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

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March 31, 2011 – New Intraday Highs for Dow Transports and Russell 2000
We are ending the first quarter of 2011 focusing on some key levels for the major equity
averages. The Dow Transportation Average and Russell 2000 traded above their February highs
on Wednesday. The Dow Transports traded as high as 5307.37 but did not close above its
February 17th closing high at 5298.10. Such would have been the first step towards a Dow
Theory Buy Signal. The Russell 2000 ended Wednesday 0.3% above its February high. The Dow
Industrial Average is below its February high at 12,391.29 by just 0.3%.
Tracking Dow Theory - The Dow Transports need to close above its February 17th closing high at
5298.10. If that happens and is followed by the Dow Industrial Average closing above its February 18th
closing high at 12,391.25, we will have a Dow Theory Buy Signal. The other major averages that
remain below their February highs are; S&P 500 by 1.2%, NASDAQ by 2.2%, NASDAQ 100 by 2.8%
and the SOX by 6.9%.
The Trading Range Scenario – The Dow Industrial Average remains in a trading range between its
March 16th low at 11,555.48 and its February 18th high at 12,391.29. Strength can stretch to this
week’s risky level at 12,488, which would still be a high below 12,600. Given a weekly close below the
five-week modified moving average at 12,038 the weekly chart profile shifts to negative, which would
target my annual risky level at 11,491. New monthly and quarterly levels will be available Friday.
Stocks Remain Overvalued Fundamentally – We are operating under a ValuEngine Valuation
Watch with more than 60% of all stocks overvalued. At Wednesday’s close 61.7% of all stocks were
overvalued. In addition all 16 sectors are overvalued with 10 by double-digit percentages. A
ValuEngine Valuation Warning occurs when more than 65% of all stocks are overvalued. This last
occurred at the mid-February highs.
More bad news on the housing market - The Mortgage Bankers Association reported that mortgage
applications for both refinancings and home purchases fell 7.5% in the week ended March 25th. A
major factor is the increasing mortgage rates as the 30-Year fixed rate mortgage rose to 4.92 percent
last week from 4.80 percent the prior week.
10-Year Note – (3.448) The 200-week simple moving average is 3.554 with the 50-day simple moving
average at 3.465, and the March 16th low yield at 3.139. Weekly and annual value levels are 3.641
and 3.791.
 Courtesy of Thomson / Reuters

Comex Gold – ($1422.1) The 50-day simple moving average is $1389.2 with the March 24th all time
high at $1448.6. Daily, semiannual and weekly risky levels are $1432.1, $1452.6 and $1469.8.

Courtesy of Thomson / Reuters

Nymex Crude Oil – ($104.30) The daily chart shows a potential double-top just shy of my semiannual
risky level at $107.14. My annual pivots are $101.92 and $99.91. My weekly pivot is $105.31. Today’s
risky level is $107.54. A close below $99.91 signals a double-top for crude oil.

Courtesy of Thomson / Reuters

The Euro – (1.4121) The weekly chart shows the euro overbought versus the dollar with the 200-week
simple moving average as support at 1.3967. My weekly pivot is 1.4119 with the November 4th high as
resistance at 1.4281.

Courtesy of Thomson / Reuters

Daily Dow: (12,351) My annual value level lags at 11,491 with the February 18th closing high at
12,391.25 and daily and weekly risky levels at 12,522 and 12,488. Given a Dow Theory Buy Signal
and a new high for the laggard SOX, the upside is to my annual risky level at 13,890. Without a Dow
Theory Buy and given a weekly close below 11,491 the downside is to semiannual value levels at
10,959 and 9,449.

Courtesy of Thomson / Reuters

Key Levels for the Other Major Equity Averages

• The S&P 500 (1328.3) The 50-day simple moving average is 1307.33 with daily and weekly
risky levels at 1342.9 and 1353.7. The S&P 500 needs to close Thursday above 1327.2 to
achieve a positive March. The February high is 1,344.07.
• The NASDAQ (2777) The 50-day simple moving average is 2743 with daily and weekly risky
levels at 2822 and 2830. The NASDAQ needs to close Thursday above 2782 to achieve a
positive March. The February high is 2840.51.
• The NASDAQ 100 (NDX) (2337) The 50-day simple moving average is 2318 with daily and
weekly risky levels at 2384 and 2389. The NDX needs to close Thursday above 2351 to
achieve a positive March. The February high is 2403.52.
• Dow Transports (5277) Set a new YTD high at 5307.37 on Wednesday. My annual pivot is
5179 with weekly and daily risky levels at 5295 and 5340, and the February 17th closing high at
5298.10.
• The Russell 2000 (840.37) Set a new YTD high at 840.76 on Wednesday. My annual value
level is 784.16 with daily and weekly risky levels at 851.09 and 857.75.
• The Philadelphia Semiconductor Index (SOX) (441.38) I show no nearby value levels with
the 50-day simple moving average at 445.50, and daily and weekly risky levels at 449.88 and
459.29. The SOX needs to close Thursday above 458.62 to achieve a positive March.
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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