthly pivot at $74.45, my annual pivot at $77.05, and semiannual risky level at $83.94.   
Courtesy of Thomson / Reuters
The Euro – (1.3317) My weekly value level is 1.2902 with a daily risky level at 1.3450. Quarterly and monthly value levels are 1.2167, 1.1721 and 1.1424 with semiannual risky level at 1.4733.
Courtesy of Thomson / Reuters
Daily Dow: (10,662) Weekly, annual, monthly and quarterly value levels are 10,445, 10,379, 10,164 and 7,812 with my semiannual pivot at 10,558, and daily and annual risky levels at 10,763 and 11,235. My annual risky level at 11,235 was tested at the April 26th high of 11,258.01. The Dow remains extremely overbought, but with a negative divergence.
Courtesy of Thomson / Reuters
Existing Home Sales rose 7.6% in August

Sales of existing homes may have rose 7.6% in August, but the month was still the second-worst month for sales in more than a decade, and were 19% lower year over year. July 2010 was the worst month for sales in fifteen years.
Low mortgage rates have not helped the housing market because they are no low enough relative to the 10-Year US Treasury yield. When the Federal Reserve stopped buying Fannie Mae and Freddie Mac mortgage securities and debt at the end of March the 30-Year fixed rate mortgage was just 115 basis points above the 10-Year yield. Today the mortgage rate is 4.37 and with the 10-Year yield at 2.52, the spread has widened 70 basis points to 185. A 3.67 mortgage rate would open the floodgates for refinancing activity for qualified homeowners.
Job security and the risk of lower house prices and the flood of foreclosures are preventing the housing market from beginning a sustainable recovery. This is a sign that “The Great Credit Crunch” continues.
About 2.5 million homes have been lost to foreclosure since “The Great Credit Crunch” began in March 2007, and another 3.3 million homes could be lost to foreclosure or distressed sale before “The Great Credit Crunch” comes to an end.
That’s today’s Four in Four. Have a great day.
Richard Suttmeier
Chief Market Strategist
(800) 381-5576
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