Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.

ValuEngine is a fundamentally-based quant research firm in Newtown, PA. ValuEngine

covers over 7,000 stocks every day.

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April 28, 2011 – Bernanke gives Wall Street more time for market speculation
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 have
spiked since last summer and that the rise in the price of crude oil has contributed to an
inflation pick-up in recent months, but the FOMC believes that inflation expectations remain
stable and that underlying inflation remains subdued. The FOMC will continue to expand its
holdings of US debt as announced in November. This $600 billion QE2 will end on June 30th
and then the Fed will re-invest maturing Treasury and MBS holdings keeping the expanded
balance sheet bloated. In addition the Federal Reserve will maintain the federal funds rate at
zero to 0.25 percent for a continued extended period. Wall Street responded with a new round
of commodity and equity speculation as the dollar got whacked.
Fed Statement – Status Quo as QE2 Set To End on June 30th - The Fed’s theme on the economy is
that 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 banking
system. The Fed admits that investment in nonresidential structures remains weak, and that the
housing market remains depressed. The key to economic growth on Main Street USA is construction
spending, 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 the
price of crude oil has contributed to an inflation pick-up in recent months, but they wrongly believe that
inflation expectations remain stable and that the underlying inflation remains subdued. Americans on
Main 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 between
the February 18th highs and the April highs requires weekly closes below the five-week modified
moving average, which was 12,200 for the Dow Industrial Average. Otherwise stocks will move higher
into the April 27 FOMC meeting, which we saw in yesterday’s trading.
Stocks are now trading under a ValuEngine Valuation Watch – 61.8% of all stocks are overvalued
with 16 of 16 sectors overvalued, 7 by double-digit percentages. A ValuEngine Valuation Warning
occurs when 65% or more of all stocks become overvalued. This last occurred on February 18th.
10-Year Note – (3.351) This yield was little changed at 3.36 both before and after the Fed Statement
as the near term decline in yield became overdone. My weekly value level is 3.430 with daily and
monthly 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 renewed
Fed-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.

Courtesy of Thomson / Reuters

Nymex Crude Oil – ($113.28) A supply build was offset by speculation indorsed by the Federal
Reserve 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.

Courtesy of Thomson / Reuters

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.

Courtesy of Thomson / Reuters

Daily Dow: (12,691) My monthly and weekly value levels are 12,481 and 12,404 with a daily pivot at
12,654, and Wednesday’s new 2011 high at 12,708.37. My quarterly and annual risky levels are
13,774 and 13,890.

Courtesy of Thomson / Reuters

S&P 500 – (1355.7) My weekly value level is 1318.7 with a daily pivot at 1351.9, Wednesday’s new
2011 high at 1357.49 and this month’s risky level at 1360.0.
NASDAQ – (2870) My weekly value level is 2744 with a daily pivot at 2858, Wednesday’s new 2011
high 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, Wednesday’s
new 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 5389,
5365 and 5371, and Wednesday’s 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 with
daily 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 risky
level at 452.34 and the February 18th high at 474.33.
Definition of MOJO – This is my term for technical momentum. I use what’s called “12x3x3 slow
stochastic readings” from daily, weekly and monthly charts. The scale is zero to 10.0 where above 8.0
is overbought and below 2.0 is oversold.
That’s today’s Four in Four. Have a great day.
Richard Suttmeier
Chief Market Strategist
ValuEngine.com
(800) 381-5576
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“I Hold No Positions in the Stocks I Cover.”