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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.

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May 27 , 2011 The Dow, SPX and NASDAQ Fail at t heir 50-day Movi ng Avera ges

The yield on the 10-Year US Treasury ended Thursday below its 200-day simple moving

average at 3.085 for the first time since December 6

th

. This enhances the flight to qualityscenario and should put pressure on US stocks. Gold continues to trade around my quarterlypivot at $1523.7. Crude oil continues to trade in a reversal-oriented pattern influenced by myannual pivots at $99.91 and $101.92. The euro remains below my quarterly pivot at 1.4308. Inthe last hour of trading on Thursday the Dow Industrial Average, S&P 500 and NASDAQ were athe cusp of their 50-day simple moving averages at 12,424, 1328 and 2786 and all three fadedinto the close. The Dow, S&P and NASDAQ are poised for weekly closes below their five-weekmodified moving averages at 12,473, 1332.5 and 2803 respectively, which is a longer termbearish warning for stocks. Only the Dow will continue to be overbought technically.

10-Year Note (3.059) This yield ended Thursday below its 200-day simple moving average at 3.085This weeks pivot is 3.170 with todays pivot at 3.095.

Courtesy of Thomson / Reuters

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Comex Gold ($1520.6) has held above its 50-day simple moving average at $1479.7. My quarterlypivot is $1523.7 the Troy ounce has been a magnet. This weeks risky level is $1566.6.

Courtesy of Thomson / Reuters

Nymex Crude Oil ($100.24) is still between my annual pivots at $99.91 and $101.92. The 200-daysimple moving average is at $90.39.

Courtesy of Thomson / Reuters

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The Euro (1.4129) broke below its 50-day simple moving average at 1.4340 on May 11th then failedthere on a rebound last Friday, May 20th. The 200-day simple moving average is 1.3690.

Courtesy of Thomson / Reuters

Daily Dow: (12,403) Daily closes below the 50-day simple moving average at 12,424 increases theodds that the weekly close will be below the five-week modified moving average at 12,473. WeeklyMOJO is still projected to be above 8.0 at 8.1 delaying a negative weekly chart. Daily and annual value

levels are 12,362 and 11,491 with weekly risky level at 12,818.

Courtesy of Thomson / Reuters

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S&P 500 (1325.7) A close this week below the five-week modified moving average at 1332.5 shiftsthe weekly chart profile to negative. Daily closes below the 50-day simple moving average at 1328 is a

warning with weekly MOJO declining below 8.0. Todays pivot is 1326.5.NASDAQ (2783) A close this week below the five-week modified moving average at 2803 shifts theweekly chart profile to negative. The NASDAQ gapped below its 50-day simple moving average at2781 on Monday and was tested on strength at 2786 on Thursday with weekly MOJO declining below8.0. Todays pivot is 2786.

NASDAQ 100 (NDX) (2326) A close this week below the five-week modified moving average at 235keeps the weekly chart profile negative. NDX gapped below its 50-day at 2338 on Monday with weeklyMOJO declining below 8.0. Todays risky level is 2331.

Dow Transports (5406) A close this week below the five-week modified moving average at 5356shifts the weekly chart profile to negative. The Transports tested and held its 50-day at 5327 onWednesday with weekly MOJO declining below 8.0. Todays risky level is 5432.

Russell 2000 (830.87) A close this week below the five-week modified moving average at 834.24keeps the weekly chart profile negative. The small cap index gapped below its 50-day at 831.65 onMonday with weekly MOJO declining below 8.0. Todays value level is 827.09.

The SOX (428.24) A close this week below the five-week modified moving average at 440.01 keepsthe weekly chart profile negative. The SOX is below its 50-day at 435.48 with weekly MOJO decliningbelow 8.0. Todays value level is 422.59.

Definition of MOJO This is my term for technical momentum. I use whats called 12x3x3 slowstochastic readings from daily, weekly and monthly charts. The scale is zero to 10.0 where above 8.0is overbought and below 2.0 is oversold.

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

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