Bernanke gives Wall Street more time for market speculation

8/7/2019 Bernanke gives Wall Street more time for market speculation

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Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.ValuEngine is a fundamentally-based quant research firm in Newtown, PA. ValuEnginecovers over 7,000 stocks every day.

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Apri l 28, 2011 Bernank e gives Wal l Str eet m ore t im e for mar ket spec ulat ion

The Fed Statement shows an economic theme that expansion is proceeding at a moderate pace

with the labor market improving gradually. The Fed recognizes that commodities prices havespiked since last summer and that the rise in the price of crude oil has contributed to aninflation pick-up in recent months, but the FOMC believes that inflation expectations remainstable and that underlying inflation remains subdued. The FOMC will continue to expand itsholdings of US debt as announced in November. This $600 billion QE2 will end on June 30thand then the Fed will re-invest maturing Treasury and MBS holdings keeping the expandedbalance sheet bloated. In addition the Federal Reserve will maintain the federal funds rate atzero to 0.25 percent for a continued extended period. Wall Street responded with a new roundof commodity and equity speculation as the dollar got whacked.

Fed Statement Status Quo as QE2 Set To End on June 30th - The Feds theme on the economy ithat expansion is proceeding at a moderate pace with the labor market improving gradually.

My focus has been the housing market and real estate in general and the impact on the bankingsystem. The Fed admits that investment in nonresidential structures remains weak, and that thehousing market remains depressed. The key to economic growth on Main Street USA is constructionspending, which is 8.8% lower than a year ago.

The Fed recognizes that commodities prices have spiked since last summer and that the rise in theprice of crude oil has contributed to an inflation pick-up in recent months, but they wrongly believe thainflation expectations remain stable and that the underlying inflation remains subdued. Americans onMain Street are struggling with a lower standard of living thanks to the Federal Reserve.

The FOMC continues a policy that helps Wall Street, while Main Street remains left out!

My Fearless Prediction of the Week on April 18th Confirming a double top for stocks betweenthe February 18th highs and the April highs requires weekly closes below the five-week modifiedmoving average, which was 12,200 for the Dow Industrial Average. Otherwise stocks will move higherinto the April 27 FOMC meeting, which we saw in yesterdays trading.

Stocks are now trading under a ValuEngine Valuation Watch 61.8% of all stocks are overvaluedwith 16 of 16 sectors overvalued, 7 by double-digit percentages. A ValuEngine Valuation Warningoccurs when 65% or more of all stocks become overvalued. This last occurred on February 18 th.


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10-Year Note (3.351) This yield was little changed at 3.36 both before and after the Fed Statementas the near term decline in yield became overdone. My weekly value level is 3.430 with daily andmonthly risky levels at 3.252 and 3.181.

Courtesy of Thomson / Reuters

Comex Gold ($1528.8) Gold traded to another all time high overnight at $1535.1 on renewedFed-supported commodity speculation. My semiannual value level is $1452.6 with weekly and

quarterly pivots at $1501.2 and $1523.7, and daily and monthly risky levels at $1537.4 and $1559.9.



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Nymex Crude Oil ($113.28) A supply build was offset by speculation indorsed by the FederalReserve as oil sets a new multi-year high overnight at $113.70. My Semiannual value level is

$107.14 with daily, quarterly and weekly risky levels at $113.70, $114.27, $116.86 and $120.52.


The Euro (1.4784) The Federal Reserve easy money policy allowed the euro to set a new 52-week high at 1.4879 overnight. Quarterly and monthly value levels are 1.4308 and 1.4170 with daily

and quarterly pivots at 1.4587 and 1.4624, and weekly pivot at 1.4771. My annual risky level is 1.6367



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Daily Dow: (12,691) My monthly and weekly value levels are 12,481 and 12,404 with a daily pivot at12,654, and Wednesdays new 2011 high at 12,708.37. My quarterly and annual risky levels are

13,774 and 13,890.


S&P 500 (1355.7) My weekly value level is 1318.7 with a daily pivot at 1351.9, Wednesdays new2011 high at 1357.49 and this months risky level at 1360.0.

NASDAQ (2870) My weekly value level is 2744 with a daily pivot at 2858, Wednesdays new 2011high at 2870.80, and my monthly risky level at 2898.

NASDAQ 100 (NDX) (2414) My weekly value level is 2288 with a daily pivot at 2411, Wednesdaysnew 2011 high at 2410.00, and monthly risky level at 2477.

Dow Transports (5446) My annual value level is 5179 with daily, weekly and monthly pivots at 53895365 and 5371, and Wednesdays new 2011 high at 5446.94.

Russell 2000 (858.31) Did not trade to a new 2011 high. My weekly value level is 835.89 withdaily and monthly pivots at 856.64 and 856.67 and the April 6th high at 859.08.

The SOX (450.64) My weekly value level is 408.52 with a daily pivot at 451.97, my monthly riskylevel at 452.34 and the February 18th high at 474.33.

Definition of MOJO This is my term for technical momentum. I use whats called 12x3x3 slowstochastic readings from daily, weekly and monthly charts. The scale is zero to 10.0 where above 8.0is overbought and below 2.0 is oversold.


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Thats todays Four in Four. Have a great day.

Richard Suttmeier

Chief Market StrategistValuEngine.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.comI have daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters awell as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as the

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I Hold No Positions in the Stocks I Cover.

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Bernanke gives Wall Street more time for market speculation