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June 2, 2010 – Housing & Financials Remain Up Year to Date, but are Fading Fast

US Treasury yields remain low, gold is above $1200 with the euro above its 120-month simple
moving average at 1.206, and crude oil could not get close to its annual pivot at $77.05. For the
Dow support remains below 10,000 with my annual pivot at 10,379. Housing and banking
indices may be up year to date, but they are leading the downside.
US Treasury Yields – are at the low end of trading ranges as risk aversion returns. Remember that
demand for US Treasuries is considered a “flight to quality.” Bankrate.com shows the 30-Year fixed rate
mortgage at 4.92% so the mortgage to 10-Year spread widened to 166 basis points on Tuesday, when
this spread should be 100 basis points. My quarterly support is 3.467 with weekly resistance at 3.192.
Next week the US Treasury auctions $28 billion 3-Year notes on Tuesday, $24 billion 10-Year notes on
Wednesday and $16 billion 30-Year bonds on Thursday June 10th.

Courtesy of Thomson / Reuters

Comex Gold – has rising MOJO on its daily chart. My semiannual pivot is $1186.5 with weekly and
monthly resistances at $1245.8 and $1265.9. Gold is back above $1200 the Troy ounce as currency of
last resort as the euro weakened to a new 52-week low of 1.2114 on Tuesday.

Courtesy of Thomson / Reuters

Nymex Crude Oil – shows rising MOJO on its daily chart with the 200-day simple moving average and
my annual risky level at $76.67 and $77.05. This week’s support is $71.64. Crude oil traded above $75
per barrel on Tuesday but then declined to below $72 on Tuesday.

Courtesy of Thomson / Reuters

The Euro – shows rising MOJO on its daily chart despite a new low for the move on Tuesday. Major
support is the 120-month simple moving average at 1.206 with weekly and quarterly pivots at 1.2187
and 1.2450 and monthly resistance at 1.2679.

Courtesy of Thomson / Reuters

Daily Dow: There’s an up trend resistance line that connects highs going back to November 2009 that
was tested at the April 26th high. The daily chart profile is negative with the Dow below its 21-day
simple moving average at 10,477. The Dow is below its 50-day and 200-day simple moving averages
at 10,779 and 10,285. It seems that the April 26th high at 11,258 ends the bear market rally since March
2009, and starts the second leg of the multi-year bear market.

Courtesy of Thomson / Reuters

We are in the second leg of the multi-year bear market which began in October 2007, but we
need a decisive break below Dow 10,000 to solidify the trend towards Dow 8,500. If we avoid further
talk of the European Contagion there may be enough positives in this week’s economic data to move
higher first. That will be signaled by a weekly close on the Dow above my annual pivot at 10,379. Once
we get readings for May data we will see the slowdown effects of oil in the Gulf of Mexico and the
problems with the PIIGS in Europe. We will also begin to see more problems in State and Local
governments.

Housing & Banking Indices

1-Jun YTD 31-Dec April '10 YTD YTD Cycle Cycle Date of % Off
Market Price Gains Price Highs Lows Hi / Lo Lows Highs Highs Highs
HGX 104.70 1.9% 102.72 132.53 101.07 23.7% 54.31 293.66 Jul-05 64.3%
ABAQ 157.13 6.1% 148.04 184.90 154.67 16.3% 108.55 315.06 Dec-06 50.1%
BKX 48.65 13.9% 42.71 58.81 47.00 20.1% 17.75 121.16 Feb-07 59.8%

Housing Sector Index (HGX) is up 1.9% year to date after a decline of 23.7% from its April high to
May low, and is down 64.3% from its July 2005 high. The daily chart is neutral with rising MOJO, but
Tuesday’s close was below the 200-day simple moving average at $106.62. My model shows no
nearby support with my monthly pivot at $109.23.

Chart Courtesy of Thomson / Reuters

The America’s Community Bankers’ Index (ABAQ) is still up 6.1% year to date, but is down 50.1%
from its December 2006 highs after a 16.3% decline from its April high to May low. The index now has a
neutral daily chart profile with flat MOJO and the 200-day simple moving average at $154.95. My
semiannual support at $146.67, my monthly pivot at $163.33 and my semiannual resistance at $181.00
which was tested at the highs.

Chart Courtesy of Thomson / Reuters

The Regional Bankers Index (BKX) is still up 13.9% year to date after a decline of 20.1% from
its April high to May low, and is down 59.8% from their February 2007 highs. The daily chart is neutral
with the 200-day simple moving average as support at $47.75. My semiannual support is $40.76 with a
monthly pivot at $48.58 and semiannual resistance at $59.12 which was nearly tested at the April high.

Chart Courtesy of Thomson / Reuters

We will soon be publishing our latest ValuEngine List of Problem Banks!
That’s today’s Four in Four. Have a great day.
Richard Suttmeier
Chief Market Strategist
www.ValuEngine.com
(800) 381-5576
As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. I
have daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters as
well as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as the
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issues of my research.

“I Hold No Positions in the Stocks I Cover.”