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Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com. ValuEngine is a fundamentally-based quant research firm in Princeton, NJ. ValuEngine

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October 15, 2009 – No Break-out or Fake-out yet

It’s frustrating but Wednesday was not a Break-out or a Fake-out. No clear signal fromcopper or crude oil, despite new dollar low. Fed minutes show Fed’s concern. Chartscourtesy of Thomson / Reuters

New highs for the Dow, S&P 500 and the NASDAQ, but not a decisive breakout

For the Dow my annual resistance was tested at 10,012 with a close just slightly above. Evenif the Dow stays above 10K near term the 10,012 level will be a magnet for the remainder of2009.

Back in 2007 the Dow first tested 14,000 on July 17, 2007, then in October 2007 hit 14,198 onOctober 11, and lost 14K on October 17. The Dow should have similar difficulties with 10K in2009.

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The S&P 500 should have tested 1100. The down trend that goes back to October 2007comes in at 1130 at the end of October. Investors should use this strength to raise cash.

The NASDAQ reached a new high but stayed below monthly resistance at 2183.

Not all major averages traded to new highs for the year

Dow Utilities lack the energy to power to new highs and has been moving sideways since July24th.

Dow Transports did not see a new high and has entered my zone of annual resistances at2037 and 4199.

The Russell 2000 did not see a new high as stayed shy of weekly resistance at 625.50.

Most important is the SOX, which stayed shy of semiannual and weekly resistances at 337.39and 338.79 despite the great quarter from Intel. Intel stayed below my monthly risky level at$21.44.

Without follow through from Intel there’s a double top to worry about on the daily chart for theSOX.

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Comex copper and Nymex crude oil are on the cusp of their 200-week simple movingaverage even as the dollar hits a new low for the move.

The 200-week simple moving average for Comex copper is 292.64. The September 28 th highis 296.60. This morning copper faded back below my weekly pivot at 280.57.

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Crude oil is trying to achieve a weekly close above its 200-week simple moving average at$75.16. Oil has been attempting this feat since mid-June.

A breakout above indicates strength to monthly and quarterly resistances at $82.98 and$83.16. Otherwise, look for a fake-out back to annual pivots at $68.81 and $66.51 once again.

If copper and crude oil can’t get above their 200-week averages the global growth story isbogus.

Concerns from the minutes of the September 22 / 23 FOMC meeting 

Most FOMC members are concerned that labor remained weak. The NBER will not time stamp the end of Recession until labor conditions improve. My contention is that Americans must adjust to a lower standard of living.

The Committee agreed to maintain its target range for the federal funds rate at 0 to 1/4

percent and to reiterate its view that economic conditions were likely to warrant anexceptionally low level of the federal funds rate for an extended period. This is a lack of confidence that Fed policy is working.

Some members thought that an increase in purchases of agency MBS could help to reduceeconomic slack more quickly than in the baseline outlook. You can’t as Fannie and Freddie need to start to unwind portfolios by law in 2010. 

Send me your comments and questions to Rsuttmeier@Gmail.com. For more information onour products and services visit www.ValuEngine.com 

That’s today’s Four in Four. Have a great day.

Richard SuttmeierChief Market StrategistValuEngine.com(800) 381-5576

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the websitewww.ValuEngine.com. I have daily, weekly, monthly, and quarterly newsletters available that track a variety ofequity and other data parameters as well as my most up-to-date analysis of world markets. My newest productsinclude a weekly ETF newsletter as well as the ValuTrader Model Portfolio newsletter. I hope that you will go towww.ValuEngine.com and review some of the sample issues of my research.

“I Hold No Positions in the Stocks I Cover.”