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VIDEOThe Power of the Pivots: Gold, Oil, and the Dow
By
Richard Suttmeier
Jul 29, 2010 8:25 am
Plus a look at the banks, which remain stressed as loan demand declines and credit standards tighten.
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10-Year Note -- (3.001) This yield returned to my annual pivot at 2.999 once again after failing again between my annual pivot at 2.999 and annual risky level at 2.813 for the second time in July. Semiannual and quarterly value levels are 3.479 and 3.486 with weekly and annual risky levels at 2.875 and 2.813. Quarterly and semiannual risky levels are 2.495 and 2.249.
Comex Gold -- ($1160.40) Quarterly and annual value levels are $1140.9 and $1115.2 with a daily pivot at $1165.6, and semiannual, weekly, semiannual, and monthly risky levels at $1218.7, $1222.3, $1260.8, and $1279.3. The all-time high of $1266.5 set on June 21 was a test of June’s monthly resistance, as a significant top for gold.
Nymex Crude Oil -- ($76.99) My annual pivot is $77.05 with a weekly pivot at $77.89, and daily and monthly pivots at $79.38 and $79.36 and semiannual risky level at $83.94. My quarterly value level is $56.63.
The Euro -- (1.2990) My weekly value level is 1.2797 with a daily pivot at 1.2933. Monthly and quarterly value levels are 1.2035 and 1.1424 with semiannual risky level at 1.4733.
Daily Dow -- (10,498) Weekly value level is 10,212 with my annual pivot at 10,379, my semiannual pivot at 10,558, and daily and monthly risky levels at 10,638 and 10,891. The 200-day simple moving average is 10,406. My quarterly value level is 7,812 with my annual risky level at 11,235, which was tested at the April 26 high at 11,258. This test marked the end of the bear market rally that began in March 2009. We're in the second leg of the multi-year bear market that began in October 2007 targeting 8,500 before 11,500.
The Fed’s Beige Book -- The Beige Book, the gossip columns from the 12 Fed Districts, defined what Fed Chief Bernanke recently described as “unusual uncertainty." Some districts defined economic activity as steady or slowing. Retail sales continued to rise for necessities, but big-ticket items moved more slowly, with auto sales declining in recent weeks. Activity in residential real estate was sluggish following the expiration of homebuyer tax credits on April 30, while commercial real estate, especially construction, remained weak. Banking conditions remained stressed with soft to declining loan demand and tight credit standards. On a positive note labor market conditions generally improved modestly, but based mainly by temporary hiring.
Mortgage Applications -- Mortgage applications to buy homes rose for the second consecutive week, but remains near a 13-year low. Refinancings remain at 80% of all mortgage applications, but they slowed last week by 5.9% despite a mortgage rate of 4.69% near the lowest in years. This weekly statistic indicates that the 23.6% rise in New Home Sales in June wasn't followed by a strong month in July, which isn't surprising given the decline in the NAHB Housing Market Index to 14 from 17. New Home Sales even after June’s surge are just above the lowest level in 47 years of record-keeping.
Other Real Estate Owned Surges in the Second Quarter -- According to RealtyTrac, Other Real Estate Owned by the “too big to fail” banks -- Bank or America (BAC), Citigroup (C), JPMorgan (JPM), and Wells Fargo (WFC) increased a total $9.5 billion in the second quarter year over year. OREO for the first quarter of 2010 totaled a record $46.3 billion for all banks according to the FDIC Quarterly Banking Profile, up 55.8% year over year.
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