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April 1, 2011 – The Stories from the Monthly Charts as April Begins
Today I show the monthly charts for the US capital markets to show how Federal Reserve
policy began speculation in gold and crude oil and US stocks, while yields began a longer term
trend higher. We have the first step towards a Dow Theory Buy Signal, but fundamentally
stocks are trading under a ValuEngine Valuation Watch.
Tracking Dow Theory - The Dow Transports ended March with a daily close above its February 17th
closing high at 5298.10. This is just a fractionally higher close at 5299.89, so the Dow Industrial
Average needs to follow with a close above its February 18th closing high at 12,391.25 today to
confirm a Dow Theory Buy Signal. The other major averages that remain below their February highs
are; S&P 500 by 1.4%, NASDAQ by 2.1%, NASDAQ 100 by 2.7% and the SOX by 7.8%. The Russell
2000 is 0.7% above its February high.
Comex Gold – ($1434.60) Annual, semiannual and annual value levels are $1356.5, $1300.6 and
$1187.2 with a daily pivot at 1429.1, and semiannual, weekly, quarterly and monthly risky levels at
$1452.6, $1469.8, 1523.7 and 1559.9. The monthly chart is overbought and the price pattern looks like
a parabolic rise that accelerated as the Fed cut the funds rate to zero in mid-December 2008.
Courtesy of Thomson / Reuters
Nymex Crude Oil – ($106.65) My annual and monthly value levels are $101.92, $101.09 and $99.91
with a weekly pivot at $105.31, and semiannual, daily and quarterly risky levels at $107.14, $108.20,
$114.27 and $120.52. The semiannual level at $107.14 was tested overnight and is now a pivot.
The monthly chart is overbought and oil was as low as $33.20 per barrel just after the Fed cut the
funds rate to zero percent. A zero percent funds rate was clearly a license for traders to speculate.
Monthly Dow: (12,320) Annual and semiannual value levels are 11,491, 10,959, and 9,449 with
monthly, quarterly and annual risky levels at 12,481, 13,774 and 13,890. We show overbought MOJO
with the 120-month simple moving average as support at 10,500.
Richard Suttmeier
Chief Market Strategist
ValuEngine.com
(800) 381-5576
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As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com.
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