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Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com . ValuEngine is a fundamentally-based quant research firm in Princeton, NJ. ValuEnginecovers over 5,000 stocks every day.

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June 24 , 2010 New Home Sales Plunge and t he Fed i s Concer ned

The yield on the 10-Year Treasury moved lower as $38 billion 5-Year note auction gets tepidinvestor demand. Gold continues to consolidate off Mondays all time high at $1266.5, whichwas a test of this months resistance. Crude moved below my annual pivot at $77.05. The euroconsolidates off my quarterly resistance at 1.2450, which was tested on Monday. The Dowremains below my annual pivot at 10,379. New home sales plunge 32.7% as tax credits end, andthe Fed leaves rates exceptionally low for an extended period.

US Treasury Yields The $38 billion 5-Year note auction had a neutral result with a yield of 1.995, abid-to-cover of 2.58 and indirect bid of 35%. The US Treasury auctions $30 billion 7-Year notes today. ,The 30-Year fixed rate mortgage is at a record low of 4.76%, but mortgage applications decline. Theproblem is that the spread versus the 10-Year has widened to 166 basis points from 115 where it waswhen the Fed stopped buying mortgage securities on March 31 st . A 4.25% mortgage would make it alot easier to refinance mortgages. The daily chart for the 10-Year shows the longer-term trading rangebetween the 200-day simple moving average at 3.544 and 3.061 with a daily pivot at 3.180, and annualresistances at the floor at 2.999 and 2.813.

Chart Courtesy of Thomson / Reuters

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Comex Gold The daily chart shows declining MOJO, but Mondays all time high of $1266.5 was afailed test of my monthly resistance at $1265.9. The 21-day and 50-day simple moving averagesprovide key supports at $1228.4 and $1201.3.

Courtesy of Thomson / Reuters

Nymex Crude Oil The daily chart still shows overbought MOJO with oil below its 50-day and 200-daysimple moving averages and annual pivot at $77.05, $77.04 and $77.05. The 21-day is support at$74.41. Todays resistance is $79.91.

Courtesy of Thomson / Reuters

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The Euro The daily chart shows rising MOJO as strength reached my quarterly resistance at 1.2450on Monday. The 21-day simple moving average is support at 1.2208.

Courtesy of Thomson / Reuters

Daily Dow: The 21-day simple moving average is support at 10,183 with the 200-day and 50-daysimple moving averages at 10,350 and 10,556. My annual pivot has been a magnet at 10,379. A close

below the 21-day shifts the daily chart to negative as MOJO rolls over. My call remains that the April26 th high at 11,258 ended the bear market rally since March 2009, and starts the second leg of themulti-year bear market.

Courtesy of Thomson / Reuters

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New Home Sales Plunge as Tax Credits Expire - New Home Sales for May plunged 32.7% to anannual rate of just 300,000 units, the lowest pace since record keeping began in 1963. This should notbe a surprise as 33% of new home sales were generated because of tax credits, which expired on April30 th. Remember that homebuilders peaked in share price in July 2005 and new home sales are down78% from that peak. Complicating a housing recovery is high unemployment, job security and bankscontinue to employ tight credit conditions.

Federal Reserve Leaves The Funds Rate Exceptionally Low For An Extended Period. The FOMCsees the economic recovery proceeding with a gradual improving labor market. Against this backdrophousehold spending is increasing but constrained by high unemployment. The Fed worries aboutmodest income growth, lower housing wealth and tight credit conditions.

My concerns are clearly stated by the Fed Housing starts remain at a depressed level. Financial conditions have become less supportive of economic growth on balance, largely reflecting

developments abroad. Bank lending has continued to contract in recent months. It was housing that caused stress in the banking system beginning in 2007. Housing is beginning todrag the economy again, and stress in the banking system continues, but is buoyed by low interestrates, which has just not helped Main Street USA. Strategists argue whether or not the economy isheaded for a double-dip or not. Looking at housing and the unemployment rate the economy is still inits first dip. After all, the National Bureau of Economic Research (NBER) has yet to time stamprecessions end. Without an end there can not be a double-dip. Can the NBER declare the Recessiontime stamped beginning December 2007 over with an unemployment rate of 9.7% when the rate was4.6% at the end of 2007?

Thats todays Four in Four. Have a great day.

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.

I Hold No Positions in the Stocks I Cover.