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

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February 5, 2010 – Confirming Weekly Key Reversals

Tracking the weekly key reversals for the Dow and S&P 500! Weakness in semiconductors and
the China 25 Fund. The euro, gold and crude oil show continued weakness. Risk aversion pulls
10-Year yields lower. Regional banks are the only group I follow that’s still in the green for the
year. Comparing ValuEngine Valuations as 2010 began versus today.
The weekly charts for the Dow and S&P 500 are poised to confirm weekly key reversals.
Subscribers to the ValuEngine Morning Briefing know that every Monday I present My Fearless
Prediction of the Week. This week it was that the Dow would trade below 10,000, which it did on
Thursday.
The Dow needs to close below last week’s close of 10,067 to confirm the weekly key reversal, which
occurred three weeks ago. If we get this signal the downside risk is to quarterly support at 6,705.
Today’s resistance is 10,109 with weekly and annual resistances at 10,341 and 10,379. If we do not
confirm the key reversal it is likely that weekly support will form next week to slow the market decline.

Chart Courtesy of Thomson / Reuters

The Dow had its negative moving average crossover with the 21-day simple moving average at
10,407 below the 50-day at 10,425. Another key is that both are declining.
The S&P 500 needs to close below last week’s close at 1073 to confirm its weekly key reversal. SPX
needs a weekly close below my annual support at 1014 to target quarterly support at 682. Today’s
resistance is 1073.

Chart Courtesy of Thomson / Reuters

We need two months of lower closes to confirm the Monday Key Reversals for the Dow, S&P 500,
the NASDAQ and Dow Transports.
All other major averages have confirmed weekly key reversals.
The Philadelphia Semiconductor Index (SOX) is the number one stock market drag down 13.2%
year to date. The risk is to my semiannual support at 271.90.

Chart Courtesy of Thomson / Reuters

The China 25 Fund (FXI) was touted as a 2010 leader by Wall Street and it’s down 10% year to date.
Weekly closes below my annual pivot at 39.25 indicates continued downside risk. Remember when my
ETF subscribers had the opportunity to sell strength to my annual risky level at $44.53.

Chart Courtesy of Thomson / Reuters

The daily chart for the euro is in a near free fall with this week’s support at 1.3658. It was back on
Thanksgiving when I projected that euro gains above 1.50 would not be sustained. The focus is
sovereign debt issues in Greece, Spain and Portugal just for starters.

Chart Courtesy of Thomson / Reuters

The stronger dollar replaces gold as currency of last resort. This week’s support is $1043 and
being long gold has been a crowded trade and margin calls have forced position liquidations.

Chart Courtesy of Thomson / Reuters

As long as weekly closes for crude oil are below my annual pivot at $77.05 the risk is to my
quarterly support at $67.22. Weakness in oil is caused by the unwinding of speculative positions and on
the notion that the global recovery is not as strong as Wall Street proclaims.
The yield on the 10-Year is declining as risk aversion rules in front of next week’s $81 billion in
auctions. My semiannual pivot is 3.675 with monthly resistance at 3.504.
The Regional Banking Index (BKX) which was up 8.2% year to date yesterday morning got hit hard
and is now only up 3.5% so far in 2010. BKX shifts to neutral on a weekly close below $45.33. My
semiannual support is $40.76.

Chart Courtesy of Thomson / Reuters

Ten of eleven sectors were overvalued at the 2010 highs and now only two are overvalued. This
was a major reason why I said that stocks were vulnerable and to sell strength.
Send me your comments and questions to Rsuttmeier@Gmail.com. For more information on our
products and services visit www.ValuEngine.com
That’s today’s Four in Four. Have a great day.

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Richard Suttmeier
Chief Market Strategist
www.ValuEngine.com
(800) 381-5576
As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. I
have daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters as
well 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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issues of my research.

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