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October 19, 2010 – Dow remains on track for 11,235 to 11,296 by Election Day.

The yield on the 10-Year note held this week’s value level at 2.620 then declined back below my
monthly pivot at 2.555, so the potential is strength towards my quarterly and semiannual risky
levels at 2.265 and 2.249. Gold tested my weekly risky level at $1373.6, which is now a pivot as
my monthly pivot at $1343.7 becomes a value level. Crude oil rebounded above this week’s
pivot at $82.38, but stayed shy of my semiannual pivot at $83.94 and my monthly risky level at
$84.74. The euro is trying to achieve this week’s risky level at 1.4074. The Dow wants to test my
zone of risky levels; 11,229 weekly, 11,235 annual and 11,296 semiannual. The National
Association of Home Builders Housing Market Index remains subdued at 16 up from 13.
10-Year Note – (2.569) Weekly, annual and annual value levels are 2.620, 2.813 and 2.999 with a
monthly pivot at 2.555, and daily, quarterly and semiannual risky levels at 2.427, 2.265 and 2.249.

Courtesy of Thomson / Reuters

Comex Gold – ($1374.7) Monthly, quarterly, semiannual and annual value levels are $1343.7,
$1306.4, $1260.8, $1218.7 and $1115.2 with weekly and daily risky pivots at $1373.6 and $1376.7.

Courtesy of Thomson / Reuters

Nymex Crude Oil – ($83.20) My annual value level is $77.05 with daily and weekly pivots at $81.69
and $82.38, and semiannual and monthly risky levels at $83.94 and $84.74.

Courtesy of Thomson / Reuters

The Euro – (1.3969) My quarterly value level is 1.3318 with daily and weekly pivots at 1.4060 and
1.4074. My monthly value level is 1.2342 with semiannual risky level at 1.4733.

Courtesy of Thomson / Reuters

Daily Dow: (11,144) Monthly, semiannual, annual and quarterly value levels are 10,857, 10,558,
10,379 and 8,523 with a daily pivot at 11,149, and weekly, annual and semiannual risky levels at
11,229, 11,235, 11,290 and 11,296. My annual risky level at 11,235 was tested at the April 26th
high of 11,258.01.

Courtesy of Thomson / Reuters

Home Builders Remain Pessimistic as the NAHB Housing Market Index moves up to 16 from 13 in
October. While an improvement this index needs to read 50 to be considered neutral. High
unemployment, slow job growth and tight credit continue to prevent Americans from buying new
homes. The NAHB describes the index as showing “flickers of interest among potential buyers.” The
NAHB most significant concern it the fact that most builders have no access to credit for building
homes, which means that if pent-up demand develops builders will not have the inventory. The other
roadblock is that potential buyers are having difficulty in qualifying for mortgages.

My Fearless Prediction of the Week - I still forecast “Dow 8,500 before Dow 11,500” unless there’s a
Dow Theory Buy Signal. Near Term I have been projecting Dow 11,235 by Election Day on a
Republican victory and QE2 by the Fed. A Dow Theory Buy Signal occurs with Dow Transports closing
above its May 3rd closing high at 4,806.1, and then the Dow Industrials closing above its April 26th
closing high at 11,205.03.
That’s today’s Four in Four. Have a great day.
Richard Suttmeier
Chief Market Strategist
ValuEngine.com
(800) 381-5576
Send your comments and questions to Rsuttmeier@Gmail.com. For more information on our products
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“I Hold No Positions in the Stocks I Cover.”