Key Reversals and Key Levels Tested

8/14/2019 Key Reversals and Key Levels Tested

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Januar y 19 , 2010 Key Reversals and Key Levels Tested

Four Important Weekly Key Reversals, Bank Failure Friday, the Yield on the 10-Year TestsSemiannual Resistance, the Bear Can Win the Title Bout against the Bull this week.

As 2010 began Wall Street told investors on Main Street to buy emerging markets and technology,and that crude oil was headed back above $100 per barrel.

After the first two weeks of 2010 we have weekly key reversals for the Emerging Markets Index Fund(EEM), The Philadelphia Semiconductor Index (SOX), The NASDAQ 100 Shares (QQQQ) andNymex Crude Oil. A weekly key reversal occurs when a market reaches a new high for the moveduring the week, but then closes below the low of the prior week. A market reversal is confirmed by twoconsecutive lower weekly closes after that.

Emerging Markets Index Fund (EEM) traded as high as $43.47 a week ago Monday then ended lastweek at $41.95 below the low of the first week of the year, which was $42.16, but still up 1.1% year todate. A close this week below $41.34 indicates risk to the 200-week simple moving average at $37.70.This would put EEM below my annual support at $39.81.

Chart Courtesy of Thomson / Reuters


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The Philadelphia Semiconductor Index (SOX) traded as high as 370.91 a week ago Monday, whichwas shy of the 200-week simple moving average at 380.25, then ended last week at 344.67, well below360.08 the low of the first week of the year. A close this week below 343.66 indicates risk to semiannual

and annual supports at 271.90 and 259.45. The SOX is down 4.2% year to date despite a blowoutearnings report for SOX leader Intel. Where is the Technology Leadership Wall Street called for?


The NASDAQ 100 Shares (QQQQ) traded as high as $46.64 a week ago Monday and ended lastweek at $45.85, slightly below the low of the first week of the year at $45.92. Without technologyleadership I show risk to semiannual support at $44.82, then to annual support at $40.37.



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Nymex Crude Oil traded as high as $83.95 a week ago Monday and ended last week at $78.00 belowthe low of the first week of the year at $79.63. My annual support at $77.05 held as this week begins.This weeks support is $76.79 with the 200-week simple moving average at $76.15. A close this weekbelow these supports would be a clear sign of a reluctant economic recovery.


Bank Failure Friday closes three private community banks.

All three banks were overexposed to C&D and CRE loans bringing the total for 2010 to four. In 2008there were 25 failures, in 2009 there were 140, so the total for The Great Credit Crunch is now 169.We cannot blame Wall Street for theses woes of community banks on Main Street. Blame theregulators, the US Treasury, the Federal Reserve and the FDIC for ignoring their own regulatory

guidelines.Assuming the FDIC collected $45 billion in Deposit Insurance Fees for 2010 through 2012 this fund isdown to $25.5 billion, which will run dry this year as more than 150 additional banks fail.

The yield on the 10-Year US Treasury tested my semiannual resistance at 3.675 as I predicted lastweek. Wall Street told Main Street investors that yields would rise, but my monthly support at 3.868held as 2010 began. The 50-day and 200-day simple moving averages are 3.555 and 3.438, which canbe tested again if this risk aversion trend continues.


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The Bull leads the Bear in the Dow Title Bout, but the Bear could score a knock-out this week.The score stands at 8 to 2 favoring the Bull. My annual support is 10,379 with a weekly pivot at 10,634,and monthly and annual resistances at 10,997 and 11,235. A knock out bunch by the Bear requires aweekly close below 10,379. The Bull needs a daily close above 10,634 to win round 11. A close below

10,574 breaks the Ascending Wedge support that goes back to the March 2009 lows.



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Richard SuttmeierChief Market Strategistwww.ValuEngine.com (800) 381-5576

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com . Ihave daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters aswell as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as theValuTrader Model Portfolio newsletter. I hope that you will go to www.ValuEngine.com and review some of the sampleissues of my research.

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Key Reversals and Key Levels Tested