qe2 starts to re-inflate bubbles, risks stagflation!

8/8/2019 QE2 Starts To Re-inflate Bubbles, Risks Stagflation!

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Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.ValuEngine is a fundamentally-based quant research firm in Newtown, PA. ValuEnginecovers over 7,000 stocks every day.

A variety of newsletters and portfolios containing Suttmeier's detailed research, stock picks

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November 5, 2010 QE2 Star t s To Re-inf lat e Bubbles , Risks St agfl at ion!

I still project that the decline in the 10-Year yield will be limited to my quarterly and semiannua

risky levels at 2.265 and 2.249. The rise in Gold extended the parabolic towards this weeksrisky level at $1396.7. Crude oil traded above its May 3rd high at $87.15 and thanks to QE2 couldrally another $10 per barrel taxing Main Street USA. The euro is trading at a new high for themove with this weeks risky level at 1.4371. The Dow Theory Buy Signal is the technical reasonfor Dow 11,434.84. Helicopter Bens Dollar Drop, and answering your questions about DowTheory.

10-Year Note (2.487) Daily, annual and annual value levels are 2.660, 2.813 and 2.999 withmonthly, quarterly and semiannual risky levels at 2.380, 2.265 and 2.249.

Courtesy of Thomson / Reuters


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Comex Gold ($1391.3) Quarterly, semiannual and annual value levels are $1306.4, $1260.8,$1218.7 and $1115.2 with my monthly pivot at $1373.0, and weekly risky level at $1396.7.


Nymex Crude Oil ($86.72) Monthly and annual value levels are $78.51 and $77.05 with semiannuaand weekly pivots at $83.94 and $85.08, and semiannual and annual risky levels at $96.53 and

$97.29.



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The Euro (1.4213) Daily, quarterly and monthly value levels are 1.4019, 1.3318 and $1.2709 withweekly and semiannual risky levels at 1.4371 and 1.4733.


Daily Dow: (11,435) Monthly, semiannual, annual and quarterly value levels are 10,848, 10,558,10,379 and 8,523 with daily, annual, semiannual and weekly pivots at 11,263, 11,235, 11,296 and

11,374. I show no risky levels following the Dow Theory Buy Signal.



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Helicopter Ben Starts an Eight Month Dollar Drop The Fed decision to buy $75 billion longer-dated US Treasuries in each of the next eight months will total $600 billion by the end of June 2011.

This policy helps Wall Street make money on commodity speculation and staying short the dollar, whilMain Street USA struggles with the higher cost of living resulting from higher energy and food costs.The Fed says there is no inflation which is hogwash! Just observe the rising Prices Paid componentsof the latest ISM readings.

Gentle Ben says he wants higher stock prices and instead of giving retirees a money market rate theycan live with. The Fed wants folks living on a fixed income to take more investment risks. Many onMain Street lost a bundle on the Fed-induced bubbles of the new millennium. First was the TechBubble in 2000, then the Housing Bubble in 2006, which continues today, and the stock market crashof October 2007 to March 2009. Now we have a gold bubble and an overvalued stock market. IfAmericans were allowed to vote on Fed policy the vote would have been against QE2.

Now we are re-inflating the commodities bubbles as Gold pushes towards a new all time high and asCrude Oil breaks out to the upside. Please tell me how this helps Main Street USA where jobs aresupposed to be created?Complicating the Main Street problems are rising home foreclosures, fewehours worked in addition to higher real inflation. Americans are being forced into a scenario ofaccepting a lower standard of living, while the fat cats on Wall Street get a QE2 license to speculate.

With all of the bailouts that have cost tax payer billions, nothing has been done to help end the causeof The Great Credit Crunch, which is the weakening housing market. This is the foundation that musbe fixed before the US economy has a chance to create jobs and grow again.

Questions on Dow Theory - A Dow Theory Buy Signal is a late cycle signal that typically occurs afteabout two thirds of the rally has already occurred. The signal fortifies the notion that the market is in aBuy Weakness mode. One reader asked why am I comparing it to the Thanksgiving 2007 Dow TheorySell Signal? The market turned lower after that signal but then staged a rally into Mid-December as aSell Strength opportunity. Now that we are operating in a Dow Theory Buy mode you want to knowwhere to buy on weakness. We know we have semiannual and annual pivots at 11,296 and 11,235.Below these levels are monthly, semiannual and annual value levels at 10,848, 10,558 and 10,379. Areader mentioned price gaps, and that gaps are usually filled. I agree with that notion as well.

ValuTrader Question - Subscribers to the ValuTrader newsletter have access to a model portfolio oflongs and shorts. The shorts are Diamonds (DIA), S&P Spiders (SPY) and NASDAQ 100 Shares(QQQQ). We have existing short positions for each of these ETFs and we add to shorts using GTCLimit Orders to sell strength to the levels shown in the weekly report. On Thursday we added to the

short in DIA at $113.77 and to the short in SPY at $121.28, which was Thursdays open above theweekly pivot at $120.88.

Thats todays Four in Four. Have a great day.

Richard SuttmeierChief Market StrategistValuEngine.com(800) 381-5576


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qe2 starts to re-inflate bubbles, risks stagflation!

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