NEW YORK (TheStreet) — The yield on the U.S. Treasury 10-Year note tested another new all-time low at 1.377% on Wednesday. Comex gold stabilized around my annual pivot at $1575.8 per the Troy ounce. Nymex crude oil prices drifted lower before starting a European Central Bank and quantitative easing, or QE3, rally on Thursday. The euro versus the dollar set a two-year low at 1.2045 on Tuesday, then rallied to above 1.2300 on Thursday.
There are divergences in the charts of the major equity averages that need to be sorted out. This is the fifth week in a row that the S&P 500 enters Friday on the cusp of my annual pivot at 1363.2. Weekly closes have been below that key level.
Here is my analysis of the major markets:
Yield on the 10-Year Treasury Note. (1.429) — There are no technical signals that indicate the “flight to quality” will end anytime soon. However, the 10-Year yield could back up to my semiannual and quarterly value levels at 1.853 and 1.869, respectively, given weekly closes cheaper than my semiannual pivot at 1.389, which was tested with a record-low yield set this week at 1.377.
Comex Gold ($1614.9) — Recent weakness in gold held above its post-bubble December 2011 low of $1523.9, as my annual pivot at $1575.8 provided a stabilizing force. Gold closed above this pivot four weeks in a row. If it closes today above its five-week modified moving average at $1596.1 today, the weekly chart shifts to positive from neutral. Given QE3 and action by the ECB, gold could rebound to my semiannual risky levels at $1643.3 and $1702.5. The daily chart has also improved technically, with gold above its rising 50-day simple moving average at $1589.2 with the 200-day at $1657.8.
Nymex Crude Oil ($89.41) — The weekly chart for crude oil remains positive with a close today above the five-week modified moving average at $88.10. The upside in anticipation of QE3 and ECB money printing is to my monthly and annual risky levels at $100.47 and $103.58.
The euro vs. the dollar (1.2280) — The weekly chart shows an oversold euro versus the greenback. After setting a multi-year low this week at 1.2045, a close today above last week’s high at 1.2320 is a weekly key reversal. If this is followed by a close next week above the five-week modified moving average at 1.2465, the weekly chart would shift to positive with upside to my semiannual risky level at 1.2917.
Richard Suttmeier has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.
Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.
Suttmeier’s industry licenses include, Series 7, Registered Principal (Series 24), and Investment Advisor (Series 65). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.
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Richard Suttmeier can be reached at RSuttmeier@Gmail.com